Karen Limbu v. Ust Global, Inc et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.May 31, 2017

UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JANIE F. SCHULMAN (BAR NO. 130461) JSchulman@mofo.com BRIAN MARTINEZ (BAR NO. 274210) BrianMartinez@mofo.com NEIL S. TYLER (BAR NO. 301719) NTyler@mofo.com Morrison & Foerster LLP 707 Wilshire Boulevard, Suite 6000 Los Angeles, California 90017-3543 Telephone: 213.892.5200 Facsimile: 213.892.5454 Attorneys for Defendants UST GLOBAL INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA KAREN LIMBU, an individual, Plaintiff, v. UST GLOBAL INC., and DOES 1 through 50 inclusive, Defendant. Case No. 2:16-CV-08499 DMG (JPRx) DEFENDANT UST GLOBAL INC.’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Date: June 30, 2017 Time: 9:30 a.m. Judge: Honorable Dolly Gee Courtroom: 8C Trial Date: None Set Amended Complaint Filed: May 10, 2017 Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 1 of 20 Page ID #:571 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT i CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page TABLE OF AUTHORITIES .......................................................................................................... ii NOTICE OF MOTION AND MOTION ........................................................................................ 1 MEMORANDUM OF POINTS AND AUTHORITIES ................................................................ 3 I. INTRODUCTION AND PROCEDURAL HISTORY ....................................................... 3 II. ARGUMENT ...................................................................................................................... 4 A. LEGAL STANDARD ............................................................................................. 4 B. UST GLOBAL’S CONTRACTS WITH ISG, GARTNER, AND FORRESTER ALLEGED IN THE FAC ARE CONTRACTS UNDER WHICH THE PUBLIC COMPANIES PROVIDE SERVICES TO UST GLOBAL, NOT THE OTHER WAY AROUND. ................................................. 6 C. SOX DOES NOT EXTEND TO PURELY PRIVATE COMPANIES LIKE UST GLOBAL THAT MERELY ENTER INTO CONTRACTS TO RECEIVE GOODS OR SERVICES FROM A PUBLIC COMPANY ................. 7 D. PLAINTIFF’S CONCLUSORY ALLEGATIONS THAT ARE CONTRADICTED BY HER SPECIFIC FACTUAL ALLEGATIONS DO NOT SAVE HER CLAIM ...................................................................................... 9 III. ALTERNATIVE MOTION TO CERTIFY ISSUE FOR INTERLOCUTORY APPEAL ............................................................................................................................ 10 A. ARGUMENT ........................................................................................................ 11 1. The Court’s Order Involves a Controlling Question that Will Materially Advance the Ultimate Termination of the Litigation Because—Depending on the Answer to the Question—this Litigation Will Either Proceed or Terminate ............................................ 12 2. There is a Substantial Ground for Difference of Opinion Because this Case Raises an Issue of First Impression in the Ninth Circuit ........... 13 3. Should the Court Grant Certification, the Court Should Also Stay Proceedings ............................................................................................... 14 IV. CONCLUSION ................................................................................................................. 16 Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 2 of 20 Page ID #:572 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT ii CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases Anthony v. Nw. Mut. Life Ins. Co., 130 F. Supp. 3d 644 (N.D.N.Y. 2015) ..................................................................................9, 14 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ..........................................................................................................4, 5, 10 Asis Internet Servs. v. Active Response Grp., No. C07 6211 TEH, 2008 WL 4279695 (N.D. Cal. Sept. 16, 2008) ............................11, 14, 15 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ..............................................................................................................5, 10 Brickman v. Facebook, Inc., No. 16-CV-00751-TEH, 2017 WL 1508719 (N.D. Cal. Apr. 27, 2017) ..................................15 Coto Settlement v. Eisenberg, 593 F.3d 1031 (9th Cir. 2010) ...............................................................................................5, 10 Farrell v. Bank of Am., N.A., No. 3:16-CV-00492-L-WVG, 2017 WL 1325572 (S.D. Cal. Apr. 11, 2017), appeal filed (9th Cir. Apr. 21, 2017) ...................................................................................13, 14 Fleszar v. U.S. Dep’t of Labor, 598 F.3d 912 (7th Cir. 2010) .................................................................................................8, 14 Kansas v. Utilicorp United, Inc., 497 U.S. 199 (1990) ..................................................................................................................11 Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) ...............................................................................................5, 10 Lawson v. FMR LLC, 134 S. Ct. 1158 (2014) ........................................................................................................3, 4, 8 Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008), aff’d, 322 F. App’x 489 (9th Cir. 2009) .......................5 Smith v.Univ. of Wash. Law School, 233 F.3d 1188 (9th Cir. 2000) ...................................................................................................11 Somers v. Digital Realty Trust, Inc., No. C-14-5180 EMC, 2015 WL 4481987 (N.D. Cal. July 22, 2015) ...........................12, 13, 14 Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 3 of 20 Page ID #:573 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT iii CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Swint v. Chambers Cnty. Comm’n, 514 U.S. 35 (1995) ....................................................................................................................11 United States v. Crisp, 190 F.R.D. 546 (E.D. Cal. 1999) ................................................................................................5 Vereda, Ltda. v. United States, 46 Fed. Cl. 569 (Fed. Cl. 2000) ................................................................................................11 Statutes and Other Authorities 15 U.S.C. § 78u-6(a)(6) ..................................................................................................................11 18 U.S.C. § 1514A .................................................................................................................. passim 