UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION 

LA WREN CE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI REVOCABLE 

TRUST; GREG and ANGELA JULIEN; 

JAMES and SUSAN MACDONALD, as CoTrustees of the MACDONALD FAMILY 

TRUST; R.F. MACDONALD CO.; ANDREW 

NOWAK, for himself and as Trustee of the 

ANDREW NOW AK REVOCABLE LIVING 

TRUST U/ A 2/20/2002; WILLIAM 

RAMSTEIN; and GREG WARRICK, for 

himself and, with SUSAN WARRICK, as CoTrustees of the WARRICK FAMILY TRUST, 

individually and on behalf of all others 

similarly situated, 

Plaintiffs, 

v. 

DELOITTE & TOUCHE LLP, 

EISNERAMPER LLP; SIDLEY AUSTIN 

LLP; TONKON TORP LLP; TD 

AMERITRADE, INC.; and INTEGRITY 

BANK & TRUST, 

Defendants. 

ACOSTA, Magistrate Judge: 

Page 1 - OPINION AND ORDER 

Case No. 3:16-cv-0580-AC 

OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 1 of 12
Introduction 

Defendants Sidley AustinLLP ("Sidley"), TD Ameritrade, Inc. ("Ameritrade"), and Integrity 

Bank & Trnst ("Integrity") (collectively, "Moving Defendants") each move for a protective order 

against Plaintiffs' Requests for Production, asking the court to stay discovery in whole or in pmi 

until the co mi decides the seven pending motions to dismiss the named defendants collectively filed. 

Defendants also assert that Plaintiffs' Requests for Production are overbroad and burdensome, and 

are not proportional to the needs of the case. Finally, Sidley asserts its response to Plaintiffs' 

production request should be deferred because the Plaintiffs' request potentially encompasses 

documents subject to an attorney-client privilege claim by three former executives of the Aequitas 

compames. 

For the reasons that follow, the comi GRANTS IN PART and DENIES IN PART each 

motion for protective order. 1 

Background 

L The Lawsuit. 

Plaintiffs filed this securities fraud lawsuit against an international accounting film and an 

international law firm, a national accounting firm, an Oregon law firm, a national stock trading firm, 

and a bank, alleging that each of them pmiicipated in and aided the Aequitas group of companies 

("Aequitas") sale of a group of securities (the "Disputed Securities") through material 

misrepresentations and omissions. (ECF No. 1 (Complaint), at if 1; ECF No. 57 (First Amended 

1 The protective order motions are atECF No. 160 (Sidley), ECF No. 171 (Ameritrade), and 

ECF No. 175 (Integrity). Each of the Moving Defendants requested oral argument on its motion. 

The court finds oral argument unnecessary to help it resolve these motions. See Local Rule 7-1 ( d)(l) 

( comi has discretion to determine whether oral argument is necessmy). 

Page 2 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 2 of 12
Complaint), at if 1.) Although Plaintiffs assert only a single claim for relief for violation of Oregon 

securities law (ECF No. 57, at 'lf'lf 189-194), they present their claim in a 52-page complaint that 

contains lengthy and detailed factual allegations; asserts scores of alleged failures to disclose, 

misrepresentations, and omissions; and includes a request for class certification. Plaintiffs contend 

that Defendants' alleged misrepresentations were "extensive and pervasive" and that Defendants "are 

jointly and severally liable to return to all Aequitas investors the money they paid for the securities, 

plus interest at the rate stated in the security or 9 percent, whichever is greater." (ECFNo. 57, at 'lf'lf 

1, 2.) Plaintiffs assert their damages from Defendants' alleged actions exceed 13 million dollars 

(ECFNo. 57, at'lf'lf 8-14) and they seek class certification of their claims (ECFNo. 57, at'lf'lf 181-188) 

which, if granted, likely will increase the Defendants' potential liability many times greater than the 

named Plaintiffs' specifically alleged damages. 

Collectively, the Defendants in this case have filed seven motions to dismiss (ECF Nos. 74, 

78, 80, 81, 85, 95, and 113), asserting multiple reasons to support their respective contentions that 

Plaintiffs have failed to state a claim against them. The motions to dismiss asseit Plaintiffs' 

complaint should be dismissed for legal and factual deficiencies. If granted based on some of the 

claimed legal deficiencies, Plaintiffs' claims against one or more of the Defendants could be 

dismissed with prejudice, but Plaintiffs likely would be allowed to attempt to cure factual 

deficiencies tlu·ough an amended complaint. 2 

On November 28, 2016, the comt issued its Opinion and Order (ECF No. 174; see also 

Ciujjitelli, eta I. v. Deloitte & Touche LLP, eta!., 3:16-cv-0580-AC, 2016 WL 6963039 (D. Or. Nov. 

