Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00057/USCOURTS-casd-3_15-cv-00057-7/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 18:1030 Fraud &amp; Related Activity in Connection with Computers

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JEREMY L. KEATING ET AL.,

Plaintiffs,

v.

JOHN A. JASTREMSKI ET AL.,

Defendants.

AND RELATED CROSS-ACTIONS.

CASE NO. 3:15-cv-00057-L-AGS

ORDER GRANTING THE 

RETIREMENT GROUP, LLC’S 

MOTION TO AMEND 

COUNTERCLAIM 

(Doc. no. 439)

In this action alleging misappropriation of trade secrets, pending before the 

Court is a motion to amend counterclaim filed by Counterclaimant The Retirement 

Group, LLC ("TRG"). (Doc. no. 439.) Counter-Defendants Lloyd Silvers, Steven 

Dalton and Ardent Retirement Planning, LLC (“Ardent,” collectively the “Ardent 

Group”) filed an opposition and TRG replied. For the reasons that follow, TRG’s 

motion is granted. 

The parties had previously filed cross-motions for evidentiary and terminating 

sanctions based on claims of discovery misconduct and spoliation of evidence. (See 

docs. no. 157, 275.) The Court appointed Hon. Ronald S. Prager (Ret.) as the Special 

Master pursuant to Rule 53 of the Federal Rules of Civil Procedure to prepare a report 

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and recommendation. (Docs. no. 316, 323.) After the Special Master had issued a 

report recommending terminating sanctions against the Ardent Group (see doc. no. 

440), but before the Court ruled on the Ardent Group’s objections, TRG filed the 

pending motion, requesting leave to amend its counterclaims to prepare its case for a 

motion for default judgment against the Ardent Group, should this Court adopt the 

Special Master’s recommendation.

The proposed second amended counterclaim removes the claims against the 

parties who have settled out of the case, including Plaintiffs/Counter-Defendants 

Jeremy Keating, Richard P. Gigliotti and Alexander J. Mele (collectively, “the Keating 

Group”), as well as Counter-Defendant Securities America, Inc. ("SAI"), and leaves 

intact the claims against the Ardent Group members. 

The substantive amendments pertain to the requested relief. With respect to the 

claim for misappropriation of trade secrets, the first amended counterclaim sought 

“proximately caused damages and unjust enrichment obtained by counter-defendants.” 

(See doc. no. 439-1 Ex. B (redline comparison of the first and proposed second 

amended counterclaims (“Redline”)) at 103.)

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 The proposed amendment replaces this 

language with a reference to disgorgement and specifies the amounts sought against 

each member of the Ardent Group, including prejudgment interest. (Id.) It also adds 

an estimated amount of attorneys’ fees TRG intends to request. (Id.)

A similar request is made with respect to the claim for unfair trade practices. 

The first amended counterclaim sought restitution of Counter-Defendants’ unjust 

enrichment and attorneys’ fees. (Redline at 108.) TRG seeks leave to add the specific 

sums it intends to seek against each member of the Ardent Group and estimates the 

attorneys’ fees. (Id.)

With respect to the breach of contract claim against Silvers, the first amended 

counterclaim sought “damages in an amount to be proven at trial.” (Redline at 106.) 

 

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This remains unchanged, but TRG seeks leave to add a request for an “injunction 

pursuant to the terms of Silvers’ Marketing and Licensing Agreement.” (Id. at 106-

07.) 

Finally, the prayer for relief reflects the above requested changes. In the first 

amended counterclaim, TRG requested “compensatory damages (including restitution 

and unjust enrichment) according to proof” and attorneys’ fees. (Redline at 110.) This 

remains unchanged, but TRG requests to add the amounts sought against each member 

of the Ardent Group, an estimate of attorneys’ fees, and a request for injunctive relief. 

(Id.)

Rule 15 advises leave to amend shall be freely given when justice so requires. 

Fed. R. Civ. P. 15(a)(2). “This policy is to be applied with extreme liberality.” 

Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal 

quotation marks and citation omitted).

In the absence of any apparent or declared reason – such as undue delay, 

bad faith or dilatory motive on the part of the movant, repeated failure to 

cure deficiencies by amendments previously allowed, undue prejudice to 

the opposing party by virtue of allowance of the amendment, futility of the 

amendment, etc. – the leave sought should, as the rules require, be freely 

given.

Foman v. Davis, 371 U.S. 178, 182 (1962) (internal quotation marks and citation 

omitted).

The Ardent Group does not oppose adding requests for injunctive relief and 

prejudgment interest. However, it argues that in other respects, the amendments are 

requested in bad faith and that they are untimely and prejudicial. They claim to be 

prejudiced because they did not know TRG’s damage theory and the actual amounts in 

advance, for example, through TRG’s disclosures under Federal Rule of Civil 

Procedure 26(a)(1)(A), responses to interrogatories or timely updates to each. This 

argument is without merit. 

