United States District Court, N.D. California
CHARLOTTE B. MILLINER, et al., Plaintiffs,
MUTUAL SECURITIES, INC., Defendant.
ORDER GRANTING MSI'S MOTION TO AMEND DISCOVERY
RESPONSES AND MOTION FOR LEAVE TO FILE MOTION FOR PARTIAL
THELTON E. HENDERSON United States District Judge
before the Court are Defendant Mutual Securities, Inc.'s
(“MSI”) motion to amend discovery responses (ECF
No. 91) and motion for leave to file motion for partial
reconsideration of the Court's March 18, 2017 Order (ECF
No. 90). Plaintiffs timely opposed both motions. The Court
heard oral arguments on MSI's motions on May 8, 2017.
During oral arguments, the Court granted Plaintiffs request
for an opportunity to respond to MSI's late filing of an
exhibit (ECF No. 97) in support of its motion.
Plaintiff filed a supplemental brief (ECF No. 105), and MSI
replied to the supplemental brief (ECF No. 111). After
carefully considering the Parties' written and oral
arguments the Court GRANTS both of MSI's motions.
BACKGROUND As the parties are familiar with
the factual background of this case, the Court provides only
a brief summary of the facts.
class action is related to another class action separately
filed in this Court: Milliner v. Bock Evans Financial
Counsel, Ltd., No. 15-cv-1763 TEH (the “Bock Evans
Class Action”). The Bock Evans Class Action was brought by
the same Plaintiffs as the present class action, to challenge
the “‘one size fits all' investment approach
implemented by their investment advisor, Defendant Bock Evans
Financial Counsel, Ltd. (‘BEFC').” Compl.
¶ 1 (EFC No. 1). Plaintiffs brought the present class
action against Defendant Mutual Securities, Inc.
(“MSI”) because of MSI's relationship with
BEFC. Specifically, BEFC required that clients hire MSI as
their broker-dealer. Id. ¶ 9. Plaintiffs allege
one reason BEFC required clients to use MSI is because Thomas
Bock and Mary Evans, the principal executive officers of
BEFC, were registered representatives of MSI. Id.
¶ 9. In other words, Bock and Evans were “dually
registered as registered representatives and commissioned
brokers of MSI and as investment advisors and principals of
BEFC.” ECF No. 32 at 1:27-2:1. Plaintiffs allege BEFC
“plac[ed] 100% or nearly 100% of their assets in high
risk and highly speculative foreign mining stocks, including
over-the counter and penny stocks” resulting in the
value of BEFC's portfolios going “from $60 million
to $4.17 million in just a few years, a drop of roughly
$55.83 million, or 93%.” Compl. ¶¶ 1- 2.
prior orders, the Court established “MSI owed
Plaintiffs a contractual duty to ‘determine the
suitability of any investment recommendations and advice'
in accordance with the express terms of their Brokerage
Agreement, ” ECF No. 38, 4:27-5:3; that MSI had a duty
to supervise the outside advisory investment activities of
Thomas Bock and Mary Evans pursuant to FINRA rules, ECF No.
52 at 12; and that this duty to supervise includes a duty to
determine suitability, ECF No. 87 at 4:8-9.
before the Court are two motions: (1) MSI's Motion to
Amend its Discovery Responses, ECF No. 91, and (2) MSI's
Motion for Leave to File Motion for Partial Reconsideration
of Court's March 18, 2017 Order, ECF No. 90. In short,
MSI argues it should be granted leave to amend its responses
to its Requests for Admissions because at the time it made
its admissions that it did not determine the suitability of
trades conducted in Plaintiffs' accounts, MSI had the
understanding that Bock and Evans' actions were not done
on MSI's behalf. ECF No. 91 at 1:2-8. MSI argues this
understanding was rejected by the Court in its March 18, 2017
order, therefore making its admissions no longer accurate.
Id. at 1:18-21. MSI also argues that because these
admissions were the sole basis for the Court's
determination that MSI failed to determine suitability,
MSI's amendment of its responses - should the Court
decide to grant them - creates a material difference in law
and fact that warrants reconsideration of the issue.
See ECF No. 90.
Motion to Withdraw or Amend Responses to Requests for
Federal Rule of Civil Procedure 36(b), the Court may permit
withdrawal or amendment of an admission under Rule 36
“if it would promote the presentation of the merits of
the action and if the court is not persuaded that it would
prejudice the requesting party in maintaining or defending
the action on the merits.” This rule allows the Court
to exercise to its discretion to grant relief from an
admission only when (1) “the presentation of the merits
of the action will be subserved, ” and (2) “the
party who obtained the admission fails to satisfy the court
that withdrawal or amendment will prejudice that party in
maintaining the action or defense on the merits.”
Conlon v. United States, 474 F.3d at 621 (9th Cir.
Motion for Reconsideration
Local Rule 7-9 establishes the entry of a final judgment,
“any party may make a motion before a Judge requesting
that the Judge grant the party leave to file a motion for
reconsideration of any interlocutory order on the ground set
forth in Civil L.R. 7-9(b). No party may notice a motion for
reconsideration without first obtaining leave of Court to
file the motion.” Additionally, Civil L.R. 7-9(b)
requires that the party seeking leave to file a motion for
reconsideration must show “reasonable diligence in
bringing the motion, and one of the following:
(1) That at the time of the motion for leave, a material
difference in fact or law exists from that which was
presented to the Court before entry of the interlocutory
order for which reconsideration is sought. The party also
must show that in the exercise of reasonable diligence the
party applying for reconsideration did not know such fact or
law at the time of the interlocutory order; or
(2) The emergence of new material facts or a change of law
occurring after the time of such order; or
(3) A manifest failure by the Court to consider material
facts or dispositive legal arguments which were presented to
the Court ...