2 The motions to dismiss were fully briefed and oral argument on the motions occurred on 

December 21, 2016. The motions to dismiss currently are under advisement. 

Page 3 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 3 of 12
28, 2016) (hereinafter "November 2016 Opinion and Order"), in which it granted in part and denied 

in part defendant Deloitte & Touche LLP's and defendant EisnerAmper's (the "Accounting Firms") 

respective motions for protective order. 2016 WL 6963039, at* 1. Both motions sought a protective 

order for reasons mostly identical to the reasons asserted in the Moving Defendants' respective 

motions for protective order which the November 16, 2016 Opinion and Order resolves. 

Accordingly, in this Opinion and Order the court will refer to and incorporate relevant sections of 

its November 16, 2016 Opinion and Order, as appropriate. 

II. The Requested Discovery. 

Plaintiffs served requests for production on each of the Moving Defendants under Federal 

Rule of Civil Procedure ("Rule") 26, the request documents each exceeding 30 pages in length and 

setting out at least 24 and at most 36 numbered paragraphs. (Deel. of Zachary M. Briers in Support 

of Defendant Sidley Austin LLP's Motion for Protective Order ("Briers Deel."), ECF No. 161, Ex. 

l; Declaration of Nicholas T. Christakos in Support of Defendant TD Ameritrade's Motion for 

Protective Order ("Christakos Deel."), ECF No. 173, Ex. 1; Declaration of Milo Petranovich in 

Support of Motion for Protective Order oflntegrity Bank & Trust ("Petranovich Deel."), ECF No. 

176, Ex. 1.) Each of the three request documents contain 16 pages of virtually identical definitions 

and instructions, differing only by the particular defendant's name and the specific Aequitas entities 

which Plaintiffs allege the particular defendant materially aided. 3 

3 Both Sidley and Ameritrade filed as exhibits to their respective motions the request for 

production document each received from Plaintiffs. Integrity filed as an exhibit only its response 

to the request document, which does not include the definitions and instructions (but does include 

the individual paragraphs of the request). Based on the close similarity between the Sidley and 

Ameritrade request documents, the court presumes the Integrity request document itself is similar 

in form and content to the Sidley and Ameritrade request documents. 

Page 4 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 4 of 12
Many of the paragraphs call for documents and information pertaining to and "any Aequitas 

company," the definition of which encompasses at least 60 separate limited liability companies and 

other entities, as well as their present and fonner subsidiaries, predecessors, and successors in 

interest. The paragraphs' scope includes "any of the Aequitas securities" issued by each of eight 

Aequitas companies. Paragraphs call production of "communications," which is defined as any 

document containing "the transmittal of information [] in the fonn of facts, ideas, inquiries, or 

otherwise[]", relating to any Aequitas company and security. In sum, the requests for production 

served on each of the three Moving Defendants are as broad in scope as the requests for production 

which were the subject of the court's November 2016 Opinion and Order. 

III. The Pmiies' Positions. 

The Plaintiffs and the Moving Defendants disagree whether discovery should occur prior to 

the comi's ruling on the pending motions to dismiss. (Joint Report of Pmiies' F.R.C.P. 16(f) 

Conference, ECF No. 94, at 2-9.) In their respective motions, each of the Moving Defendants 

primarily argue they should not be required to undertake the expensive, burdensome, and timeconsuming discove1y Plaintiffs request until after the court decides whether Plaintiffs have pleaded 

a viable claim for relief against them. Each of the Moving Defendants also m·gues that discove1y 

should not occur because a discovery stay has been entered in Securities and Exchange Commission 

v. Aequitas Management, LLC, et al., Case No. 3: l 6-cv-00438-PK ("SEC case"), which stay enjoins 

"all discovery directed to the Receiver and the Receivership Entity" and thus applies to all Aequitas 

companies and its affiliates. (See ECF No. 156, filed April 14, 2016.) Sidley additionally argues 

that its motion should be granted because three individual defendants in the SEC case ("Individual 

Defendants") have intervened in this case and filed a motion (ECF No. 196) for protective order to 

Page 5 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 5 of 12
prevent disclosure of any documents or information containing attorney-client privileged 

communications between any of them and Sidley. 