28 U.S.C. § 1292(b) ................................................................................................................ passim 17 C.F.R. § 240.21F-2(b)(1) ...........................................................................................................11 Federal Rules of Civil Procedure Rule 8...........................................................................................4 Federal Rules of Civil Procedure Rule 11.......................................................................................10 Federal Rules of Civil Procedure 12(b)(6) ........................................................................................1 16 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedures § 3931, p. 526-27 (2012) ............................................................11 Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 4 of 20 Page ID #:574 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 1 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO THE COURT, ALL PARTIES, AND ALL ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on June 30, 2017, at 9:30 a.m., or as soon thereafter as the matter may be heard, in Courtroom 8C of the above-entitled Court located at 350 West 1st Street, Los Angeles, CA 90012, the Honorable Dolly M. Gee presiding, defendant UST Global Inc (“UST Global”) will and hereby does move, pursuant to Federal Rules of Civil Procedure 12(b)(6), for the entry of an order dismissing the First Amended Complaint (“FAC”) against UST Global on the ground that the FAC fails to state a claim for which relief may be granted. In the alternative, should the Court deny UST Global’s motion to dismiss the FAC, UST Global respectfully requests, pursuant to 28 U.S.C. § 1292(b), that the Court certify the issues raised in this motion for interlocutory appeal to the Ninth Circuit. This Motion is based upon this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities filed in support of this Motion, the Declarations of Janie Schulman (“Schulman Decl.”) and Gautam Khanna (“Khanna Decl.”) filed concurrently herewith, the pleadings, records and files in this case, and upon such other written and oral argument as may be presented to the Court. This motion is made following the conference of counsel pursuant to Local Rule 7-3, which took place on May 30, 2017. Counsel for UST Global initiated the meet and confer process on May 18, but counsel for Plaintiff stated he was unavailable to confer until May 30, 2017 because he was in a trial that began on May 15, 2017. (See Exs. 1-2 to the Schulman Declaration.) Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 5 of 20 Page ID #:575 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 2 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: May 31, 2017 MORRISON & FOERSTER LLP /s/ Janie F. Schulman JANIE F. SCHULMAN BRIAN MARTINEZ NEIL S. TYLER Attorneys for Defendants UST GLOBAL, INC. Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 6 of 20 Page ID #:576 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 3 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND PROCEDURAL HISTORY Plaintiff Karen Limbu (“Limbu” or “Plaintiff”) filed her original Complaint in this case on November 15, 2016 alleging a single cause of action for violation of the whistleblower protection provisions of the Sarbanes-Oxley Act (“SOX” or “Section 1514A”), 18 U.S.C. § 1514A. (Complaint, ECF No. 1.) Defendant UST Global Inc (“UST Global”) moved to dismiss the Complaint on December 7, 2016. (ECF No. 9.) On April 20, 2017, the Court granted UST Global’s motion to dismiss with leave to amend. (Order, ECF No. 26 at 9.) Although the Court denied UST Global’s motion on the first ground raised by UST Global—that neither UST Global nor Plaintiff is covered by Section 1514A—the Court granted UST Global’s motion on the second ground raised in its motion—that Plaintiff had not adequately alleged that she engaged in protected activity under SOX. (Id. at 6, 8-9) On May 10, 2017, Plaintiff filed her First Amended Complaint (“FAC”) in which she adds allegations in an attempt to bolster the description of her alleged protected activity under Section 1514A. (FAC, ECF No. 27.) Although Plaintiff may have added enough facts to describe protected activity under Section 1514A, in doing so, Plaintiff also establishes that UST Global is not a covered entity under SOX.1 An action under Section 1514A, therefore, cannot lie against UST Global as a matter of law. While Congress intended Section 1514A to cover publicly-traded companies or companies that serve as contractors or subcontractors providing services to publicly-traded companies, Congress did not intend for the statute to apply broadly to private companies. As this Court explained in its ruling on UST Global’s original motion to dismiss, “In Lawson v. FMR LLC, the United States Supreme Court considered whether employees of contractors that serve public 1 UST Global does not concede that any of the added facts are in fact true, except for purposes of this motion. Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 7 of 20 Page ID #:577 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 4 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 companies—specifically, mutual fund advisors and managers that contract with publicly held mutual funds—are subject to section 1514A’s protections. 134 S. Ct. 1158 (2014).” (Order on Defendant’s Motion to Dismiss, ECF No. 26 at 5 (emphasis added).) This Court further explained, “[t]he Court held that SOX’s whistleblower anti-retaliation provision ‘shelters employees of private contractors and subcontractors, just as it shelters employees of the public company served by the contractors and subcontractors.’ Id. at 1161.” (Id.) In ruling on UST Global’s initial motion to dismiss, the Court relied upon Plaintiff’s conclusory allegation that UST Global, “‘contracted with’ and ‘serve[d] as a subcontractor for’ public companies” to conclude that UST Global was a covered entity under SOX. (Id. (alterations in original).) In the FAC, Plaintiff specifically admits that UST Global does not provide any services to the public companies named in the FAC, but rather merely receives services from those public companies. This relationship, as described in detail by Plaintiff and as corroborated by the contracts pled by Plaintiff, does not bring a private company like UST Global within the purview of SOX lest any private company that contracts for goods or services from a public company be subject to SOX. Because this case carries substantial implications for private companies, to the extent the Court is not inclined to grant UST Global’s motion to dismiss, UST Global respectfully requests that this Court certify the issues raised for immediate interlocutory appeal as explained more fully below. II. ARGUMENT A. LEGAL STANDARD A court should dismiss a complaint that fails to plead facts establishing a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[L]abels and conclusions” or “a formulaic recitation of the elements” do not suffice. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). To satisfy Rule 8 of the Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 8 of 20 Page ID #:578 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 5 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Federal Rules of Civil Procedure, the complaint must “nudge[] [the] claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570. The court need not accept as true conclusory allegations, legal characterizations, unreasonable inferences, or unwarranted fact deductions. See Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 968 (N.D. Cal. 2008), aff’d, 322 F. App’x 489 (9th Cir. 2009); see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”) (citing Twombly, 550 U.S. at 555 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we “are not bound to accept as true a legal conclusion couched as a factual allegation” (citation omitted)). In ruling on a motion to dismiss, a court may consider documents that the complaint refers to or relies on under the incorporation by reference doctrine. Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010) (“We have extended the doctrine of incorporation by reference to consider documents in situations where the complaint necessarily relies upon a document or the contents of the document are alleged in a complaint, the document's authenticity is not in question and there are no disputed issues as to the document's relevance.”); see also Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (“Our approach is permissible under the ‘incorporation by reference’ doctrine, which permits us to take into account documents ‘whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading.’”). Furthermore, allegations in the complaint that contradict documents incorporated by the complaint or judicially noticed facts are insufficient to support an otherwise defective complaint. See, e.g., United States v. Crisp, 190 F.R.D. 546, 549-50 (E.D. Cal. 1999). Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 9 of 20 Page ID #:579 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 6 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. UST GLOBAL’S CONTRACTS WITH ISG, GARTNER, AND FORRESTER ALLEGED IN THE FAC ARE CONTRACTS UNDER WHICH THE PUBLIC COMPANIES PROVIDE SERVICES TO UST GLOBAL, NOT THE OTHER WAY AROUND. Plaintiff alleges that “[a]t all relevant times, UST Global Inc entered into contracts with Information Services Group, Inc. (‘ISG’), Gartner, Inc. (‘Gartner’), and Forrester Research, Inc. (‘Forrester’) in which the [public] companies provided UST Global with research, assistance, access to inquiries, briefings, and analysts and advisors.” (FAC ¶ 11 (emphasis added).) These “contracts” referenced by Plaintiff contradict the assertion that UST Global is a “contractor” or “subcontractor” providing services to the public companies. Indeed, every “contract” referenced in the FAC specifically recites that UST Global was purchasing services from each of ISG, Gartner, and Forrester, not serving as a contractor to or for those public companies. (See Exs. A-C2 at 1 (“Client [UST Global] agrees to subscribe to the following Services [from Gartner] for the term and fees set forth below.”); Exs. D-E at 1 (“ISG Information Services Group Americas, Inc. (‘ISG’) is pleased to submit this Proposal for a Momentum subscription to UST Global Inc (‘Subscriber’). Momentum offers research tools and services to help service providers better target, win, and retain clients.”); Exs. F-H at 1 (“Client [UST Global] agrees to purchase the following products and services from Forrester Research, Inc.”).) Plaintiff’s new allegations further underscore that UST Global was not providing services as a contractor or subcontractor to ISG, Gartner, or Forrester. 3 In the FAC, Plaintiff adds detail explaining how she used the subscription services provided by the public company analysts and advisors to try to secure new clients 2 Exhibits A-H are attached to the Declaration of Gautam Khanna (“Khanna Decl.”) filed concurrently herewith. 3 Notably, Plaintiff alleges no facts regarding any acts or omissions relating to Forrester. All allegations pertain to Gartner or ISG. Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 10 of 20 Page ID #:580 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 7 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for UST Global. Although the language of the allegations contains a lot of jargon, the upshot of Plaintiff’s new allegations is that her job duties included efforts to get the paid services analysts and advisors to better help position UST Global in the market and to add UST Global to the shortlist of vendors that the analysts and advisors recommend to businesses looking for the types of IT services provided by UST Global. Specifically, Plaintiff alleges that she “align[ed] the right analysts/advisors to UST’s core business, establishing and building a relationship, creating channels of influence through briefings, meetings, workshops, demonstrations, etc. where she would present the company’s strategy, core technology strengths, innovation, differentiators and influence them as to why UST should be top of mind recall for them when shortlisting vendors for business deals over the competition.” (FAC ¶ 22.) Reading these new allegations together with the contracts pled by Plaintiff establishes that UST Global was not serving these public companies in any way. Rather, UST Global paid subscription fees to these analysts and advisors; in exchange, the analysts and advisors gave UST Global an audience at which UST Global could educate the analysts and advisors in a variety of ways (e.g., meetings, briefings, demonstrations) about the strengths of UST Global, with the ultimate goal being to secure favorable recommendations for UST Global services, whether through rankings like Gartner’s Magic Quadrant or directly to clients of the advisors. C. SOX DOES NOT EXTEND TO PURELY PRIVATE COMPANIES LIKE UST GLOBAL THAT MERELY ENTER INTO CONTRACTS TO RECEIVE GOODS OR SERVICES FROM A PUBLIC COMPANY Section 1514A prohibits “any officer, employee, contractor, subcontractor, or agent” of a publicly traded company from retaliating against an employee for engaging in protected activity, defined as providing information concerning designated fraudulent activity to a supervisor “or such other person working for the Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 11 of 20 Page ID #:581 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 8 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 employer who has the authority to investigate, discover, or terminate misconduct.” 