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Securities and Exchange Commission v. Schooler

United States District Court, S.D. California

November 5, 2014

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
LOUIS V. SCHOOLER and FIRST FINANCIAL PLANNING CORPORATION, dba Western Financial Planning Corporation, Defendants.

ORDER DENYING DEFENDANTS' MOTION FOR CERTIFICATION FOR APPEAL BY PERMISSION [ECF No. 643]

GONZALO P. CURIEL, District Judge.

I. INTRODUCTION

Before the Court is Defendants Louis V. Schooler ("Schooler") and First Financial Planning Corporation d/b/a Western Financial Planning Corporation's ("Western") (collectively, "Defendants") Motion for Certification for Appeal by Permission. (ECF No. 643.) Plaintiff Securities and Exchange Commission (the "SEC") opposed. (ECF No. 787.) Defendants replied to the SEC's opposition. (ECF No. 807.)

The parties have fully briefed the motion. (ECF Nos. 643, 787, 807.) The Court finds the motion suitable for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). Upon review of the moving papers, admissible evidence, and applicable law, the Court DENIES Defendants' motion for certification for appeal by permission.

II. BACKGROUND

On January 24, 2014, Defendants filed a motion for partial summary judgment. (ECF No. 542.) On March 28, 2014, the SEC filed a motion for partial summary judgment. (ECF No. 563.) On April 25, 2014, the Court issued an order denying Defendants' motion and granting in part and denying in part the SEC's motion (the "Summary Judgment Order"). (ECF No. 583.) On May 23, 2014, Defendants filed a motion for partial reconsideration of the Summary Judgment Order. (ECF No. 592.) On July 30, 2014, the Court issued an order denying Defendants' motion (the "Reconsideration Order"). (ECF No. 634.)

On August 13, 2014, Defendants filed a motion for certification for appeal by permission. (ECF No. 643.) Defendants seek permission to appeal both the Summary Judgment Order and the Reconsideration Order. (ECF No. 643, at 1.) Specifically, Defendants seek to appeal the Court's application of the first Williamson factor. ( Id. at 3); see also Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981). On October 3, 2014, the SEC filed an opposition to Defendants' motion. (ECF No. 787.) On October 17, 2014, Defendants filed a reply to the SEC's opposition. (ECF No. 807.)

III. LEGAL STANDARD

District courts may certify an issue for interlocutory appeal upon satisfaction of certain criteria. 28 U.S.C. § 1292(b). Those criteria are: (1) the order involves a controlling question of law; (2) 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. In re Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982). The court should apply § 1292(b)'s requirements strictly, and should grant a motion for certification only when exceptional circumstances warrant it. Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978). The party seeking certification to appeal an interlocutory order has the burden of establishing the existence of such exceptional circumstances. Id. "Even then, a court has substantial discretion in deciding whether to grant a party's motion for certification." Zulewski v. Hershey Co., No. 11-cv-5117-KAW, 2013 WL 1334159, at *1 (N.D. Cal. Mar. 29, 2013).

IV. DISCUSSION

A. Controlling Question of Law

A "controlling question of law" is one whose "resolution of the issue on appeal could materially affect the outcome of litigation in the district court." In re Cement Antitrust Litigation, 673 F.2d at 1026. Defendants argue, and the SEC does not dispute, that the first Williamson factor is a controlling question of law. ( See ECF No. 643, at 4.) The Court agrees. If the GPs were found not to be securities under the second and third Williamson factors, the resolution of the first Williamson factor would determine whether the GPs are, as a matter of law, securities. Accordingly, application of the first Williamson factor is a controlling question of law.

B. Substantial Ground for Difference of Opinion

To determine whether there exists a "substantial ground for difference of opinion, " the Court looks "to what extent the controlling law is unclear." Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). The Court considers factors such as: (1) whether there is a circuit split and the Ninth Circuit has not addressed the issue; (2) whether there is a complicated question under foreign law; and (3) whether there is a difficult question of first impression. Id. (citation omitted). However, just ...


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