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COOLEY LLP
MARTIN S. SCHENKER (SBN 109828) ,
101 California Street, 5th Floor
San Francisco, CA 94111 FKLED
3“” ”“50 COW"
Telephone: (415) 693-2000
Facsimile: (415) 693-2222
DEC 0 5 2018‘
JESSICA VALENZUELA SANTAMARIA (SBN 220934)
SHAWNA V. BENFIELD (SBN 290511) Clerk ofthe Superior Court
JEFFREY D. LOMBARD (SBN 285371) By
EEK
3175 Hanover Street
Palo Alto, CA 94304
Telephone: (650) 843-5000
Facsimile: (650) 849-7400
Attorneys for Defendants
DA VID S TROHM, TOM PA TTERSON, AIDA AL VAREZ, RA UL
VAZQ UEZ, DA VE TOMLINSON, CARL PASCARELLA
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN MATEO
KERRIGAN CAPITAL LLC and RYAN J. No. CIV534431
KERRIGAN, AS TRUSTEE FOR THE
KERRIGAN FAMILY TRUST, individually DECLARATION OF JEFFREY D. LOMBARD
and on behalf of all others similarly situated, IN SUPPORT OF DEFENDANTS’ EXPARTE
APPLICATION To MODIFY CLAss
Plaintiff, CERTIFICATION BRIEFING AND HEARING
SCHEDULE
V.
Complaint Filed: June 26, 2015
DAVID TOM PATTERSON,
STROI—IM,
CARL PASCARELLA, AIDA ALVAREZ, .
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MAPACHE INVESTMENTS L.P. FUND
V, MADRONE PARTNERS, LP. and )
DOES 1-20, inclusive,
Defendant.
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CIV534431
DECL
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COOLEY LLP
ATTORNEYS AT LAw
PALO ALTO
DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431
1, Jeffrey D. Lombard, hereby declare as follows:
1. I am an attorney admitted to practice before the Courts of the State of California
and Washington. I am an associate at the law firm Cooley LLP, counsel of record for Defendants
David Strohm, Tom Patterson, Carl Pascarella, Aida Alvarez, Raul Vazquez, and Dave
Tomlinson. I submit this declaration in support of Defendants’ Ex Parte Application to Modify
Class Certification Briefing and Hearing Schedule (“Application”), filed concurrently herewith.
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The facts set forth below are based on my personal knowledge and, if called as a witness, I could
and would competently testify thereto.
2. The relief sought in Defendants’ Application is necessary on an ex parte basis to
10 ensure that Defendants are able to depose non-party James Gutierrez and incorporate his
11 testimony into their brief in opposition to Plaintiffs’ motion for class certification. On August 19,
12 2016 the Court recognized that discovery from Mr. Gutierrez was “critical” to Defendants’
13 opposition to class certification and made clear that Defendants’ opposition to Plaintiffs’ class
14 certification motion was “subject to the depositions and production of documents of Mr.
15 Gutierrez, James Gutierrez.” A true and correct copy of the Transcript from the August 19, 2016
16 Case Management Conference is attached hereto as Exhibit A.
17 3. Despite best efforts to coordinate the scheduling of Mr. Gutierrez’s deposition, we
18 have been unable to agree to a mutually convenient date for Mr. Gutierrez’s deposition that works
19 for Plaintiffs, Defendants, and Mr. Gutierrez and their respective counsel (as set forth in more
20 detail below).
21 4. On September 3, 2015, Defendants served James Gutierrez with a document
22 subpoena. Following numerous attempts to meet and confer with Mr. Gutierrez between October
23 2015 and April 2015 and his incomplete production of documents in response to the subpoena,
24 Director Defendants filed a motion to compel production of documents from Mr. Gutierrez on
25 April 15, 2016. On July 11, 2016, the Court granted in part and denied in part Director
26 Defendants’ motion to compel. On July 15, 2016, Mr. Gutierrez and Director Defendants
27 submitted a joint statement to the Court. The statement explained that they had agreed to the
28 scope of what Mr. Gutierrez would produce in response to the subpoena.
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DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431
5. On August 19, 2016, Mr. Gutierrez produced documents to Director Defendants in
response to Defendants’ September 3, 2015 subpoena and purportedly in compliance with the
Court’s July 11, 2016 Order and the parties’ July 15, 2016joint statement. Like Mr. Gutierrez’s
previous productions, however, the supplemental production was deficient. On August 26, 2016, I
sent Mr. Gutierrez’s counsel, Raul Alcantar, a meet and confer letter identifying a number of
substantive deficiencies with Mr. Gutierrez’s August 19, 2016 production. Attached as Exhibit B
is a true and correct copy of my August 26, 2016 Meet and Confer letter to Mr. Alcantar.
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6. On September 2, 2016 Mr. Alcantar called me to discuss the August 26, 2016
letter regarding Mr. Gutierrez’s production. Although Mr. Alcantar and I generally discussed
10 some of the issues identified in my letter, he was not prepared to have a substantive discussion
11 about the defects in Mr. Gutierrez’s production.
12 7. I sent Mr. Alcantar an email memorializing our telephone conversation on
13 September 6, 2016. In that email, I asked Mr. Alcantar to address the substantive deficiencies
14 with Mr. Gutierrez’s production and to provide Mr. Gutierrez’s availability for deposition
15 between October 10-12, 2016 and October 17-19, 2016. Attached as Exhibit C is a true and
16 correct copy of my September 6, 2016 email to Mr. Alcantar.
17 8. Mr. Alcantar responded to my email later that same day indicating that Mr.
18 Gutierrez was considering one of Director Defendants’ requests regarding metadata. He
19 otherwise did not address the substantive deficiencies with his production or provide Mr.
20 Gutierrez’s availability for deposition. Attached as Exhibit D is a true and correct copy of Mr.
21 Alcantar’s September 6 email to me.
22 9. I tried to contact Mr. Alcantar a number of times after that. I emailed him on
23 September 13, September 15 and September 23. In my emails, I again asked about Mr.
24 Gutierrez’s availability for deposition on previously requested dates, as well as October 24, 27
25 and 28. I also called Mr. Alcantar on September 16 and September 23. Mr. Alcantar did not
26 answer my emails or return my phone calls.
27 10. On September 27, 2016, I sent Mr. Alcantar another email. In the email, I attached
28 a draft motion to compel seeking sanctions against Mr. Gutierrez. I told Mr. Alcantar that if I did
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DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV53443 1
not hear from him by 12:00 pm. the following day, Director Defendants would file the motion.
Attached as Exhibit E is a true and correct copy of my September 27, 2016 email to Mr.
Alcantar.
‘
.1;
11. Within two hours of receiving the draft motion, Mr. Alcantar finally returned my
phone calls indicating I had his “full attention.” He provided certain representations on behalf of
Mr. Gutierrez regarding the matters addressed in Defendants’ draft motion and previous meet and
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confer communications.
12. The next day, I sent Mr. Alcantar an email memorializing our telephone
conversation. In that email, I also requested that Mr. Gutierrez provide his availability for a
10 deposition during the weeks of October 24-28, October 31-November 4 and November 7-11.
11 Attached as Exhibit F is a true and correct copy of my September 28, 2016 email to Mr.
12 Gutierrez.
13 13. On October 5, 2016, Mr. Gutierrez produced some additional documents that
14 Director Defendants’ had identified as missing from his August 19, 2016 production but did not
15 respond with his availability for deposition.