18 U.S.C. § 1514A(a)(1)(C). In Lawson v. FMR LLC, the Supreme Court held that private companies that provided advisory and management services to Fidelity public mutual funds were “contractors” under Section 1514A. 134 S. Ct. 1158, 1171 (2014). In so holding, the Court acknowledged the legislative history and enactment of SOX and noted that, with respect to contractor coverage, “‘Congress plainly recognized that outside professionals—accountants, law firms, contractors, agents, and the like—were complicit in, if not integral to, the shareholder fraud and subsequent cover-up [Enron] officers . . . perpetrated.’” Id. at 1169 (alteration in original) (citation omitted). While the Supreme Court in Lawson answered yes to the question of whether a public company’s private contractors and subcontractors are covered under Section 1514A, the Court also acknowledged that the term “‘contractor’ does not extend to every fleeting business relationship.” Id. at 1173. For example, the Court acknowledged that “§ 1514A protects contractor employees only to the extent that their whistleblowing relates to ‘the contractor . . . fulfilling its role as a contractor for the public company, not the contractor in some other capacity.’” Id. (citation omitted.) Indeed, even Plaintiff admits that Lawson held that Section 1514A extends to “private contracts [sic] and subcontractors serving public companies.” (FAC ¶ 68 (emphasis added).) In reaching its decision, the Lawson Court cited the Seventh Circuit’s decision in Fleszar v. United States Dep’t of Labor, in which the Court held that Section 1514A does not extend to every private entity “who has any contract with an issuer of securities.” 598 F.3d 912, 915 (7th Cir. 2010) (emphasis omitted.) As an example, the Seventh Circuit stated that “[n]othing in § 1514A implies that, if [a privately held business] buys a box of rubber bands from Wal- Mart, a company with traded securities, the [business] becomes covered by Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 12 of 20 Page ID #:582 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 9 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 § 1514A.” Id.4 Allowing Plaintiff’s SOX claim to proceed here would, contravening the Court in Lawson, extend the statute to those private companies buying rubber bands from Wal-Mart. UST Global is a purely private company that has incidentally entered into contracts to purchase services from ISG, Forrester, and Gartner—the alleged public companies. (See Khanna Decl., Exs. A-H.) It is clear from those contracts that UST Global is not providing services to ISG, Forrester, and Gartner. (See id.) Indeed, Plaintiff admits this fact in the FAC. (FAC ¶ 11) (“At all relevant times, UST Global, Inc. entered into contracts with Information Services Group, Inc. (‘ISG’), Gartner, Inc. (‘Gartner’), and Forrester Research, Inc. (‘Forrester’) in which the companies provided UST Global with research, assistance, access to inquiries, briefings, and analysts and advisors.” (emphasis added).) D. PLAINTIFF’S CONCLUSORY ALLEGATIONS THAT ARE CONTRADICTED BY HER SPECIFIC FACTUAL ALLEGATIONS DO NOT SAVE HER CLAIM Notwithstanding the specific facts alleged and admission by Plaintiff, in an effort to contort a square peg into a round hole, Plaintiff tosses in the conclusory allegations that UST Global is a contractor generally for “publicly traded companies” and specifically for ISG (FAC ¶ 10) and is a “subcontractor for publicly traded companies including, but not limited to Information Services Group, Inc., Gartner, Inc., and Forrester Research, Inc.” (FAC ¶ 69.) Notably, nowhere in her 23-page FAC does plaintiff describe any activity or contract under which UST Global provided any services to ISG, Gartner, or Forrester. Plaintiff’s conclusory allegations that UST Global is a “subcontractor” or 4 Acknowledging the limiting principles from Lawson, the Northern District of New York in Anthony v. Nw. Mut. Life Ins. Co. noted that section 1514A requires that “the whistleblowing must relate to the contractor’s provision of services to the public company,” and that a “private company’s fraudulent practices do not become subject to § 1514A merely because that company incidentally has a contract with a public company.” Anthony v. Nw. Mut. Life Ins. Co., 130 F. Supp. 3d 644, 652 (N.D.N.Y. 2015) (emphasis added). Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 13 of 20 Page ID #:583 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 10 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “contractor”—both terms parroted from Section 1514A—must be disregarded as a matter of law in favor of her specific factual allegations. See Iqbal, 556 U.S. at 681 (“These bare assertions, much like the pleading of conspiracy in Twombly, amount to nothing more than a ‘formulaic recitation of the elements’ of a constitutional discrimination claim . . . . It is the conclusory nature of respondent's allegations, rather than their extravagantly fanciful nature, that disentitles them to the presumption of truth.”) In addition, the Court may consider the actual contracts referenced in the FAC (see ¶ 69) to assess whether they contradict Plaintiff’s conclusory “subcontractor” and “contractor” allegations (they do). Coto Settlement, 593 F.3d at 1038; see Knievel, 393 F.3d at 1076. While the contracts (see Khanna Decl., Exs. A-H) between UST Global and ISG, Forrester, and Gartner are consistent with Plaintiff’s specific allegation in paragraph 11 of the FAC that UST Global merely purchases services from these companies, the contracts contradict Plaintiff’s conclusory allegations in paragraphs 10 and 69 of the FAC that UST Global is a “contractor” or “subcontractor” of the very same companies. The specific allegations control, particularly given that they are supported by the contracts pled in the FAC. In sum, this Court should dismiss Plaintiff’s FAC because Congress did not intend Section 1514A to extend to a private company like UST Global under the circumstances of this case. The dismissal should be with prejudice because given the specific allegations pled in the FAC, there is no way Plaintiff could amend to state a claim within the bounds of Rule 11 of the Federal Rules of Civil Procedure. III. ALTERNATIVE MOTION TO CERTIFY ISSUE FOR INTERLOCUTORY APPEAL If the Court is not inclined to grant UST Global’s motion on Plaintiff’s newly-filed allegations, UST Global respectfully requests that the Court certify its order along with the question presented below for immediate interlocutory appeal. 28 U.S.C. §1292(b) authorizes the Court to certify for immediate appeal Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 14 of 20 Page ID #:584 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 11 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 interlocutory orders deemed “pivotal and debatable.” Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 46 (1995). Pursuant to 28 U.S.C. § 1292(b), an interlocutory order may be certified for appellate review when the court finds that the order (1) “involves a controlling question of law;” (2) as to which there is “substantial ground for difference of opinion;” and (3) an immediate appeal from the order may “materially advance the ultimate termination of the litigation.” Id. In applying this three-prong test, the Court may consider factors including the likelihood of reversal, judicial proceedings avoided, and the burdens on the parties to weigh the costs and benefits of certification. Vereda, Ltda. v. United States, 46 Fed. Cl. 569, 570 (Fed. Cl. 2000) (citing 16 Wright, Miller & Cooper, Federal Practice and Procedure § 3930, at 415 (2d ed. 1996)). Certification of a question for interlocutory appeal is appropriate in situations that, as here, involve motions to dismiss. See Kansas v. Utilicorp United, Inc., 497 U.S. 199, 200 (1990); Smith v.Univ. of Wash. Law School, 233 F.3d 1188, 1192 (9th Cir. 2000); Asis Internet Servs. v. Active Response Grp., No. C076211 TEH, 2008 WL 4279695, at *6 (N.D. Cal. Sept. 16, 2008) (granting § 1292 motion for certification to appeal motion to dismiss denial and staying proceedings pending Ninth Circuit decision on appeal). In fact, “[a]ppeals have frequently been allowed on the question of whether the plaintiff has stated a claim if the problem is a difficult one of substantive law, rather than a mere matter of properly pleading a claim sought to be brought within a recognized and generally sufficient legal theory.” 16 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedures § 3931, p. 526-27 (2012). Compare 15 U.S.C. § 78u-6(a)(6) with 17 C.F.R. § 240.21F-2(b)(1). A. ARGUMENT UST Global seeks certification of the following question: 1. Does a private company remain excluded from coverage under the whistleblower protection provisions of the Sarbanes-Oxley Act, 18 U.S.C. Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 15 of 20 Page ID #:585 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 12 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 § 1514A, when the private company merely enters into a contract with a public company for the public company to provide goods or services to the private company, as opposed to the private company providing goods or services to the public company. 1. The Court’s Order Involves a Controlling Question that Will Materially Advance the Ultimate Termination of the Litigation Because—Depending on the Answer to the Question—this Litigation Will Either Proceed or Terminate Whether UST Global is a covered employer under SOX is a legal question, the answer to which will determine whether this case will move forward— addressing both the first and third factors of the Section 1292(b) inquiry. If a private employer is only covered under SOX when it contracts to provide services to a public company and the alleged whistleblowing relates to the private employer in its capacity as a provider of those services to the public company, then this case must be dismissed. Accordingly, this case involves a controlling question of law. A recent decision from the Northern District of California involving the related Dodd-Frank Act (“DFA”) counsels in favor of granting UST Global’s motion to certify. See Somers v. Digital Realty Trust, Inc., No. C-14-5180 EMC, 2015 WL 4481987, at *2 (N.D. Cal. July 22, 2015). In that case, the question presented bore similarities to the question presented here. Specifically, the parties and the court in Somers grappled with the question of whether “the DFA whistleblower protection provisions apply to Somers” because “Somers did not make a report to the SEC.” Id. If the “Court’s legal determination that such a report is not required to state a whistleblower retaliation claim under the DFA is reversed on appeal, Somers’s Dodd–Frank claim will necessarily be dismissed with prejudice.” Id. Accordingly, the court in Somers concluded that “both the first and third 1292(b) factors are satisfied – an interlocutory appeal here would be on a ‘controlling question of law’ that will ‘materially advance the ultimate termination Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 16 of 20 Page ID #:586 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 13 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the litigation.’” Id. (citing Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011) (holding that an interlocutory appeal is appropriate where a reversal will remove an entire claim from the litigation); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982) (suggesting that a question of law is “controlling” where, as here, the order under review could constitute “reversible error on final appeal”).) Here, as in Somers, if the Ninth Circuit agrees that UST Global is not a covered employer under SOX, the SOX claim will necessarily be dismissed with prejudice. In addition, the dismissal of the SOX claim—the only claim in the case—would lead to the termination of the entire litigation, which of course would “materially advance the ultimate termination of the litigation.” See Farrell v. Bank of Am., N.A., No. 3:16-CV-00492-L-WVG, 2017 WL 1325572, at *1-2 (S.D. Cal. Apr. 11, 2017) (“If the Extended Charges are interest, Plaintiff's claims survive. On the other hand, if the Extended Charges are instead 12 C.F.R. § 7.4002 authorized deposit account service charges, Plaintiff's claims must be dismissed with prejudice. Thus, there can be no question that this is a controlling question of law and that its resolution may materially advance the termination of the litigation.”), appeal filed (9th Cir. Apr. 21, 2017). 