Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-02641/USCOURTS-cand-3_05-cv-02641-4/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 7:6(b) Federal Commodity Exchange Regulation

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

COMMODITY FUTURES TRADITION

COMMISSION, et al.

Plaintiffs,

 v.

NATIONAL INVESTMENT

CONSULTANTS, INC., et al.

Defendants.

 /

No. C 05-02641 JSW

NOTICE OF TENTATIVE

RULING AND QUESTIONS

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD, PLEASE TAKE

NOTICE OF THE FOLLOWING TENTATIVE RULING AND QUESTIONS FOR THE

HEARING SCHEDULED ON AUGUST 26, 2005:

The Court has reviewed the parties’ memoranda of points and authorities and, thus, does

not wish to hear the parties reargue matters addressed in those pleadings. If the parties intend to

rely on authorities not cited in their briefs, they are ORDERED to notify the Court and opposing

counsel of these authorities reasonably in advance of the hearing and to make copies available at

the hearing. If the parties submit such additional authorities, they are ORDERED to submit the

citations to the authorities only, without argument or additional briefing. See N.D. Civil Local

Rule 7-3(d). The parties will be given the opportunity at oral argument to explain their reliance

on such authority. The parties shall not file written responses to the questions posed in this

notice.

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The Court tentatively GRANTS Plaintiffs’ motion for a preliminary injunction as to all

Defendants.

The parties each shall have twenty (20) minutes to address the following questions:

1. What is Plaintiffs’ position with respect to lifting the freeze on the accounts

discussed in Mr. Giorgi’s declaration?

2. The Court is not inclined to consider the declarations submitted by Plaintiffs in

their reply brief. Excluding the allegations in those declarations, are there any

factual disputes that any party contends cannot be resolved by reference solely to

the declarations on file in this case? See International Molders' and Allied

Workers' Local Union No. 164 v. Nelson, 799 F.2d 547, 554-55 (9th Cir. 1986)

(noting that in the Ninth Circuit there is no presumption entitling a party to an

evidentiary hearing on a motion for a preliminary injunction).

a. Why was the information set forth in the Jones Declaration (Reply

Brief, Ex. 7) and the Koh Declaration (Reply Brief, Ex. 9) not

submitted with Plaintiffs’ initial application? 

b. What are Mr. Tse’s and Ms. Wong’s responses to the allegations

in Mr. Mock’s declaration?

3. a. What evidence, apart from the evidence indicating Mr. Tse was a South

China employee and an NICI employee, do Plaintiffs’ have to rebut NICI

and South China’s contentions that they are not the same entity? 

Similarly, what evidence do Plaintiffs’ have to rebut Defendants

contentions that Pacific Best, NICI, and South China are not related

entities? 

b. On what basis do Plaintiffs contend that the actions of Pacific Best should

be attributed to NICI and/or South China, or do Plaintiffs contend that

nothwithstanding a separate corporate relationship, NICI and South China

also violated the Act. If the latter, on what basis? 

4. Defendants intend to submit evidence in opposition to the plaintiff’s motion,

which will be obtained after the Court ordered deadline for responding to

plaintiffs’ motion for a preliminary junction has passed. On what authority do

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defendants rely on to support their position that the Court can, or should,

consider this evidence? 

5. The Court does not find persuasive Plaintiffs’ to distinguish the Frankwell

Bullion case on the ground that it involved a motion for a preliminary injunction,

given that Plaintiffs are before the Court to seek a preliminary injunction. 

However, Plaintiffs also attempt to distinguish the Frankwell Bullion case from

this case by asserting that the price for liquidation is established at the time of

contracting. The Court requests that Plaintiff identify the evidence of this

assertion by reference to a specific invoice. Do Defendants contest this

assertion?

a. How else would Plaintiffs distinguish the contracts at issue in

Frankwell Bullion, about which the district court noted “may well

be determined by this Court upon a full adjudication to be spot

transactions,” and that “other defining characteristics of futures

contracts are noticeably absent” from the contracts at issue in this

case? See CFTC v. Frankwell Bullion Ltd., 1994 WL 449071, *2

(N.D. Cal. Aug. 12, 1994).

6. Plaintiffs seem to contend that Pacific Best’s contracts contain an implicit

guarantee of offset. See Reply at 9. What specific provisions of the contract or

rules of trading support this contention?

7. Plaintiffs contend that the Zelener case ignored the decisions in Lachmund and

Nagel. In Lachmund and Nagel, however, the defendants contended the

contracts at issue were cash forward contracts, which Plaintiffs’ own expert

contends are different from spot contracts. As such, and recognizing that Zelener

is not binding on this Court, how else would Plaintiffs distinguish the facts in

Zelener from the facts in this case?

Dated: August 23, 2005 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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