16 14. On October 6, 2016, I sent Mr. Alcantar another email requesting his client’s
17 availability for deposition and offered November 4 and November 11 as two available dates,
18 notifying Mr. Alcantar that I planned to reach out to the Plaintiffs to see if they were available on
19 those dates. Attached as Exhibit G is a true and correct copy of my October 6, 2016 email to Mr.
20 Alcantar.
21 15. On October 6, 2016, I sent an email to Plaintiffs’ counsel, Mark Molumphy and
22 Alexandra Summer, requesting their availability for a deposition of Mr. Gutierrez on November 4
23 and November 11. I also copied Mr. Alcantar and co-counsel for Mr. Pascarella, Kasowitz,
24 Benson, Torres & Friedman LLP. Later that day, Ms. Summer responded that Plaintiffs were not
25 available on November 4, but that they were available on November 11. On October 7, Gunnar
26 Martz of Kasowitz, co-counsel for Mr. Pascarella, sent an email indicating that Kasowitz was not
27 available on November 11. Mr. Martz proposed November 7 as an alternative date. Mr. Gutierrez
28 never responded to this email. Hearing nothing, on October 12, Director Defendants notified Mr.
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ATTORNEYS AT LAW
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DECL. OF J. LOMBARD ISO DEFENDANTS’ Ex PARTE APPLICATION - CASE NO. CIV534431
Gutierrez, Plaintiffs and co-counsel for Mr. Pascarella that they were no longer available on
November 7. Plaintiffs then responded that they were available on November 7. On October 13,
Director Defendants sent an email to the group informing everyone that they had spoken to
Kasowitz and that Kasowitz could be available on November 11. However, Mr. Alcantar
responded to that email that Mr. Gutierrez was not available then. Director Defendants then
proposed four additional dates to the group for Mr. Gutierrez’s deposition: November 29,
December 1, December 6 and December 7. In response, Mr. Alcantar sent an email saying that
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Mr. Gutierrez would not agree to any deposition date “prior to reaching an agreement with the
parties on the scope of Mr. Gutierrez’s deposition questioning.” Mr. Alcantar then proposed
10 November 17, a date Director Defendants had never indicated they were available and on which
11 they were not available. Attached as Exhibit H is a true and correct copy of an email chain
12 between counsel for Plaintiffs, Mr. Gutierrez, Director Defendants, and co-counsel for Mr.
13 Pascarella between October 6, 2016 and October 14, 2016.
14 16. On October 17, 2016, Plaintiffs and Defendants submitted ajoint stipulation to the
15 Court to modify the tentative class certification schedule discussed at the August 19, 2016 Case
16 Management Conference as a mutually agreeable date for deposition was not available before
17 November 29. The parties’ stipulation provided the following schedule for class certification
18 briefing: Plaintiffs’ motion would be filed on November 10, 2016; Defendants’ opposition would
19 be filed by December 21, 2016, and Plaintiffs’ reply would be filed by January 10, 2017. The
20 hearing would be on January 31, 2017. In the stipulation, Plaintiffs and Defendants
21 acknowledged that they were available for Mr. Gutierrez deposition on November 29, December
22 1, December 6 and December 7. However, Mr. Gutierrez had refused to confirm his availability
23 on any of those dates. The Court signed the stipulation as an order of the Court on October 18,
24 2016. Attached as Exhibit I is a true and correct copy of the Court’s October 18, 2016
1
25 stipulation and order.
26 17. The following day, on October 19, 2016, Plaintiffs’ counsel, Alexandra Summer,
27 sent a letter to Director Defendants’ lead counsel, Jessica Valenzuela Santamaria, copying me and
28 other counsel of record, indicating that “Plaintiffs will not stipulate to another continuance of the
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DECL. or J. LOMBARD ISO DEFENDANTS’ Ex PARTE APPLICATION - CASE NO. CIV534431
class certification schedule” to accommodate the scheduling of Mr. Gutierrez’s deposition.
Attached as Exhibit J is a true and correct copy of Ms. Summer’s October 19, 2016 letter.
18. The same day, Director Defendants served Mr. Gutierrez with a deposition
subpoena for December 7, 2016.
19. Six days later, on October 24, 2016, Mr. Alcantar, emailed me indicating that Mr.
Gutierrez was not available for deposition on December 7, 2016. He also requested that the
deposition be moved from Palo Alto to San Francisco and that I provide a list of proposed topics
for Mr. Gutierrez’s deposition.
20. On October 26, 2016, I emailed Mr. Alcantar to let him know that we would hold
10 the deposition in San Francisco if Mr. Gutierrez made himself available on November 29,
11 December 1, or December 6. I also provided Mr. Alcantar with a proposed list of topics for Mr.
12 Gutierrez’s deposition. Attached as Exhibit K is a true and correct copy of my October 26, 2016
13 email to Mr. Alcantar.
14 21. I did not hear back from Mr. Alcantar until November 3, 2016, following two
15 additional emails from me on October 31 and November 3, respectively.
16 22. On November 3, 2016, Mr. Alcantar emailed me indicating that “Mr. Gutierrez
17 may be able to clear this calendar for a half-day deposition on December lst.” Attached as
18 Exhibit L is a true and correct copy of Mr. Alcantar’s November 3, 2016 email to me.
19 23. On November 4, 2016, Director Defendants served Mr. Gutierrez with a revised
20 subpoena for December 1, 2016 and notified him that a half—day deposition would be insufficient.
21 24. I did not hear from Mr. Alcantar until November 17, 2016 when he emailed me
22 and Plaintiffs’ counsel to say that Mr. Gutierrez “may now need to be in New York on business
23 on December lst.” He asked Director Defendants to provide their availability for a deposition on
24 November 29 or December 9. I responded to Mr. Alcantar’s email, copying Plaintiffs’ counsel
25 and co-counsel for Mr. Pascarella, and let him know that Director Defendants were not available
26 on those dates, but I would provide him with additional dates shortly. On November 19, Director
27 Defendants emailed the group and proposed December 6 and December 12 as two possible dates
28 for a deposition. Mr. Alcantar sent an email to the group claiming that Mr. Gutierrez was not
COOLEY LLP 6.
ATTORNEYS AT LAW
PA Lo A no
DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431
available on either of those dates, but he proposed December 15. I responded that Director
Defendants were not available on that date and I proposed December 16 as an alternative along
with twenty-two other dates between December 6, 2016 and January 20, 2017. Attached as
Exhibit M is a true and correct copy of an email chain between counsel for Plaintiffs, Mr.
Gutierrez, Director Defendants and co-counsel for Mr. Pascarella between October 16, 2016 and
November 23, 2016.
25. On November 22, 2016, Mr. Gutierrez served objections to Director Defendants’
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December 1, 2016 deposition subpoena. Mr. Gutierrez objected to the subpoena on the ground
that his counsel was unavailable for deposition on December 1, 2016. Attached as Exhibit N is a
10 true and correct copy of Mr. Gutierrez’s objections to the December 1, 2016 subpoena.
11 26. When Mr. Alcantar did not respond to my email on November 23 requesting Mr.
