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Manuel Lopes and Mariana Lopes, Dba Lopes Dairy; Joseph Lopes v. California Milk Market

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA


December 20, 2010

MANUEL LOPES AND MARIANA LOPES, DBA LOPES DAIRY; JOSEPH LOPES, TRUSTEE OF THE RAYMOND LOPES FAMILY TRUST AS SUCCESSOR-IN-INTEREST TO RAYMOND LOPES; JOSEPH LOPES AND MICHAEL LOPES,
INDIVIDUALLY AND DBA WESTSIDE
HOLSTEIN; MARIA MACHADO, TRUSTEE OF THE MACHADO FAMILY TRUST AND AS THE SUCCESSOR-IN-INTEREST TO ALVARO MACHADO AND TONY ESTEVAM, PLAINTIFFS,
v.
CALIFORNIA MILK MARKET, A GEORGE VIEIRA; MARY VIEIRA; GOLD, LLC, A CALIFORNIA LIMITED CALIFORNIA CORPORATION;
VALLEY LLP, A CALIFORNIA LIMITED LIABILITY COMPANY; GENSKE-MULDER CARY;
DOWNEY BRAND LLP, A LIABILITY PARTNERSHIP; ANTHONY PARTNERSHIP;
CENTRAL VALLEY CALIFORNIA LIMITED LIABILITY FOOD AND AGRICULTURAL NONPROFIT DAIRYMEN, INC., A CALIFORNIA COOPERATIVE ASSOCIATION, DEFENDANTS.

The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

ORDER ON MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFFS' MOTION FOR LEAVE TO MODIFY SCHEDULING ORDER AND TO FILE THIRD AMENDED COMPLAINT

To implement the Court's Memorandum Decision and Order Granting Plaintiffs' Motion for Leave to Modify Scheduling Order and to file Third Amended Complaint (Docket # 329), the undersigned parties hereby stipulate and agree that the Third Amended Complaint (the "Third Amended Complaint" (Docket # 330)) is modified as follows and that the issues alleged in the 3rd Amended Complaint are modified as follows:

1. All "Doe" defendants have been dismissed without prejudice (First Amended Scheduling Order, Docket # 86) and are not parties to this litigation.

2. All allegations by Alvaro Machado, Maria Machado, Trustee of the Machado Family Trust and as the successor-in-interest to Alvaro Machado, and Tony Estevam against Genske Mulder & Co. LLP ("Genske Mulder") and Downey Brand LLP ("Downey Brand") have been adjudicated against these Plaintiffs by this Court's Memoranda of Decisions (Docket ##297 & 298) and by Court Orders regarding Downey Brand (Docket ##311 & 312) and these individuals are no longer parties to the lawsuit.

3. All allegations by Plaintiffs asserted derivatively on behalf of Central Valley Dairymen ("CVD") have been dismissed. See Lopes v. Vieira, 543 F.Supp.2d 1149, 1199 (E.D. Cal. 2008).

4. Because all Doe Defendants have been dismissed from this litigation, the term "Promoters" as defined in the 3rd Amended Complaint (Docket # 330 ¶57) means "George Vieira."

5. For the purposes of the summary judgment motions, the Court has made a factual finding that "George Vieira's attorney [representing him in the Suprema Specialties criminal investigation] had a confidential relationship [with George Vieira] and there is no evidence that either communicated the particulars of the plea deal to Genske Mulder or Downey Brand before April 23, 2003." The Court has found that "There is nothing in Exhibits N, O, or P from which it could reasonably be inferred that Mr. Vieira was actively negotiating a plea deal," (Docket #301 at 26 & 30), the claim that Genske Mulder and Downey Brand should have disclosed, before April 23, 2003, that George Vieira was in plea negotiations in the Supreme Specialties investigation has been decided that they could not.

6. For the purposes of the summary judgment motions the Court made a factual finding that "Plaintiffs did not review the Financial Statement Forecasts (Exhibit B to Plaintiffs' Response to Genske Mulder's and Downey Brand's Motions for Summary Judgment Docket ## 113, 128, 245 & 246) before April 23, 2003") and has found that Plaintiffs "could not have relied on it [Exhibit B] in making their investment decision [to purchase Valley Gold securities]" (Docket # 301 at 34).

7. The Court has granted summary judgment in favor of Genske Mulder and Downey Brand on Plaintiffs' Fifth Cause of Action in the Second Amended Complaint (for California Securities Fraud) (Docket # 301 at 49) and Fifth Cause of Action in the 3rd Amended Complaint is for the same claim.

8. Summary judgment has been granted in favor of Genske Mulder and Downey Brand on Plaintiffs' Fourth and Fifth Causes of Action in the 2nd Amended Complaint for consequential damages for failure to be paid for milk shipped to CVD (as sellers) (Docket # 301 at 53) for lack of standing. Any claims for unpaid milk by these Plaintiffs against Genske Mulder or Downey Brand under the securities laws have been resolved against Plaintiffs.

9. Because the California Court of Appeal (5th Appellate District) in Nunes v. CVD, et al. (F056381, F056917 & F056943) has ruled that a claim for fraud in connection with the sale of milk by CVD and for recovery of the purchase price of the sale of milk by CVD in the absence of fraud, are causes of action which must be pursued by CVD, not the individual members, the Plaintiff's claims for damages for non-payment for milk sold to CVD which was ultimately sold to Valley Gold are no longer issues in this litigation.

10. Downey Brand did not draft documents or prepare contracts in which Plaintiffs agreed to forego payment for their milk in return for a larger equity interest in Valley Gold ("milk for equity contracts") or play any other role in suggesting that Plaintiffs agree to the milk for equity contracts or otherwise forego milk payments -- the allegation Downey Brand played some role in the milk for equity contracts or in suggesting Plaintiffs forego milk payments has been decided. (Docket #301 at 11-12).

11. Anthony Cary is not a defendant in the case pursuant to the Court's Order of Dismissal without Prejudice, filed October 10, 2007 (Docket #63).

12. There is nothing in the Offering Memorandum stating that a contract with the cheese distributor was "anticipated" and the Offering Memorandum expressly states that, in the absence of the distributor contract, the investment will fail, and the disclaimers negate any inference of fraud with respect to the representations concerning the distributor contract buyer of cheese. See Lopes, 543 F.Supp.2d at 1189.

13. The Court previously found that the statutory provision (California Food & Ag Code § 62580(h)) coupled with case law negate any inference of fraud with respect to the failure to disclose ineligibility for the milk producer's trust fund (see Lopes, 543 F.Supp.2d at 1191).

14. Downey Brand did not represent CVD in the Valley Gold matter and has never represented CVD (Docket #301 at 8).

This stipulation does not supersede any rulings by the Court.

IT IS SO ORDERED.

668554

20101220

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