Plaintiffs oppose the motions for a protective order. They contend that the pending motions 

to dismiss will not end their case against any of the Moving Defendants and at most will result a 

rep leading of their allegations. Thus, Plaintiffs conclude, there is no reason or purpose to delay the 

discove1y they seek. Plaintiffs also observe that the discove1y stay entered in the SEC case applies 

only to the Aequitas entities and thus is irrelevant to whether Plaintiffs are entitled to discove1y of 

documents in possession of the Moving defendants in this case. Additionally, Plaintiffs point out 

that even if the Moving Defendants were not patiies in this lawsuit, they still would be non-paiiy 

witnesses from which Plaintiffs could obtain the same documents. Finally, as to Sidley's reliance 

on the Individual Defendants' motion for protective order, Plaintiffs assert the motion is not a reason 

to stay discove1y because they offered to "defer the production of email until after the these limited 

privilege issues are resolved." (ECF No. 168, at 2.) 

Each Moving Defendant proposed a discovery compromise to Plaintiffs while its motion for 

protective order was pending. Sidley, noting that it prepared the offering documents for only one 

Aequitas entity, Aequitas Capital Opportunity Fund ("ACOF") - a representation that parallels 

Plaintiffs' allegation that Sidley's liability is based on its patiicipation in the ACOF offering -

offered to produce all transaction documents for the ACOF securities offering. Those documents 

included "offering memorandum, subscription agreements, atiicles of incorporation, and bylaws," 

and also "all documents establishing exemptions from registration for the ACOF offering." (ECF 

No. 160, at 3.) Ameritrade offered to provide "Aequitas purchase confirmations[,] Aequitas Notes[,] 

and account statements, all relating to Aequitas investments for the named Plaintiffs who were TD 

Page 6 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 6 of 12
Ameritrade customers." (ECF No. 171, at 4.) Integrity proposed giving Plaintiffs "Integrity's file 

for the named plaintiffs who were Integrity customers, Greg Warrick and Greg and Susan W anwick 

as co-trustees for the WaITick Family Trust." (ECF No. 175, at 3.) Plaintiffs rejected each Moving 

Defendant's proposed compromise and instead served on each Moving Defendant the requests for 

production that prompted the filing of the pending protective order motions. 

Legal Standard 

Rule 26 governs discovery in federal civil cases, the scope of which includes "any 

nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs 

of the case." FED. R. CIV. P. 26(b)(l) (italics added). A court may issue a protective order "to 

protect a party or person from annoyance, embatTassment, oppression, or undue burden or expense" 

upon a showing of good cause. FED. R. CIV. P. 26( c )(1 ). The party seeking the protective order must 

establish "specific harm or prejudice will result if no protective order is granted." Foltz v. State 

Farm Mui. Auto Ins. Co., 331F.3d1122, 1130 (9th Cir. 2003)(citing Phillips ex rel. Estates of Byrd 

v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th Cir. 2002). Good cause is generally a "heavy 

burden." Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975). The court has "broad 

discretion ... to decide when a protective order is appropriate and what degree of protection is 

required." Phillips, 307 F.3d at 1211 (citing Seattle Times Co. v. Rhinehardt, 467 U.S. 20, 36 

(1984)). 

Analysis 

L. Preliminmy Matters. 

A. The Purpose of the Moving Defendants' Motions. 

As did the Accounting Firms through their motions for protective order, the Moving 

Page 7 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 7 of 12
Defendants here seek a stay of discovery because they believe their pending motions to dismiss will 

dispose of Plaintiffs' claim. See November 2016 Opinion and Order, 2016 WL 6963039, at *4. 

B. Discovery Stay Standards. 

The standard the court explained in its November 2016 Opinion and Order, 2016 WL 

6963039, at *4-*5, is applicable here to the Moving Defendants' respective motions for protective 

order. 

C. Proportionality. 

The proportionality standard derived from the 2015 amendment to the Federal Rules of Civil 

Procedure 26(b)(l) and described in the court's November 2016 Opinion and Order, 2016 WL 

6963039, at *5, applies to the discovery which is the subject of the Moving Defendants' respective 

motions for protective order. 

II. The Skellerup Factors. 

In its November 2016 Opinion and Order, the comi examined in detail and applied each of 

the seven Skellerup factors to the Accounting Firms' respective motions for protective order. 2016 

WL 6963039, at* 5-*9. Each of the considerations making appropriate the application the Skellerup 

factors to the Accounting Finns' respective motions is present and applicable to the Moving 

Defendants' respective motions here. Accordingly, staying all discovery until the court resolves the 

pending motions to dismiss is not wan·anted, and limited, focused merits discovery should proceed. 

III. Ruling. 

The Moving Defendants' motions for protective order are GRANTED IN PART and 

DENIED IN PART, and they are to provide to Plaintiffs the following discovery: 

A. By Sidley: 

Page 8 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 8 of 12
1. All transaction documents for the ACOF offering, including offering 

memoranda, subscription agreements, articles of incorporation, bylaws, and 

LLC agreements. 