12 Gutierrez’s availability for deposition on December 16, my colleague Shawna Benfield emailed
13 Mr. Alcantar on November 28, 2016. Ms. Benfield told him that Director Defendants would be
14 forced to go forward with the December 1 deposition without a firm commitment that the
15 deposition could proceed on one of the dates that I had proposed on November 23. Finally, on
16 November 29, 2016, Mr. Alcantar sent an email stating that Mr. Gutierrez would be traveling and
17 unavailable on December 1. He said that Mr. Gutierrez would be available for a half-day
18 deposition on December 16, 2016. Attached as Exhibit 0 is a true and correct copy of an email
19 chain between counsel for Mr. Gutierrez, Plaintiffs, Director Defendants and co-counsel for Mr.
20 Pascarella between November 28, 2016 and November 29, 2016.
21 .
27 On November 30, 2016, Director Defendants served Mr. Gutierrez with a second
22 amended subpoena, noticing his deposition for December 16, 2016. In a cover letter
23 accompanying the subpoena, Ms. Benfield informed Mr. Alcantar that, absent a protective order,
24 Director Defendants expected to take a full deposition. Attached as Exhibit P is a true and correct
25 copy of Director Defendants’ December 16, 2016 subpoena and cover letter.
26 28. As required by Rules 3.1203 and 3.1204 of the California Rules of Court, on
27 December 1, 2016 at approximately 3:50 pm, I called Alexandra Summer, attorney for Plaintiffs
28 Kerrigan Capital LLC and Ryan J. Kerrigan, as Trustee for the Kerrigan Family Trust. I informed
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ATTORN EYS AT LAW
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DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431
Ms. Summer that Defendants would be seeking ex parte relief to-modify the class certification
schedule given the developments with Mr. Gutierra’s deposition and that we would file the
Application the following day. Msr Summer informed me that Plaintiffs would oppose the
Application.
I- declare under penalty of perjury under thelaws of the State of California that the
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ATTORNEYS AT LAW
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DECL. 01" J. LOMBARD ISO DBFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV53443]
EXHIBIT A
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN MATEO
KERRIGAN CAPITAL, LLC, al.,
et
Plaintiffs,
vs. Case No. CIV534431
vvvvvvvvvv
DAVID STROHM, et al.,
Defendants.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE STEVEN L. DYLINA, JUDGE
DEPARTMENT 7
——oOo--
AUGUST 19, 2016
--oOo—-
A P P E A R A N c E s:
For the Plaintiffs:
Cotchett, Pitre & McCarthy
840 Malcolm Road
Burlingame, California 94010
By: MARK c. MOLUMPHY, Esq.
ALEXANDRA P. SUMMER, Esq.
For the Individual Defendants:
Cooley, LLP
3175 Hanover Street
Palo Alto, California 94304
By: JESSICA VALENZUELA SANTAMARIA, Esq.
SHAWNA BENFIELD, Esq.
Reported By: Megan Zalmai, CSR 10925, CRR
A P P E A R A N C E S:
For the Individual Defendants:
Cooley
101 California Street, 5th Floor
San Francisco, California 94111
By: MARTIN s. SCHENKER, Esq.
For the Greylock Defendants, et al.:
Bergeson, LLP
2033 Gateway Place, Suite 300
San Jose, California 95110
By: CAROLINE MCINTYRE, Esq.
For Defendant Pescarella:
Kasowitz, Benson, Torres & Friedman
101 California Street, Suite 2300
San Francisco, California 94111
By: LYN R. AGRE, Esq.
Also present: Maureen Dear, Research Attorney
(Appeared telephonically)
——oOo——
P R O C E E D I N G S
REDWOOD CITY, CALIFORNIA - AUGUST 19, 2016
BEFORE THE HONORABLE STEVEN Ly DYLINA, JUDGE, DEPT. 7
-— Morning Session --
THE COURT: All right. This is the matter before
the Court of the complex matter that has been assigned to
this department for all purposes. And this is our action
No. CIV534431, Kerrigan Capital, et a1. versus
David Strohm, et al.
10 And I know you all at this point in time, but
11 please state your appearances for the record.
12 MR. MOLUMPHY: Good morning Your Honor.
13 Mark Molumphy for the plaintiffs.
14 THE COURT: Mr. Molumphy.
15 MS. SUMMER: Alexandra Summer for the plaintiffs.
16 Good morning, Your Honor.
17 THE COURT: Ms. Summer, good morning.
18 MR. SCHENKER: Martin Schenker from Cooley for
19 the individual defendants.
20 THE COURT: Good morning, Mr. Schenker.
21 MS. VALENZUELA SANTAMARIA: Good morning,
22 Your Honor. Jessica Valenzuela Santamaria from Cooley,
23 also on behalf of the individual defendants.
24 THE COURT: Good morning. Good to see you again.
25 MS. MCINTYRE: Good morning, Your Honor.
26 Caroline McIntyre for the venture fund defendants.
THE COURT: Thank you, Ms. McIntyre.
MS. AGRE: Good morning, Your Honor. Lyn Agre on
behalf of Carl Pescarella.
THE COURT: Thank you very much. So we have
everyone's appearance here this morning, and we have a case
management conference. But the first thing we're going to
do is delve into what both attorneys have told me is a
really simple issue for the Court to decide. But I have
more questions than answers at this point in time.
10 So, Ms. Valenzuela Santamaria, I'm going to ask
11 you some questions just so I understand where I go on this
12 because there's so many questions I don't have answers to.
13 Are you ready?
14 MS. VALENZUELA SANTAMARIA: I'm ready.
15 THE COURT: Okay. So in this ——
you know, I'm
16 much more organized than this. I forgot where I put my
17 papers. I'm sorry. I'm usually so OCD. I forgot, but I
18 now remember. So thank you. You made me remember. So I
19 appreciate that.
20 (Pause in Proceedings.)
21 THE COURT: So thank you for addressing the
22 questions that I'm about to ask you. And if I look at the
23 questions that plaintiffs have posed, I certainly know the
24 Rule of Court, and it's fairly simple and straightforward,
25 but its application is much more complicated here.
26 So what Ms. Summer has indicated to me is
there's no demonstrative, unique percipient knowledge of
the intended witness. I don't know what that is. So tell
me what percipient knowledge you think is guidance to the
Court at this time.
MS. VALENZUELA SANTAMARIA: Yes, Your Honor. SO
as our papers set forth, Mr. Torres is a common shareholder
of Oportun. At one point in time, he was a preferred
shareholder. And his ownership interest in the company was
impacted by many of the transactions that plaintiffs are
10 challenging.
11 THE COURT: Right.
12 MS. VALENZUELA SANTAMARIA: As a shareholder of
13 the company, he had communications with Mr. Gutierrez, who
14 Your Honor knows is the former CEO of the company. He also
15 participated in investor calls that the company hosted for
16 the purpose of providing information to the shareholders.
17 THE COURT: But he's not the only one positioned
18 like that?
19 MS. VALENZUELA SANTAMARIA: That's correct,
20 Your Honor.
21 THE COURT: So are you intending to take the
22 depositions of everyone that Mr. Gutierrez communicated
23 with?
24 MS. VALENZUELA SANTAMARIA: No, Your Honor, we
25 are not.
26 We are targeting the discovery to those
individuals who we believe have the most information that
is relevant.
THE COURT: Other than Mr. Torres, who is that?
MS. VALENZUELA SANTAMARIA: We have subpoenaed
another investor by the name of Jimmy Gutierrez, and we
have been unable to serve him.
So, at present, we are not ccntinuing those
efforts. Although, based on information that we learned
from Mr. Gutierrez and Mr. Torres, if we're allowed to
10 take discovery, it may lead to discovery from additional
11 class members. Although, at this time, we don't have any
12 present intentions of doing so.