2. There is a Substantial Ground for Difference of Opinion Because this Case Raises an Issue of First Impression in the Ninth Circuit The second 1292(b) factor (substantial ground for difference of opinion) is also easily met here. “As the Ninth Circuit has held, ‛[c]ourts traditionally will find that a substantial ground for difference of opinion exists where “the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point....”’” Somers v. Digital Realty Trust, Inc., 2015 WL 4481987, at *2. This case implicates both grounds. First, the question presented here is one of first Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 17 of 20 Page ID #:587 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 14 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 impression in the Ninth Circuit. In other words, there is no binding authority on this question, thereby making interlocutory appeal all the more appropriate. See Farrell, 2017 WL 1325572, at *1–2 (finding reasonable grounds for a difference of opinion, in part, because there was “no binding authority that addresses [the] specific issue”). Second, if the Court denies UST Global’s motion to dismiss, there will be a difference of opinion among courts of different circuits. This Court’s decision will be in disagreement with the Seventh Circuit Court of Appeals and the Northern District of New York. See Fleszar, 598 F.3d at 915 (“We don't share Fleszar’s belief that the phrase ‘contractor, subcontractor, or agent’ means anyone who has any contract with an issuer of securities. Nothing in § 1514A implies that, if the AMA buys a box of rubber bands from Wal–Mart, a company with traded securities, the AMA becomes covered by § 1514A. In context, ‘contractor, subcontractor, or agent’ sounds like a reference to entities that participate in the issuer's activities.”); Anthony v. Nw. Mut. Life Ins. Co., 130 F. Supp. 3d 644, 652 (N.D.N.Y. 2015) (dismissing complaint because Section 1514A requires that “the whistleblowing must relate to the contractor’s provision of services to the public company,” and that a “private company's fraudulent practices do not become subject to § 1514A merely because that company incidentally has a contract with a public company”). This case is analogous to Somers and the conclusion it reached that “[p]ut simply, there is a serious split in authority on the pure legal question Defendants seek leave to appeal, and the question is one of first impression in the Ninth Circuit” making interlocutory appeal appropriate. Somers, 2015 WL 4481987, at *2. 3. Should the Court Grant Certification, the Court Should Also Stay Proceedings “When considering a stay pending appeal pursuant to § 1292(b), the Court has broad discretion to decide whether a stay is appropriate to ‘promote economy of time and effort for itself, for counsel, and for litigants.’” Asis Internet Servs., 2008 Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 18 of 20 Page ID #:588 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 15 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WL 4279695, at *3–4. “When considering whether to stay proceedings, courts must consider (1) the possible damage which may result from the granting of a stay; (2) the hardship or inequity which a party may suffer in being required to go forward; and (3) the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.” Brickman v. Facebook, Inc., No. 16-CV-00751-TEH, 2017 WL 1508719, at *4 (N.D. Cal. Apr. 27, 2017). Here, Plaintiff will not be harmed or prejudiced as she merely seeks monetary relief. See (ECF No. 27 at 22-23) and Asis Internet Servs., 2008 WL 4279695, at *5 (“A mere delay in monetary recovery is not a sufficient basis to deny a stay.”) “Second, if the Court were to deny the stay, both parties would run the risk of incurring unnecessary litigation fees and expenses,” another factor weighing in favor of a stay. Brickman, 2017 WL 1508719, at *4. Third, a stay should be granted because the Ninth Circuit’s resolution of the precise scope of contractor coverage under SOX could eliminate this case entirely—by definition “promot[ing] judicial economy by simplifying the issues in this case.” Id. Finally, there are two separate reasons why a stay should be granted in this case: 1) UST Global has a high likelihood of success on its appeal given that its position is in accord with a district court in another district as well as the Seventh Circuit; and 2) private companies across the vast Ninth Circuit would benefit from clarity on the precise scope of SOX coverage to private companies and whether they do or do not need to take appropriate actions to ensure compliance with that law. In sum, if this Court denies UST Global’s motion to dismiss, the Court should certify the issues raised by the motion to dismiss for immediate interlocutory appeal so that the parties and this Court can obtain the benefit of appellate guidance while in the meantime avoiding expending resources that could be wasted should it ultimately be determined that UST Global is correct that this case should be dismissed with prejudice. Furthermore, this case carries enormous implications for Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 19 of 20 Page ID #:589 UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 16 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 private companies that merely purchase goods and services from public companies and the resolution of the issues presented by UST Global could affect a large number of private companies beyond UST Global. IV. CONCLUSION For the foregoing reasons, the Court should dismiss Plaintiff’s FAC in its entirety with prejudice. In the alternative, should the Court deny UST Global’s motion to dismiss the FAC, the Court should certify the issues for interlocutory appeal to the Ninth Circuit. Dated: May 31, 2017 MORRISON & FOERSTER LLP /s/ Janie F. Schulman JANIE F. SCHULMAN BRIAN MARTINEZ NEIL S. TYLER Attorneys for Defendants UST GLOBAL INC Case 2:16-cv-08499-DMG-JPR Document 32 Filed 05/31/17 Page 20 of 20 Page ID #:590 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SCHULMAN DECL. ISO UST GLOBAL’S MOTION TO DISMISS AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING MOTION la-1350733 JANIE F. SCHULMAN (BAR NO. 130461) JSchulman@mofo.com BRIAN MARTINEZ (BAR NO. 274210) BrianMartinez@mofo.com NEIL S. TYLER (BAR NO. 301719) NTyler@mofo.com Morrison & Foerster LLP 707 Wilshire Boulevard, Suite 6000 Los Angeles, California 90017-3543 Telephone: 213.892.5200 Facsimile: 213.892.5454 Attorneys for Defendant UST GLOBAL, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA KAREN LIMBU, an individual, Plaintiff, v. UST GLOBAL, INC., and DOES 1 through 50 inclusive, Defendant. Case No. 2:16-CV-08499 DMG (JPRx) DECLARATION OF JANIE SCHULMAN IN SUPPORT OF DEFENDANT UST GLOBAL, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: June 30, 2017 Time: 9:30 a.m. Judge: Honorable Dolly Gee Courtroom: 8C Trial Date: None Set Amended Complaint Filed: May 10, 2017 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 1 of 10 Page ID #:591 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SCHULMAN DECL. ISO UST GLOBAL’S MOTION TO DISMISS AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING MOTION 1 la-1350733 I, JANIE SCHULMAN, hereby state and declare: 1. I am an attorney admitted to practice before this Court, a member in good standing of the bar of the state of California, and an associate in the law firm of Morrison & Foerster LLP, counsel of record for Defendant UST Global, Inc. I have personal knowledge of the matters and facts set forth herein and, if called and sworn as a witness, I would and could competently testify thereto. 2. Attached hereto as Exhibit 1 is a true and correct copy of a May 18, 2017 email from counsel for UST Global to counsel for Plaintiff. 