Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-05357/USCOURTS-cand-5_04-cv-05357-3/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Reese M. Jones,

Plaintiff,

 v.

 Deutsche Bank AG, et al.,

Defendants.

 /

NO. C 04-05357 JW 

ORDER DENYING DEUTSCHE

BANK'S MOTION FOR LEAVE

TO FILE MOTION FOR

RECONSIDERATION; DENYING

CHENERY DEFENDANTS’

MOTION TO JOIN DEUTSCHE

BANK’S MOTION FOR

RECONSIDERATION

On August 2, 2005, Defendants Deutsche Bank AG and Deutsche Bank Securities, Inc.

("Deutsche Bank") filed a "Motion For Leave To File Motion For Reconsideration Of The Court's

July 19, 2005 Order, Pursuant To Civil Local Rule 7-9(b)," hereinafter "Motion For Recons." On

August 5, 2005, Chenery Associates, Chenery Associates, Inc., Chenery Management, Inc., Chenery

Investments, Inc., Chenery Services, Inc., and Chenery Capital, Inc., Sussex Financial Enterprises,

Inc., and Roy E. Hahn (collectively “the Chenery Defendants”) filed a Motion to Join Deutsche Bank’s

Motion for Reconsideration. This Court's July 19, 2005 Order, hereinafter "Order," granted in part

and denied in part Defendants' Motion to Dismiss. To be granted leave to file a motion for

reconsideration, the moving party must specifically show 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

Case 5:04-cv-05357-JW Document 131 Filed 08/12/05 Page 1 of 4
United States District Court

For the Northern District of California

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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 before 

such interlocutory order.

Civil L.R. 7-9(b) (2005).

Deutsche Bank relies on Civil L.R. 7-9(b)(3) to argue that there was "a manifest failure by the

Court to consider material facts or dispositive legal arguments which were presented to the Court

before such interlocutory order." (Motion for Recons., Ex. A at 1.) Specifically, Deutsche Bank

argues that this Court failed to consider Defendants' argument that "the CARDS investment strategy

involves the purchase and sale of U.S. Treasury bonds, which are securities." Id. Deutsche Bank

argues that because the CARDS investment strategy involved securities, Plaintiff's RICO claim is

barred by the Private Securities Litigation Reform Act ("PSLRA"). See 18 U.S.C. § 1964(c) (PSLRA

bars RICO claims based on conduct otherwise actionable as securities fraud). 

After careful review of Defendants' submissions and the Order at issue, however, this Court

finds that Deutsche Bank's Motion For Reconsideration lacks merit. The first subheading in the Order,

Part A, Section 1, is titled, "The Court Declines To Decide Whether The CARDS Facility Is A

Security." (Order at 5.) This Court noted that it would not grant a Rule 12(b)(6) motion to dismiss

"unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim

which would entitle him to relief." See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Limiting itself

to the face of Plaintiff's First Amended Complaint (FAC), this Court found that the FAC did mention

the use of "promissory notes," which, if determined to be "securities," would bar Plaintiff's' RICO

claim. This Court determined that the question of whether the CARDS transactions involved the sale

of securities was more appropriate for a summary judgment motion, in which more facts would be

available for the Court's consideration. (Order at 5.) 

This Court, still limiting itself to the face of the FAC, also did not determine whether the

CARDS investment strategy used government bonds, including Treasury bonds, which Deutsche Bank

argues are securities. (Motion for Recons. at 2.) Unlike the mentioning of "promissory notes,"

Case 5:04-cv-05357-JW Document 131 Filed 08/12/05 Page 2 of 4
United States District Court

For the Northern District of California

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however, Plaintiff's FAC nowhere mentioned that the CARDS transaction at issue involved Treasury

bonds. Defendants provided the Court with exhibits, allegedly proving that Plaintiff, in a deposition,

admitted the CARDS transaction involved Treasury bonds. (Motion for Recons. at 5.) If true, this

would likely support Defendants' argument that the CARDS transactions involved the sale of

securities. The problem, as specifically noted in the July 19, 2005 Order, is that this Court, at this

stage of the litigation, must limit itself to the face of Plaintiff's FAC. 

To make the point clear for both parties, especially the movant here, this Court's Order

decided only that Plaintiff's FAC sufficiently stated a RICO claim to overcome Defendants' 12(b)(6)

motion. Future submissions by Defendants and further discovery may later persuade this Court that the

CARDS transactions, in fact, involved the sale of securities. In sum, as the Court's Order on this issue

concluded, the factual question of whether the CARDS transactions at issue here involved the sale of

securities is "more appropriately addressed in a summary judgment motion." (Order at 5.) 

This Court, pursuant to Civil L.R. 7-9(c) "Prohibition Against Repetition of Argument," has

authority to make appropriate sanctions on any party who violates the restriction. Plaintiff argues that

Defendants deserve sanctions because Defendants have repeated the same arguments only to delay

Plaintiff's attempt to conduct discovery. This Court does not look kindly on dilatory tactics of

improper purpose. Deutsche Bank's Motion for Leave to File Motion for Reconsideration is

DENIED. The Chenery Defendants' Motion To Join Deutsche Bank's Motion For Reconsideration is

DENIED as moot. Sanctions shall not be imposed at this time, nor shall discovery be stayed. Finally,

this Court grants both the Deutsche Bank and Chenery Defendants an extension of time of ten (10) days

from the date of this Order to answer Plaintiff's First Amended Complaint. 

Dated: August 12, 2005

04cv5357denrecon

/s/ James Ware 

JAMES WARE

United States District Judge

Case 5:04-cv-05357-JW Document 131 Filed 08/12/05 Page 3 of 4
United States District Court

For the Northern District of California

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Amy Lynn Rice arice@gwwe.com

Arturo Esteban Sandoval asandoval@mwe.com

Christine Chi cchi@dbllp.com

Christopher Kliefoth ckliefoth@mwe.com

David S. McLeod dmcleod@dbllp.com

Jason A. Carey jacarey@mwe.com

Jeffrey R. Witham jwitham@dbllp.com

Jennifer L. Jonak jenny@jonak.com

Jill M. Kastner jkastner@mwe.com

Megan Christine Roth mroth@watsonlawgroup.com

Sarah E. Hancur shancur@mwe.com

Stephen Allen Watson swatson@watsonlawgroup.com

William M. Lukens wlukens@lukenslaw.com

Dated: August 12, 2005 Richard W. Wieking, Clerk

By: /jwchambers/ 

Ronald L. Davis

Courtroom Deputy

Case 5:04-cv-05357-JW Document 131 Filed 08/12/05 Page 4 of 4