13 THE COURT: But can't you identify who is on the
14 telephone calls with Mr. Gutierrez, the former president of
15 the company?
16 You know who those were by your own documents,
17 the company's documents; correct?
18 MS. VALENZUELA SANTAMARIA: To a large degree, we
19 do, Your Honor, based on information that has been provided
20 by Jonathan Coblentz, for example, who was deposed and is
21 the chief financial officer of Oportun, and Mr. Torres was
22 identified as an investor who participated in those phone
23 calls, which is one of the primary reasons why we are
24 interested in taking discovery from him.
25 THE COURT: Mr. Jimmy Gutierrez, the person you
26 identified that you haven't been able to serve, he is also
a common shareholder?
MS. VALENZUELA SANTAMARIA: That's correct.
THE COURT: So he's really in the position, the
same position, that Mr. Torres would be in?
MS. VALENZUELA SANTAMARIA: To a certain extent,
yes, although not entirely, given the differing levels of
ownership of the company and the extent of communications.
Jimmy Gutierrez is also a relation to
James Gutierrez, and, at a certain point in time, we
10 believe may have provided some legal advice to the
11 company.
12 So the two are not exactly similarly situated,
l3 and we've made the determination that Mr. Torres is the
14 common shareholder who we are most interested in seeking
15 discovery from.
16 THE COURT:‘ And the information that
17 Mr. Gutierrez, not Jimmy Gutierrez but James Gutierrez, the
18 former CEO of the company, sent, what relevance does that
19 have?
2O MS. VALENZUELA SANTAMARIA: James Gutierrez?
21 THE COURT: Yes.
22 MS. VALENZUELA SANTAMARIA: James was the CEO of
23 Oportun.
24 THE COURT: Yes.
25 MS. VALENZUELA SANTAMARIA: The founder of the
26 company, a member of the board during all but one of the
transactions that plaintiffs are challenging. So he was a
participant in the board discussions regarding whether to
approve those transactions.
Plaintiffs have alleged that the individual
members of the board had breached their fiduciary duties,
and Mr. Gutierrez, of course, has percipient knowledge of
the bases for the board's decision and the circumstances
underlying those financing transactions.
Your Honor should be aware that we haven't yet
10 completed our discovery of Mr. Gutierrez; so we don't know
11 what other information he has.
12 THE COURT: His deposition is scheduled, though;
l3 right?
14 MS. VALENZUELA SANTAMARIA: It is not yet
15 scheduled. We have been waiting on production of documents
16 from him.
17 THE COURT: Okay.
18 MS. VALENZUELA SANTAMARIA: We understand, based
19 on an e—mail we received from his counsel, that a
2O FedEx —— a FedEx is in transit and may have been delivered
21 at some point this morning with that production. But we
22 haven't had an opportunity to review it, and we don't know
23 yet what the extent of those documents are.
24 THE COURT: Can I ask you this,
25 Ms. Valenzuela Santamaria: Wouldn't the documents be in
26 the possession of the company, anything that Mr. Gutierrez
would have generated while CEO?
MS. VALENZUELA SANTAMARIA: While CEO, yes.
However —— to the extent that he used his company e—mail
address for those communications. However, we do know that
he used a personal e—mail address to communicate with
certain shareholders. We do have copies of some of those
communications.
THE COURT: He was never Secretary of State, was
he?
10 MS. VALENZUELA SANTAMARIA: No, he was not.
11 THE COURT: I digress.
12 Go ahead.
13 MS. VALENZUELA SANTAMARIA: So we do know that it
14 was his practice at certain points in time to communicate
15 with shareholders via his personal e—mail address, and
16 those, of course, would not be in the possession of the
17 company.
18 THE COURT: All right. Let me turn this
19 discussion over to either Mr. Molumphy or Ms. Summer.
20 Ms. Summer?
21 MS. SUMMER: Yes, Your Honor.
22 As the Court --
23 THE COURT: Go ahead. I'm sorry.
24 MS. SUMMER: As the Court recognized in its
25 opening remarks, the Rule of Court that has been cited by
26 both parties on this motion is designed to further a
long—standing principle in California law that absent class
member discovery is disfavored and is appropriate only in
the context of unique, percipient knowledge by an absent
class member.
THE COURT: But this Rule of Court was adopted
long after the decision you've cited.
MS. SUMMER: Yes, Your Honor. But it is
consistent with that case law, and it sets forth that, you
know, these are the factors and the sort of steps that the
10 subpoenaing party must go through to demonSCrate that such
11 discovery is appropriate in the face of the preexisting
12 case law, which disfavors such discovery.
13 And in the face of that premise, when called
14 upon to articulate what that unique percipient knowledge
15 is as to Mr. Torres in this case, defendants, both in
16 their briefing and here today, say that he was the
17 recipient of communications from the company regarding
18 contested financings, and it remains the case that that is
19 true of all absent class members. And they still have not
20 pointed to any ——
anything that is unique to Mr. Torres.
21 THE COURT: Well, why would they single
22 Mr. Torres out? I know he's a large shareholder with
23 405,000 shares of common stock.
24 Ms. Summer, what I'm really searching for here
25 is why Mr. Torres as opposed to any other? What
26 information does he have that is unique to him?
MS. SUMMER: I don't know, Your Honor. And I
think that's their burden to articulate, and they still
have not.
And what concerns me, Your Honor, is the
slippery slope that we have, and on two separate
occasions, defense counsel has represented to me that,
apart from Mr. Gutierrez and Mr. Torres, they don't intend
to take any other discovery before class certification is
decided, that goes to class certification. And now today
10 we hear that this discovery may lead to discovery from
11 additional class members.
12 Well, that is the very point, is that this
13 becomes a slippery slope if we allow this discovery as to
14 Mr. Torres. And, at a minimum, Your Honor, I think if the
15 Court is inclined to order any discovery as to Mr. Torres,
16 it should be very narrowly tailored in scope and time, and
17 discovery of absent class members should be limited to
18 Mr. Torres.
19 THE COURT: And in terms of the limit of
20 discovery as to scope and time, I think in your reply you
21 indicated the scope and time that you're requesting the
22 Court to grant, if the Court denies the protective order.
23 I'm a little bit concerned about my discussion with
24 Ms. Valenzuela Santamaria in terms of opening a broad door
25 in terms of other potential class members.
26 Clearly, the cases you've cited guide the Court
10
in terms of discovery of non—designated class members,
those who are not in a representative capacity. I get
that. I'm just concerned about defining the critical need
for Mr. Torres' testimony.
And let me ——
again, thank you, Ms. Summer.
Let me turn, again, to
Ms. Valenzuela Santamaria.
You indicated that you think this is critical
for the class certification motion to have Mr. Torres'
10 deposition?