2. All documents relevant to whether the ACOF offering was or was not exempt 

from registration. 

3. All retention and engagement letters between Sidley and any Aequitas 

company regarding Sidley's provision of legal services, including services 

related to the ACOF offering. 

4. All documents Sidley sent to and received from any Aequitas company 

pertaining to the ACOF offering. 

5. All documents Sidley sent to and received from the General Partner of the 

ACOF fund, including documents regarding the preparation of the ACOF 

PPM. 

6. All documents Sidley sent to and received from the Investment Advisor to the 

ACOF fund, including documents regarding the preparation of the ACOF 

PPM. 

7. All documents Sidley sent to and received from the Securities and Exchange 

Commission, the Consumer Financial Protection Bureau, the Department of 

Justice, and any state and federal regulatory and law enforcement agency 

relating to any inquiry or investigation of any Aequitas company. 

8. All documents Sidley sent to and received from any purchaser or prospective 

purchaser of the ACOF securities. 

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Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 9 of 12
9. The names, job titles, and designated primaty office location of the attorneys 

and paralegals/legal assistants who provided legal services to any Aequitas 

company in connection with the ACOF offering. For any attorney and 

paralegal/legal assistant no longer employed by Sidley, also provide the title 

of the last job held and the designated primary office location at the time the 

attorney and paralegal/legal assistant separated from the company. 

Sidley may defer production of email as part of the above-ordered discove1y until after the 

court resolves the attorney-client privilege issues raised in the Individual Defendants' pending 

motion (ECF No. 196) for protective order. 

B. By Ameritrade: 

I. Aequitas purchase confirmations, Aequitas Notes, and account statements, 

all relating to Aequitas investments for any named plaintiff who was an 

Ameritrade customer. 

2. All documents Ameritrade sent to and received from any Aequitas company 

regarding securities issued by or proposed to be issued by any Aequitas 

company. 

3. All documents Ameritrade sent to and received from any registered 

investment advisers, registered dealer-brokers, and purchasers or prospective 

purchasers regarding any Aequitas company. 

4. All promotional materials distributed by and presentations made by 

Ameritrade regarding any Aequitas company security. 

5. All documents Ameritrade sent to and received from the Securities and 

Page 10 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 10 of 12
Exchange Commission, the Consumer Financial Protection Bureau, the 

Department of Justice, and any state and federal regulatory and law 

enforcement agency relating to any inquiry or investigation of any Aequitas 

company. 

6. The names, job titles, and designated pnmary office location of the 

employees who provided services for any named plaintiff who was an 

Ameritrade customer and who bought any Aequitas security. For any 

employee no longer employed by Ameritrade, also provide the title of the last 

job held and the designated primary office location at the time the employee 

separated from the company. 

C. By Integrity: 

1. Integrity's file for any named plaintiff who was an Integrity customer, 

including transaction-level documents. 

2. All documents Integrity sent or received regarding the ACF Notes. 

3. All documents Integrity sent or received regarding the AIOF-II Notes. 

4. All promotional materials distributed by and presentations made by Integrity 

regarding any Aequitas company security. 

5. All documents Integrity sent to and received from any Aequitas company 

regarding securities issued by or proposed to be issued by any Aequitas 

company. 

6. All documents Ameritrade sent to and received from the Securities and 

Exchange Commission, the Consumer Financial Protection Bureau, the 

Page 11 - OPINION AND ORDER 

Case 3:16-cv-00580-AC Document 213 Filed 02/21/17 Page 11 of 12
Department of Justice, and any state and federal regulatory and law 

enforcement agency relating to any inquiry or investigation of any Aequitas 

company. 

7. The names, job titles, and designated primary office location of the 

employees who provided services to any named plaintiff who was an Integrity 

customer and bought any Aequitas security. For any employee no longer 

employed by Integrity, also provide the title of the last job held and the 

designated primary office location at the time employee separated from the 

company. 

Except as described above, Sidley, Ameritrade, and Integrity need not respond to remainder 

of Plaintiffs' requests for production pending the corut's ruling on the Moving Defendants' 

respective motions to dismiss. 

The information described above must be provided within forty-five (45) days of date of 

entry of this Order, or within such other time as the parties agree or the court fmther orders. 

Conclusion 

For the reasons described above, the Moving Defendants' motions (ECFNos. 160, 171, and 

175) for protective order are GRANTED IN PART and DENIED IN PART. 

IT IS SO ORDERED. 

-;d- DATED thisq day of February, 2017. 

'----::71, 

HNV.ACOSTA 

a~ d States Magistrate Judge 

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