3. Attached hereto as Exhibit 2 is a true and correct copy of email correspondence between counsel for UST Global and counsel for Plaintiff regarding meet and conferring. I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on May 31, 2017, at Los Angeles, California. /s/ Janie Schulman Janie Schulman Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 2 of 10 Page ID #:592 EXHIBIT 1 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 3 of 10 Page ID #:593 1 From: Martinez, Brian Sent: Thursday, May 18, 2017 1:32 PM To: 'Steven Rubin'; Paymon Mondegari Cc: Schulman, Janie F.; Tyler, Neil S. Subject: Karen Limbu V. UST Global, Inc. (C.D. Cal.)--Meet and Confer Hi Steve/Paymon, Can you please let me know when you are available to meet and confer on Monday or Tuesday regarding a motion we intend to file in response to plaintiff’s newly‐filed complaint? Best, Brian Exhibit 1 Page 2 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 4 of 10 Page ID #:594 EXHIBIT 2 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 5 of 10 Page ID #:595 1 From: Paymon Mondegari Sent: Thursday, May 25, 2017 10:50 AM To: Martinez, Brian; Tyler, Neil S. Cc: Schulman, Janie F.; Evelyne Kim; Claire Mayer; Steven Rubin Subject: RE: Limbu - External Email - Hi Brian, You can reach us at (310) 385‐0777. We can also call you if you prefer. Best, Paymon Mondegari, Esq. The Rubin Law Corporation A Professional Law Corporation 433 N. Camden Dr., Suite 725 Beverly Hills, CA 90210 Phone: (310) 385-0777 / Fax: (310) 288-0207 Email: steve@stevenrubinlaw.com www.stevenrubinlaw.com CONFIDENTIAL: Nothing herein should be understood as creating an attorney-client relationship. Any and all communications are solely an effort to determine whether we are interested in representing you. Unless and until a formal attorney-client contract/retainer agreement is signed by both the client and the firm, we will not take any action to protect your rights. Deadlines exist for your claims and you should act immediately. From: Martinez, Brian [mailto:BrianMartinez@mofo.com] Sent: Wednesday, May 24, 2017 11:48 PM To: Paymon Mondegari ; Tyler, Neil S. Cc: Schulman, Janie F. ; Evelyne Kim ; Claire Mayer ; Steven Rubin Subject: RE: Limbu Hi Paymon, We will talk with you after 5:30 pm on Tuesday. Please circulate a conference line or let us know where to reach you. Thanks, Brian From: Paymon Mondegari [mailto:paymon@stevenrubinlaw.com] Sent: Wednesday, May 24, 2017 10:31 AM To: Tyler, Neil S.; Martinez, Brian Cc: Schulman, Janie F.; Evelyne Kim; Claire Mayer; Steven Rubin Subject: RE: Limbu Exhibit 2 Page 3 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 6 of 10 Page ID #:596 2 - External Email - Hi Neil, We have been in trial since last Monday (5/15/17). We are still in trial and therefore, the soonest we can meet and confer would be next Tuesday, May 30, 2017. We would be available after 5:30pm on Tuesday to speak via phone. Please let me know if that time works. Additionally, we would not object to your meet and confer efforts based on the timing of the conference. Best, Paymon Mondegari, Esq. The Rubin Law Corporation A Professional Law Corporation 433 N. Camden Dr., Suite 725 Beverly Hills, CA 90210 Phone: (310) 385-0777 / Fax: (310) 288-0207 Email: steve@stevenrubinlaw.com www.stevenrubinlaw.com CONFIDENTIAL: Nothing herein should be understood as creating an attorney-client relationship. Any and all communications are solely an effort to determine whether we are interested in representing you. Unless and until a formal attorney-client contract/retainer agreement is signed by both the client and the firm, we will not take any action to protect your rights. Deadlines exist for your claims and you should act immediately. From: Tyler, Neil S. [mailto:NTyler@mofo.com] Sent: Tuesday, May 23, 2017 1:08 PM To: Steven Rubin ; Martinez, Brian Cc: Paymon Mondegari ; Schulman, Janie F. ; Evelyne Kim ; Claire Mayer Subject: RE: Limbu Steve, We understand that you are in trial, but is Paymon or someone else on your team available to discuss our intended motion sometime today or tomorrow? We have been attempting to meet and confer since Thursday, and sent you a letter in email format Monday morning (see email chain below). If neither you nor Paymon or anybody else on your team is available to meet and confer sometime today or tomorrow, please let us know the soonest that you are available and your position in response to our Monday morning email by the end of the day tomorrow. Best, Neil From: Steven Rubin [mailto:steve@stevenrubinlaw.com] Sent: Tuesday, May 23, 2017 12:48 PM To: Martinez, Brian Cc: Paymon Mondegari; Schulman, Janie F.; Tyler, Neil S.; Evelyne Kim; Claire Mayer Subject: Re: Limbu Exhibit 2 Page 4 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 7 of 10 Page ID #:597 3 - External Email - Brian I am literally in trial in dept 36. I do not know how long the jury will deliberate. I cannot break away to meet and confer until the case goes to the jury. And even then I may be constrained. We asked that you send a letter? Not possible? Can you wait for Monday? Sent from my iPhone On May 22, 2017, at 9:32 PM, Martinez, Brian wrote: Hi Paymon, Under the Local Rules we are required to discuss the substance of the contemplated motion and any potential resolution at least 7 days prior to the filing of our motion. We would prefer to meet and confer from someone on your team by Wednesday, but if you are saying nobody is available and insist on Thursday we can schedule it for then. Assuming we agree to schedule the conference for Thursday, we presume that you will not object to our meet and confer efforts based on the timing of the conference. However, please let us know if that is not the case. Best, Brian From: Paymon Mondegari [mailto:paymon@stevenrubinlaw.com] Sent: Monday, May 22, 2017 1:32 PM To: Martinez, Brian Cc: Schulman, Janie F.; Tyler, Neil S.; Evelyne Kim; Claire Mayer; Steven Rubin Subject: RE: Limbu - External Email - Hi Brian, We are still in trial. Can we schedule a call for Thursday? Best, Paymon Mondegari, Esq. The Rubin Law Corporation A Professional Law Corporation 433 N. Camden Dr., Suite 725 Beverly Hills, CA 90210 Phone: (310) 385-0777 / Fax: (310) 288-0207 Email: steve@stevenrubinlaw.com www.stevenrubinlaw.com CONFIDENTIAL: Nothing herein should be understood as creating an attorney-client Exhibit 2 Page 5 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 8 of 10 Page ID #:598 4 relationship. Any and all communications are solely an effort to determine whether we are interested in representing you. Unless and until a formal attorney-client contract/retainer agreement is signed by both the client and the firm, we will not take any action to protect your rights. Deadlines exist for your claims and you should act immediately. -----Original Message----- From: Martinez, Brian [mailto:BrianMartinez@mofo.com] Sent: Monday, May 22, 2017 9:43 AM To: Steven Rubin Cc: Paymon Mondegari ; Schulman, Janie F. ; Tyler, Neil S. Subject: RE: Limbu Steve, We plan on filing a motion to dismiss and plan to attach UST Global's contracts with ISG, Forrester, and Gartner. We believe those contracts in combination with the allegations in the newly-filed complaint clearly show that there is a lack of subject matter jurisdiction and that UST Global is not subject to SOX. In the alternative, given some of the Court's statements in the prior order, we intend to ask the Court to certify the issues raised for interlocutory appeal to the Ninth Circuits should our motion to dismiss be denied. Please let us know your position and I can be available to discuss on Wednesday should that work better for you. I can make myself available whenever you have a moment to discuss so please let me know when you can be available in the next few days. Best, Brian -----Original Message----- From: Steven Rubin [mailto:steve@stevenrubinlaw.com] Sent: Thursday, May 18, 2017 8:24 PM To: Martinez, Brian Cc: Paymon Mondegari Subject: Limbu - External Email - In trial. Can you send letter? Not out til Wed or Thurs. Sent from my iPhone ===================================================================== ======= This message may be confidential and privileged. Use or disclosure by anyone other than an intended addressee is prohibited. If you received this message in error, please delete it and advise the sender by reply email. Exhibit 2 Page 6 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 9 of 10 Page ID #:599 5 ===================================================================== ======= This message may be confidential and privileged. Use or disclosure by anyone other than an intended addressee is prohibited. If you received this message in error, please delete it and advise the sender by reply email. ============================================================================ This message may be confidential and privileged. Use or disclosure by anyone other than an intended addressee is prohibited. If you received this message in error, please delete it and advise the sender by reply email. ============================================================================ This message may be confidential and privileged. Use or disclosure by anyone other than an intended addressee is prohibited. If you received this message in error, please delete it and advise the sender by reply email. Exhibit 2 Page 7 Case 2:16-cv-08499-DMG-JPR Document 32-1 Filed 05/31/17 Page 10 of 10 Page ID #:600 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KHANNA DECL. ISO UST GLOBAL’S MOTION TO DISMISS AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING MOTION la-1350734 JANIE F. SCHULMAN (BAR NO. 130461) JSchulman@mofo.com BRIAN MARTINEZ (BAR NO. 274210) BrianMartinez@mofo.com NEIL S. TYLER (BAR NO. 301719) NTyler@mofo.com Morrison & Foerster LLP 707 Wilshire Boulevard, Suite 6000 Los Angeles, California 90017-3543 Telephone: 213.892.5200 Facsimile: 213.892.5454 Attorneys for Defendant UST GLOBAL, INC. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA KAREN LIMBU, an individual, Plaintiff, v. UST GLOBAL, INC., and DOES 1 through 50 inclusive, Defendant. Case No. 2:16-CV-08499 DMG (JPRx) DECLARATION OF GAUTAM KHANNA IN SUPPORT OF DEFENDANT UST GLOBAL, INC.’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: June 30, 2017 Time: 9:30 a.m. Judge: Honorable Dolly Gee Courtroom: 8C Trial Date: None Set Amended Complaint Filed: May 10, 2017 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 1 of 11 Page ID #:601 Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 2 of 11 Page ID #:602 Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 3 of 11 Page ID #:603 Exhibit A to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 4 of 11 Page ID #:604 Exhibit B to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 5 of 11 Page ID #:605 Exhibit C to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 6 of 11 Page ID #:606 Exhibit D to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 7 of 11 Page ID #:607 Exhibit E to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 8 of 11 Page ID #:608 Exhibit F to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 9 of 11 Page ID #:609 Exhibit G to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 10 of 11 Page ID #:610 Exhibit H to Khanna Declaration Conditionally Filed Under Seal Case 2:16-cv-08499-DMG-JPR Document 32-2 Filed 05/31/17 Page 11 of 11 Page ID #:611 i CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350736 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA KAREN LIMBU, an individual, Plaintiff, v. UST GLOBAL, INC., and DOES 1 through 50 inclusive, Defendant. Case No. 2:16-CV-08499 DMG (JPRx) [PROPOSED] ORDER GRANTING DEFENDANT UST GLOBAL, INC.’S MOTION TO DISMISS FIRST AMENDED COMPLAINT, OR, IN THE ALTERNATIVE, TO CERTIFY FOR INTERLOCUTORY APPEAL ORDER DENYING UST GLOBAL’S MOTION TO DISMISS FIRST AMENDED COMPLAINT Honorable Dolly Gee Case 2:16-cv-08499-DMG-JPR Document 32-3 Filed 05/31/17 Page 1 of 2 Page ID #:612 1 CASE NO. 2:16-CV-08499 DMG (JPRx) la-1350736 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Motion to Dismiss filed by Defendant UST Global Inc. (“Defendant”) came on for hearing on June 30, 2017. After considering the papers filed in support of and in opposition thereto, the evidence and arguments of the parties, and all other matters presented to the Court, and for good cause shown, Defendants’ Motion is GRANTED in its entirety. Plaintiff Karen Limbu (“Plaintiff”) failed to properly plead her Sarbanes-Oxley Act whistleblower protection claim (“SOX Claim”) and the new allegations in her First Amended Complaint make clear that UST Global is not a covered entity under Section 1514A(1)(A). SOX does not afford general “whistleblower” protection to employees of private companies who happen to do business with a public company. Plaintiff’s pleading simply does not withstand scrutiny under the standard set forth in Bell Atlantic Corp. v. Tombly, 550 U.S. 544 (2007). Pursuant to Federal Rules of Civil Procedure 12(b)(6), Plaintiff’s claims are hereby dismissed WITH PREJUDICE. [ALTERNATIVELY, Defendant’s motion to dismiss is denied, but the Court finds that the issues raised by Defendant should be certified for interlocutory appeal to determine the precise scope of SOX coverage to private companies. In addition, the Court hereby stays this case until either the Ninth Circuit declines to hear Defendant’s appeal or until all appeals are exhausted.] IT IS SO ORDERED. Dated: ___________________, 2017 ____________________________________ UNITED STATES DISTRICT JUDGE HON. DOLLY M. GEE Case 2:16-cv-08499-DMG-JPR Document 32-3 Filed 05/31/17 Page 2 of 2 Page ID #:613