11 MS. VALENZUELA SANTAMARIA: That's correct,
12 Your Honor.
13 THE COURT: I'm not connecting. So help me.
14 MS. VALENZUELA SANTAMARIA: Sure.
15 The relevancy here, Your Honor, goes to the
16 statute of limitations defens
Preview
COOLEY LLP MARTIN S. SCHENKER (SBN 109828) , 101 California Street, 5th Floor San Francisco, CA 94111 FKLED 3“” ”“50 COW" Telephone: (415) 693-2000 Facsimile: (415) 693-2222 DEC 0 5 2018‘ JESSICA VALENZUELA SANTAMARIA (SBN 220934) SHAWNA V. BENFIELD (SBN 290511) Clerk ofthe Superior Court JEFFREY D. LOMBARD (SBN 285371) By EEK 3175 Hanover Street Palo Alto, CA 94304 Telephone: (650) 843-5000 Facsimile: (650) 849-7400 Attorneys for Defendants DA VID S TROHM, TOM PA TTERSON, AIDA AL VAREZ, RA UL VAZQ UEZ, DA VE TOMLINSON, CARL PASCARELLA SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN MATEO KERRIGAN CAPITAL LLC and RYAN J. No. CIV534431 KERRIGAN, AS TRUSTEE FOR THE KERRIGAN FAMILY TRUST, individually DECLARATION OF JEFFREY D. LOMBARD and on behalf of all others similarly situated, IN SUPPORT OF DEFENDANTS’ EXPARTE APPLICATION To MODIFY CLAss Plaintiff, CERTIFICATION BRIEFING AND HEARING SCHEDULE V. Complaint Filed: June 26, 2015 DAVID TOM PATTERSON, STROI—IM, CARL PASCARELLA, AIDA ALVAREZ, . gecember RAUL VAZQUEZ, DAVE TOMLINSON, 11313“? 5322,16 GREYLOCK X11L.P.,GREYLOCK XII-A 2:1“; Hepartsmem Buglroom 83 L.P., GREYLOCK XII PRINCIPALS LLC, J u ge- 0” “we" L - Y ”‘3 MAPACHE INVESTMENTS L.P. FUND V, MADRONE PARTNERS, LP. and ) DOES 1-20, inclusive, Defendant. WNlEJIElO / ' CIV534431 DECL : Declaration 281639 'I llllllllllllllllllllllllllllllIll 28 COOLEY LLP ATTORNEYS AT LAw PALO ALTO DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431 1, Jeffrey D. Lombard, hereby declare as follows: 1. I am an attorney admitted to practice before the Courts of the State of California and Washington. I am an associate at the law firm Cooley LLP, counsel of record for Defendants David Strohm, Tom Patterson, Carl Pascarella, Aida Alvarez, Raul Vazquez, and Dave Tomlinson. I submit this declaration in support of Defendants’ Ex Parte Application to Modify Class Certification Briefing and Hearing Schedule (“Application”), filed concurrently herewith. \OOO\IO\Ul-§ The facts set forth below are based on my personal knowledge and, if called as a witness, I could and would competently testify thereto. 2. The relief sought in Defendants’ Application is necessary on an ex parte basis to 10 ensure that Defendants are able to depose non-party James Gutierrez and incorporate his 11 testimony into their brief in opposition to Plaintiffs’ motion for class certification. On August 19, 12 2016 the Court recognized that discovery from Mr. Gutierrez was “critical” to Defendants’ 13 opposition to class certification and made clear that Defendants’ opposition to Plaintiffs’ class 14 certification motion was “subject to the depositions and production of documents of Mr. 15 Gutierrez, James Gutierrez.” A true and correct copy of the Transcript from the August 19, 2016 16 Case Management Conference is attached hereto as Exhibit A. 17 3. Despite best efforts to coordinate the scheduling of Mr. Gutierrez’s deposition, we 18 have been unable to agree to a mutually convenient date for Mr. Gutierrez’s deposition that works 19 for Plaintiffs, Defendants, and Mr. Gutierrez and their respective counsel (as set forth in more 20 detail below). 21 4. On September 3, 2015, Defendants served James Gutierrez with a document 22 subpoena. Following numerous attempts to meet and confer with Mr. Gutierrez between October 23 2015 and April 2015 and his incomplete production of documents in response to the subpoena, 24 Director Defendants filed a motion to compel production of documents from Mr. Gutierrez on 25 April 15, 2016. On July 11, 2016, the Court granted in part and denied in part Director 26 Defendants’ motion to compel. On July 15, 2016, Mr. Gutierrez and Director Defendants 27 submitted a joint statement to the Court. The statement explained that they had agreed to the 28 scope of what Mr. Gutierrez would produce in response to the subpoena. COOLEY LLP 2. ATTORNEYS AT LAW PALO ALTO DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431 5. On August 19, 2016, Mr. Gutierrez produced documents to Director Defendants in response to Defendants’ September 3, 2015 subpoena and purportedly in compliance with the Court’s July 11, 2016 Order and the parties’ July 15, 2016joint statement. Like Mr. Gutierrez’s previous productions, however, the supplemental production was deficient. On August 26, 2016, I sent Mr. Gutierrez’s counsel, Raul Alcantar, a meet and confer letter identifying a number of substantive deficiencies with Mr. Gutierrez’s August 19, 2016 production. Attached as Exhibit B is a true and correct copy of my August 26, 2016 Meet and Confer letter to Mr. Alcantar. \DOO\]O\ 6. On September 2, 2016 Mr. Alcantar called me to discuss the August 26, 2016 letter regarding Mr. Gutierrez’s production. Although Mr. Alcantar and I generally discussed 10 some of the issues identified in my letter, he was not prepared to have a substantive discussion 11 about the defects in Mr. Gutierrez’s production. 12 7. I sent Mr. Alcantar an email memorializing our telephone conversation on 13 September 6, 2016. In that email, I asked Mr. Alcantar to address the substantive deficiencies 14 with Mr. Gutierrez’s production and to provide Mr. Gutierrez’s availability for deposition 15 between October 10-12, 2016 and October 17-19, 2016. Attached as Exhibit C is a true and 16 correct copy of my September 6, 2016 email to Mr. Alcantar. 17 8. Mr. Alcantar responded to my email later that same day indicating that Mr. 18 Gutierrez was considering one of Director Defendants’ requests regarding metadata. He 19 otherwise did not address the substantive deficiencies with his production or provide Mr. 20 Gutierrez’s availability for deposition. Attached as Exhibit D is a true and correct copy of Mr. 21 Alcantar’s September 6 email to me. 22 9. I tried to contact Mr. Alcantar a number of times after that. I emailed him on 23 September 13, September 15 and September 23. In my emails, I again asked about Mr. 24 Gutierrez’s availability for deposition on previously requested dates, as well as October 24, 27 25 and 28. I also called Mr. Alcantar on September 16 and September 23. Mr. Alcantar did not 26 answer my emails or return my phone calls. 27 10. On September 27, 2016, I sent Mr. Alcantar another email. In the email, I attached 28 a draft motion to compel seeking sanctions against Mr. Gutierrez. I told Mr. Alcantar that if I did COOLEY LLP 3. ATTORNEYS AT LAW PALO ALTO DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV53443 1 not hear from him by 12:00 pm. the following day, Director Defendants would file the motion. Attached as Exhibit E is a true and correct copy of my September 27, 2016 email to Mr. Alcantar. ‘ .1; 11. Within two hours of receiving the draft motion, Mr. Alcantar finally returned my phone calls indicating I had his “full attention.” He provided certain representations on behalf of Mr. Gutierrez regarding the matters addressed in Defendants’ draft motion and previous meet and \OOOQONUI confer communications. 12. The next day, I sent Mr. Alcantar an email memorializing our telephone conversation. In that email, I also requested that Mr. Gutierrez provide his availability for a 10 deposition during the weeks of October 24-28, October 31-November 4 and November 7-11. 11 Attached as Exhibit F is a true and correct copy of my September 28, 2016 email to Mr. 12 Gutierrez. 