/ / /

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The Ardent Group, together with other Counter-Defendants, raised the same 

issues of timeliness, prejudice and bad faith in their motion for evidentiary sanctions 

(doc. 275). Magistrate Judge Andrew G. Schopler entertained voluminous briefing 

and extensive oral argument. He concluded that TRG should have provided an 

estimate of its damages earlier in the case. He found, however, that the delay in 

disclosure was harmless to Counter-Defendants. Accordingly, evidentiary sanctions 

were denied, but Counter-Defendants were awarded attorneys’ fees for having to file 

the motion. (See doc. no. 298 and related audio recording of the hearing.) They 

requested a total of approximately $31,000 in fees. (Docs. no. 299, 300.) The Special 

Master ultimately recommended, and this Court agreed, to award a total of $10,000, 

with $5,000 of that attributable to the Ardent Group. (Docs. no. 409, 418.) The 

Ardent Group did not object to this resolution of their motion for evidentiary sanctions. 

See Fed. R. Civ. Proc. 53(f), 72. 

If not before, in February 2018, in its opposition to the motion for evidentiary 

sanctions, TRG spelled out its theory of damages and how it intends to calculate them. 

(See doc. no. 293 at 8.) Its theory was that members of the Keating Group “stole”

TRG’s clients when they transferred from TRG to Ardent and SAI. SAI was a brokerdealer who employed them. Ardent was associated with SAI in that it provided 

marketing services to find clients. As referenced in the order adopting the Special 

Master’s recommendation, filed concurrently herewith, the Ardent Group members 

considered their assistance with the Keating Group’s transition, including alleged theft 

of client information, a “marketing service,” resulting in commission override

payments to Dalton and kickbacks to Silvers. 

The implications of this theory on TRG’s calculation of damages were explained 

in TRG’s brief in opposition to the motion for evidentiary sanctions. TRG explained 

that it needed SAI’s commissions report to see how much the Keating Group members 

earned based on the clients they “stole” from TRG. (Doc. no. 293 at 8.) This 

information changed daily and was in SAI’s and Ardent’s possession. (Id.) To 

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calculate damages against Dalton and Ardent, TRG planned to apply 30% to the 

commissions, representing Dalton’s override on the Keating Group’s commissions 

earned from TRG’s clients. (Id.) With respect to Silvers, the disgorgement amount 

was disclosed in a deposition, where the witness testified that Silvers received 

$97,573.74 in kickbacks in connection with transitioning the Keating Group to SAI. 

(Id.) The foregoing information resulted in the sums included in the proposed second 

amended counterclaim. As to Silvers, precisely the same sum is included in the 

proposed second amended counterclaim. (Cf. Redline at 108, 110.)

Based on the foregoing, no later than February 2018, the Ardent Group had the 

exact sum of damages against Silvers and the means to calculate damages against 

Dalton and Ardent. Their claims of undue delay, prejudice and bad faith and their 

motion to preclude TRG from relying on these calculations at trial were rejected by 

Judge Schopler in March 2018. The Ardent Group did not object. See Fed. R. Civ. 

Proc. 53(f), 72. Their reliance on the same arguments in opposition to TRG’s pending 

motion for leave to amend is unavailing. 

The Ardent Group’s remaining opposition arguments are premised on the 

contention that TRG seeks to change the nature of its claims against the Ardent Group 

members and that the claims are without merit as unsupported by law or evidence. 

However, review of the proposed amendments shows that all causes of action against 

the Ardent Group members remain the same, with the exception of specifying damage 

amounts, as addressed above. Accordingly, the Ardent Group’s arguments as to the 

merits cannot properly be considered in opposition to TRG’s motion for leave to 

amend.

For the foregoing reasons, TRG’s motion for leave to amend is granted. No 

later than April 16, 2020, TRG shall file the second amended counterclaim attached as 

Exhibit A to its motion (doc. no. 439-1 at 7-73 ("Exhibit A")) with the following 

changes:

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1. Consistent with the representations made in its motion (doc. no. 439-1 at 

1-5), TRG shall remove from the caption the Counter-Defendants who have been 

dismissed to date (Jeremy Keating, Richard Gigliotti, Alexander Mele, Securities 

America, Inc., Sean Sullivan, and Capital Income Advisors, LLC (collectively, 

"Dismissed Parties")), leaving only Lloyd Silvers, Steven Dalton and Ardent 

Retirement Planning, LLC as named Counter-Defendants.

2. Also consistent with the representations made in its motion, TRG shall 

review Exhibit A and remove all references to Dismissed Parties as CounterDefendants. (See, e.g., Ex. A at 25 ("counter-defendant Securities America").)

IT IS SO ORDERED.

Dated: April 9, 2020

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