13 13. On October 5, 2016, Mr. Gutierrez produced some additional documents that 14 Director Defendants’ had identified as missing from his August 19, 2016 production but did not 15 respond with his availability for deposition. 16 14. On October 6, 2016, I sent Mr. Alcantar another email requesting his client’s 17 availability for deposition and offered November 4 and November 11 as two available dates, 18 notifying Mr. Alcantar that I planned to reach out to the Plaintiffs to see if they were available on 19 those dates. Attached as Exhibit G is a true and correct copy of my October 6, 2016 email to Mr. 20 Alcantar. 21 15. On October 6, 2016, I sent an email to Plaintiffs’ counsel, Mark Molumphy and 22 Alexandra Summer, requesting their availability for a deposition of Mr. Gutierrez on November 4 23 and November 11. I also copied Mr. Alcantar and co-counsel for Mr. Pascarella, Kasowitz, 24 Benson, Torres & Friedman LLP. Later that day, Ms. Summer responded that Plaintiffs were not 25 available on November 4, but that they were available on November 11. On October 7, Gunnar 26 Martz of Kasowitz, co-counsel for Mr. Pascarella, sent an email indicating that Kasowitz was not 27 available on November 11. Mr. Martz proposed November 7 as an alternative date. Mr. Gutierrez 28 never responded to this email. Hearing nothing, on October 12, Director Defendants notified Mr. COOLEY LLP 4. . ATTORNEYS AT LAW PALO ALTO DECL. OF J. LOMBARD ISO DEFENDANTS’ Ex PARTE APPLICATION - CASE NO. CIV534431 Gutierrez, Plaintiffs and co-counsel for Mr. Pascarella that they were no longer available on November 7. Plaintiffs then responded that they were available on November 7. On October 13, Director Defendants sent an email to the group informing everyone that they had spoken to Kasowitz and that Kasowitz could be available on November 11. However, Mr. Alcantar responded to that email that Mr. Gutierrez was not available then. Director Defendants then proposed four additional dates to the group for Mr. Gutierrez’s deposition: November 29, December 1, December 6 and December 7. In response, Mr. Alcantar sent an email saying that \OOO\)O\ Mr. Gutierrez would not agree to any deposition date “prior to reaching an agreement with the parties on the scope of Mr. Gutierrez’s deposition questioning.” Mr. Alcantar then proposed 10 November 17, a date Director Defendants had never indicated they were available and on which 11 they were not available. Attached as Exhibit H is a true and correct copy of an email chain 12 between counsel for Plaintiffs, Mr. Gutierrez, Director Defendants, and co-counsel for Mr. 13 Pascarella between October 6, 2016 and October 14, 2016. 14 16. On October 17, 2016, Plaintiffs and Defendants submitted ajoint stipulation to the 15 Court to modify the tentative class certification schedule discussed at the August 19, 2016 Case 16 Management Conference as a mutually agreeable date for deposition was not available before 17 November 29. The parties’ stipulation provided the following schedule for class certification 18 briefing: Plaintiffs’ motion would be filed on November 10, 2016; Defendants’ opposition would 19 be filed by December 21, 2016, and Plaintiffs’ reply would be filed by January 10, 2017. The 20 hearing would be on January 31, 2017. In the stipulation, Plaintiffs and Defendants 21 acknowledged that they were available for Mr. Gutierrez deposition on November 29, December 22 1, December 6 and December 7. However, Mr. Gutierrez had refused to confirm his availability 23 on any of those dates. The Court signed the stipulation as an order of the Court on October 18, 24 2016. Attached as Exhibit I is a true and correct copy of the Court’s October 18, 2016 1 25 stipulation and order. 26 17. The following day, on October 19, 2016, Plaintiffs’ counsel, Alexandra Summer, 27 sent a letter to Director Defendants’ lead counsel, Jessica Valenzuela Santamaria, copying me and 28 other counsel of record, indicating that “Plaintiffs will not stipulate to another continuance of the COOLEY LLP 5. ATTORNEYS AT LAW PALo ALTO DECL. or J. LOMBARD ISO DEFENDANTS’ Ex PARTE APPLICATION - CASE NO. CIV534431 class certification schedule” to accommodate the scheduling of Mr. Gutierrez’s deposition. Attached as Exhibit J is a true and correct copy of Ms. Summer’s October 19, 2016 letter. 18. The same day, Director Defendants served Mr. Gutierrez with a deposition subpoena for December 7, 2016. 19. Six days later, on October 24, 2016, Mr. Alcantar, emailed me indicating that Mr. Gutierrez was not available for deposition on December 7, 2016. He also requested that the deposition be moved from Palo Alto to San Francisco and that I provide a list of proposed topics for Mr. Gutierrez’s deposition. 20. On October 26, 2016, I emailed Mr. Alcantar to let him know that we would hold 10 the deposition in San Francisco if Mr. Gutierrez made himself available on November 29, 11 December 1, or December 6. I also provided Mr. Alcantar with a proposed list of topics for Mr. 12 Gutierrez’s deposition. Attached as Exhibit K is a true and correct copy of my October 26, 2016 13 email to Mr. Alcantar. 14 21. I did not hear back from Mr. Alcantar until November 3, 2016, following two 15 additional emails from me on October 31 and November 3, respectively. 16 22. On November 3, 2016, Mr. Alcantar emailed me indicating that “Mr. Gutierrez 17 may be able to clear this calendar for a half-day deposition on December lst.” Attached as 18 Exhibit L is a true and correct copy of Mr. Alcantar’s November 3, 2016 email to me. 19 23. On November 4, 2016, Director Defendants served Mr. Gutierrez with a revised 20 subpoena for December 1, 2016 and notified him that a half—day deposition would be insufficient. 21 24. I did not hear from Mr. Alcantar until November 17, 2016 when he emailed me 22 and Plaintiffs’ counsel to say that Mr. Gutierrez “may now need to be in New York on business 23 on December lst.” He asked Director Defendants to provide their availability for a deposition on 24 November 29 or December 9. I responded to Mr. Alcantar’s email, copying Plaintiffs’ counsel 25 and co-counsel for Mr. Pascarella, and let him know that Director Defendants were not available 26 on those dates, but I would provide him with additional dates shortly. On November 19, Director 27 Defendants emailed the group and proposed December 6 and December 12 as two possible dates 28 for a deposition. Mr. Alcantar sent an email to the group claiming that Mr. Gutierrez was not COOLEY LLP 6. ATTORNEYS AT LAW PA Lo A no DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431 available on either of those dates, but he proposed December 15. I responded that Director Defendants were not available on that date and I proposed December 16 as an alternative along with twenty-two other dates between December 6, 2016 and January 20, 2017. Attached as Exhibit M is a true and correct copy of an email chain between counsel for Plaintiffs, Mr. Gutierrez, Director Defendants and co-counsel for Mr. Pascarella between October 16, 2016 and November 23, 2016. 25. On November 22, 2016, Mr. Gutierrez served objections to Director Defendants’ \OOO\10\ December 1, 2016 deposition subpoena. Mr. Gutierrez objected to the subpoena on the ground that his counsel was unavailable for deposition on December 1, 2016. Attached as Exhibit N is a 10 true and correct copy of Mr. Gutierrez’s objections to the December 1, 2016 subpoena. 11 26. When Mr. Alcantar did not respond to my email on November 23 requesting Mr. 12 Gutierrez’s availability for deposition on December 16, my colleague Shawna Benfield emailed 13 Mr. Alcantar on November 28, 2016. Ms. Benfield told him that Director Defendants would be 14 forced to go forward with the December 1 deposition without a firm commitment that the 15 deposition could proceed on one of the dates that I had proposed on November 23. Finally, on 16 November 29, 2016, Mr. Alcantar sent an email stating that Mr. Gutierrez would be traveling and 17 unavailable on December 1. He said that Mr. Gutierrez would be available for a half-day 18 deposition on December 16, 2016. Attached as Exhibit 0 is a true and correct copy of an email 19 chain between counsel for Mr. Gutierrez, Plaintiffs, Director Defendants and co-counsel for Mr. 20 Pascarella between November 28, 2016 and November 29, 2016. 21 . 27 On November 30, 2016, Director Defendants served Mr. Gutierrez with a second 22 amended subpoena, noticing his deposition for December 16, 2016. In a cover letter 23 accompanying the subpoena, Ms. Benfield informed Mr. Alcantar that, absent a protective order, 24 Director Defendants expected to take a full deposition. Attached as Exhibit P is a true and correct 25 copy of Director Defendants’ December 16, 2016 subpoena and cover letter. 26 28. As required by Rules 3.1203 and 3.1204 of the California Rules of Court, on 27 December 1, 2016 at approximately 3:50 pm, I called Alexandra Summer, attorney for Plaintiffs 28 Kerrigan Capital LLC and Ryan J. Kerrigan, as Trustee for the Kerrigan Family Trust. I informed COOLEY LLP 7. ATTORN EYS AT LAW PALO ALTO DECL. OF J. LOMBARD ISO DEFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV534431 Ms. Summer that Defendants would be seeking ex parte relief to-modify the class certification schedule given the developments with Mr. Gutierra’s deposition and that we would file the Application the following day. Msr Summer informed me that Plaintiffs would oppose the Application. I- declare under penalty of perjury under thelaws of the State of California that the OO\]O\Ur-¥> foregomg lS true and correct. Executed this 2nd dayf ‘ {560611)}:7,‘201 ,, m Seat<¢le, Was7ngic1m”: 1/ Vj‘ fi'p __ if l‘ 2*" j f. {’{JJIffrey D. Lombard i; ,‘ll 5'. it Coom LLP 8. ATTORNEYS AT LAW PAm Arm DECL. 01" J. LOMBARD ISO DBFENDANTS’ EX PARTE APPLICATION - CASE NO. CIV53443] EXHIBIT A IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN MATEO KERRIGAN CAPITAL, LLC, al., et Plaintiffs, vs. Case No. CIV534431 vvvvvvvvvv DAVID STROHM, et al., Defendants. REPORTER'S TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE STEVEN L. DYLINA, JUDGE DEPARTMENT 7 ——oOo-- AUGUST 19, 2016 --oOo—- A P P E A R A N c E s: For the Plaintiffs: Cotchett, Pitre & McCarthy 840 Malcolm Road Burlingame, California 94010 By: MARK c. MOLUMPHY, Esq. ALEXANDRA P. SUMMER, Esq. For the Individual Defendants: Cooley, LLP 3175 Hanover Street Palo Alto, California 94304 By: JESSICA VALENZUELA SANTAMARIA, Esq. SHAWNA BENFIELD, Esq. Reported By: Megan Zalmai, CSR 10925, CRR A P P E A R A N C E S: For the Individual Defendants: Cooley 101 California Street, 5th Floor San Francisco, California 94111 By: MARTIN s. SCHENKER, Esq. For the Greylock Defendants, et al.: Bergeson, LLP 2033 Gateway Place, Suite 300 San Jose, California 95110 By: CAROLINE MCINTYRE, Esq. For Defendant Pescarella: Kasowitz, Benson, Torres & Friedman 101 California Street, Suite 2300 San Francisco, California 94111 By: LYN R. AGRE, Esq. Also present: Maureen Dear, Research Attorney (Appeared telephonically) ——oOo—— P R O C E E D I N G S REDWOOD CITY, CALIFORNIA - AUGUST 19, 2016 BEFORE THE HONORABLE STEVEN Ly DYLINA, JUDGE, DEPT. 7 -— Morning Session -- THE COURT: All right. This is the matter before the Court of the complex matter that has been assigned to this department for all purposes. And this is our action No. CIV534431, Kerrigan Capital, et a1. versus David Strohm, et al. 10 And I know you all at this point in time, but 11 please state your appearances for the record. 12 MR. MOLUMPHY: Good morning Your Honor. 13 Mark Molumphy for the plaintiffs. 14 THE COURT: Mr. Molumphy. 15 MS. SUMMER: Alexandra Summer for the plaintiffs. 16 Good morning, Your Honor. 17 THE COURT: Ms. Summer, good morning. 18 MR. SCHENKER: Martin Schenker from Cooley for 19 the individual defendants. 20 THE COURT: Good morning, Mr. Schenker. 21 MS. VALENZUELA SANTAMARIA: Good morning, 22 Your Honor. Jessica Valenzuela Santamaria from Cooley, 23 also on behalf of the individual defendants. 24 THE COURT: Good morning. Good to see you again. 25 MS. MCINTYRE: Good morning, Your Honor. 26 Caroline McIntyre for the venture fund defendants. THE COURT: Thank you, Ms. McIntyre. MS. AGRE: Good morning, Your Honor. Lyn Agre on behalf of Carl Pescarella. THE COURT: Thank you very much. So we have everyone's appearance here this morning, and we have a case management conference. But the first thing we're going to do is delve into what both attorneys have told me is a really simple issue for the Court to decide. But I have more questions than answers at this point in time. 10 So, Ms. Valenzuela Santamaria, I'm going to ask 11 you some questions just so I understand where I go on this 12 because there's so many questions I don't have answers to. 13 Are you ready? 14 MS. VALENZUELA SANTAMARIA: I'm ready. 15 THE COURT: Okay. So in this —— you know, I'm 16 much more organized than this. I forgot where I put my 17 papers. I'm sorry. I'm usually so OCD. I forgot, but I 18 now remember. So thank you. You made me remember. So I 19 appreciate that. 20 (Pause in Proceedings.) 21 THE COURT: So thank you for addressing the 22 questions that I'm about to ask you. And if I look at the 23 questions that plaintiffs have posed, I certainly know the 24 Rule of Court, and it's fairly simple and straightforward, 25 but its application is much more complicated here. 26 So what Ms. Summer has indicated to me is there's no demonstrative, unique percipient knowledge of the intended witness. I don't know what that is. So tell me what percipient knowledge you think is guidance to the Court at this time. MS. VALENZUELA SANTAMARIA: Yes, Your Honor. SO as our papers set forth, Mr. Torres is a common shareholder of Oportun. At one point in time, he was a preferred shareholder. And his ownership interest in the company was impacted by many of the transactions that plaintiffs are 10 challenging. 11 THE COURT: Right. 12 MS. VALENZUELA SANTAMARIA: As a shareholder of 13 the company, he had communications with Mr. Gutierrez, who 14 Your Honor knows is the former CEO of the company. He also 15 participated in investor calls that the company hosted for 16 the purpose of providing information to the shareholders. 17 THE COURT: But he's not the only one positioned 18 like that? 19 MS. VALENZUELA SANTAMARIA: That's correct, 20 Your Honor. 21 THE COURT: So are you intending to take the 22 depositions of everyone that Mr. Gutierrez communicated 23 with? 24 MS. VALENZUELA SANTAMARIA: No, Your Honor, we 25 are not. 26 We are targeting the discovery to those individuals who we believe have the most information that is relevant. THE COURT: Other than Mr. Torres, who is that? MS. VALENZUELA SANTAMARIA: We have subpoenaed another investor by the name of Jimmy Gutierrez, and we have been unable to serve him. So, at present, we are not ccntinuing those efforts. Although, based on information that we learned from Mr. Gutierrez and Mr. Torres, if we're allowed to 10 take discovery, it may lead to discovery from additional 11 class members. Although, at this time, we don't have any 12 present intentions of doing so. 13 THE COURT: But can't you identify who is on the 14 telephone calls with Mr. Gutierrez, the former president of 15 the company? 16 You know who those were by your own documents, 17 the company's documents; correct? 18 MS. VALENZUELA SANTAMARIA: To a large degree, we 19 do, Your Honor, based on information that has been provided 20 by Jonathan Coblentz, for example, who was deposed and is 21 the chief financial officer of Oportun, and Mr. Torres was 22 identified as an investor who participated in those phone 23 calls, which is one of the primary reasons why we are 24 interested in taking discovery from him. 25 THE COURT: Mr. Jimmy Gutierrez, the person you 26 identified that you haven't been able to serve, he is also a common shareholder? MS. VALENZUELA SANTAMARIA: That's correct. THE COURT: So he's really in the position, the same position, that Mr. Torres would be in? MS. VALENZUELA SANTAMARIA: To a certain extent, yes, although not entirely, given the differing levels of ownership of the company and the extent of communications. Jimmy Gutierrez is also a relation to James Gutierrez, and, at a certain point in time, we 10 believe may have provided some legal advice to the 11 company. 12 So the two are not exactly similarly situated, l3 and we've made the determination that Mr. Torres is the 14 common shareholder who we are most interested in seeking 15 discovery from. 16 THE COURT:‘ And the information that 17 Mr. Gutierrez, not Jimmy Gutierrez but James Gutierrez, the 18 former CEO of the company, sent, what relevance does that 19 have? 2O MS. VALENZUELA SANTAMARIA: James Gutierrez? 21 THE COURT: Yes. 22 MS. VALENZUELA SANTAMARIA: James was the CEO of 23 Oportun. 24 THE COURT: Yes. 25 MS. VALENZUELA SANTAMARIA: The founder of the 26 company, a member of the board during all but one of the transactions that plaintiffs are challenging. So he was a participant in the board discussions regarding whether to approve those transactions. Plaintiffs have alleged that the individual members of the board had breached their fiduciary duties, and Mr. Gutierrez, of course, has percipient knowledge of the bases for the board's decision and the circumstances underlying those financing transactions. Your Honor should be aware that we haven't yet 10 completed our discovery of Mr. Gutierrez; so we don't know 11 what other information he has. 12 THE COURT: His deposition is scheduled, though; l3 right? 14 MS. VALENZUELA SANTAMARIA: It is not yet 15 scheduled. We have been waiting on production of documents 16 from him. 17 THE COURT: Okay. 18 MS. VALENZUELA SANTAMARIA: We understand, based 19 on an e—mail we received from his counsel, that a 2O FedEx —— a FedEx is in transit and may have been delivered 21 at some point this morning with that production. But we 22 haven't had an opportunity to review it, and we don't know 23 yet what the extent of those documents are. 24 THE COURT: Can I ask you this, 25 Ms. Valenzuela Santamaria: Wouldn't the documents be in 26 the possession of the company, anything that Mr. Gutierrez would have generated while CEO? MS. VALENZUELA SANTAMARIA: While CEO, yes. However —— to the extent that he used his company e—mail address for those communications. However, we do know that he used a personal e—mail address to communicate with certain shareholders. We do have copies of some of those communications. THE COURT: He was never Secretary of State, was he? 10 MS. VALENZUELA SANTAMARIA: No, he was not. 11 THE COURT: I digress. 12 Go ahead. 13 MS. VALENZUELA SANTAMARIA: So we do know that it 14 was his practice at certain points in time to communicate 15 with shareholders via his personal e—mail address, and 16 those, of course, would not be in the possession of the 17 company. 18 THE COURT: All right. Let me turn this 19 discussion over to either Mr. Molumphy or Ms. Summer. 20 Ms. Summer? 21 MS. SUMMER: Yes, Your Honor. 22 As the Court -- 23 THE COURT: Go ahead. I'm sorry. 24 MS. SUMMER: As the Court recognized in its 25 opening remarks, the Rule of Court that has been cited by 26 both parties on this motion is designed to further a long—standing principle in California law that absent class member discovery is disfavored and is appropriate only in the context of unique, percipient knowledge by an absent class member. THE COURT: But this Rule of Court was adopted long after the decision you've cited. MS. SUMMER: Yes, Your Honor. But it is consistent with that case law, and it sets forth that, you know, these are the factors and the sort of steps that the 10 subpoenaing party must go through to demonSCrate that such 11 discovery is appropriate in the face of the preexisting 12 case law, which disfavors such discovery. 13 And in the face of that premise, when called 14 upon to articulate what that unique percipient knowledge 15 is as to Mr. Torres in this case, defendants, both in 16 their briefing and here today, say that he was the 17 recipient of communications from the company regarding 18 contested financings, and it remains the case that that is 19 true of all absent class members. And they still have not 20 pointed to any —— anything that is unique to Mr. Torres. 21 THE COURT: Well, why would they single 22 Mr. Torres out? I know he's a large shareholder with 23 405,000 shares of common stock. 24 Ms. Summer, what I'm really searching for here 25 is why Mr. Torres as opposed to any other? What 26 information does he have that is unique to him? MS. SUMMER: I don't know, Your Honor. And I think that's their burden to articulate, and they still have not. And what concerns me, Your Honor, is the slippery slope that we have, and on two separate occasions, defense counsel has represented to me that, apart from Mr. Gutierrez and Mr. Torres, they don't intend to take any other discovery before class certification is decided, that goes to class certification. And now today 10 we hear that this discovery may lead to discovery from 11 additional class members. 12 Well, that is the very point, is that this 13 becomes a slippery slope if we allow this discovery as to 14 Mr. Torres. And, at a minimum, Your Honor, I think if the 15 Court is inclined to order any discovery as to Mr. Torres, 16 it should be very narrowly tailored in scope and time, and 17 discovery of absent class members should be limited to 18 Mr. Torres. 19 THE COURT: And in terms of the limit of 20 discovery as to scope and time, I think in your reply you 21 indicated the scope and time that you're requesting the 22 Court to grant, if the Court denies the protective order. 23 I'm a little bit concerned about my discussion with 24 Ms. Valenzuela Santamaria in terms of opening a broad door 25 in terms of other potential class members. 26 Clearly, the cases you've cited guide the Court 10 in terms of discovery of non—designated class members, those who are not in a representative capacity. I get that. I'm just concerned about defining the critical need for Mr. Torres' testimony. And let me —— again, thank you, Ms. Summer. Let me turn, again, to Ms. Valenzuela Santamaria. You indicated that you think this is critical for the class certification motion to have Mr. Torres' 10 deposition? 11 MS. VALENZUELA SANTAMARIA: That's correct, 12 Your Honor. 13 THE COURT: I'm not connecting. So help me. 14 MS. VALENZUELA SANTAMARIA: Sure. 15 The relevancy here, Your Honor, goes to the 16 statute of limitations defens