Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

Keith A. Ketterling, OSB No. 913368 

Email: kketterling@stollberne.com 

Timothy S. DeJong, OSB No. 940662

Email: tdejong@stollberne.com 

Jacob S. Gill, OSB No. 033238 

Email: jgill@stollberne.com 

Nadia H. Dahab, OSB No. 125630

Email:ndahab@stollberne.com 

STOLL STOLL BERNE LOKTING & SHLACHTER P.C. 

209 SW Oak Street, Suite 500 

Portland, Oregon 97204 

Telephone: (503) 227-1600 

Facsimile: (503) 227-6840 

Steve W. Berman (admitted pro hac vice) 

Email: steve@hbsslaw.com 

Karl P. Barth (admitted pro hac vice) 

Email: karlb@hbsslaw.com 

Lee M. Gordon (admitted pro hac vice)

Email: lee@hbsslaw.com

HAGENS BERMAN SOBOL SHAPIRO LLP 

1918 Eighth Avenue, Suite 3300 

Seattle, Washington 98101 

Telephone: (206) 623-7292 

Facsimile: (206) 623-0594 

Attorneys For Plaintiffs 

[Additional Counsel of Record Listed on Signature Page] 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

PORTLAND DIVISION 

LAWRENCE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI 

REVOCABLE TRUST; GREG and ANGELA 

JULIEN; JAMES and SUSAN 

MACDONALD, as Co-Trustees of the 

MACDONALD FAMILY TRUST; R.F. 

MACDONALD CO.; ANDREW NOWAK, 

for himself and as Trustee of the ANDREW 

NOWAK REVOCABLE LIVING TRUST 

U/A 2/20/2002; WILLIAM RAMSTEIN; and 

Case No. 3:16-cv-00580-AC 

PLAINTIFFS’ OPPOSITION TO 

DEFENDANT DELOITTE & TOUCHE 

LLP’S MOTION FOR PROTECTIVE 

ORDER 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 1 of 18
Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

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GREG WARRICK, for himself and, with 

SUSAN WARRICK, as Co-Trustees 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. 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 2 of 18
PAGE i - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

TABLE OF CONTENTS 

Page 

I. INTRODUCTION ...............................................................................................................1

II. BACKGROUND REGARDING DISCOVERY .................................................................2

III. A PROTECTIVE ORDER IS NOT JUSTIFIED.................................................................3

A. The Audit Workpapers Are Relevant ......................................................................3

B. The Requested Workpapers Are Proportional to the Needs 

of the Case................................................................................................................5

C. Deloitte Fails to Meet Its Heavy Burden to Show Good Cause 

for a Discovery Stay.................................................................................................6

1. Deloitte’s motion to dismiss is not “good cause” to stay 

discovery. .....................................................................................................6

2. Deloitte fails to demonstrate “good cause” related to 

undue burden. ...............................................................................................8

3. A stay will prejudice Plaintiffs and will delay determination 

of this action. ................................................................................................9

IV. CONCLUSION ..................................................................................................................10

 

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PAGE ii - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

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TABLE OF AUTHORITIES 

Page(s) 

CASES

Ainslie v. First Interstate Bank, 

148 Or. App. 162 (1997) ........................................................................................................4, 8 

BAC Home Loan Servicing, LP v. Advanced Funding Strategies, Inc., 

2013 WL 6844766 (D. Nev. 2013) ........................................................................................1, 9 

Baldwin v. United States, 

2011 WL 5177698 (D. Colo. Nov. 1, 2011) ..............................................................................7 

Beckman Indus. v. Int’l Ins. Co., 

966 F.2d 470 (9th Cir. 1992) .....................................................................................................8 

Blankenship v. Hearst Corp., 

519 F.2d 418 (9th Cir. 1975) .....................................................................................................6 

Burgoon v. Narconon of N. Cal., 

125 F. Supp. 3d 974 (N.D. Cal. 2015) .......................................................................................7 

Carr v. State Farm Mut. Auto. Ins. Co., 

312 F.R.D. 459 (N.D. Tex. 2015) ..............................................................................................3

Fein v. Numex Corp., 

92 F.R.D. 94 (S.D.N.Y. 1981) ...............................................................................................4, 9 

Foltz v. State Farm Mut. Auto. Ins. Co., 

331 F.3d 1122 (9th Cir. 2003) ...................................................................................................8 

In re Goodyear Tire & Rubber Co. Sec. Litig., 

1991 WL 172930 (N.D. Ohio 1991) ......................................................................................4, 9 

Gray v. First Winthrop Corp., 

133 F.R.D. 39 (N.D. Cal. 1990) .................................................................................................6 

Hatamian v. Advanced Micro Devices, Inc., 

2015 WL 7180662 (N.D. Cal. Nov. 16, 2015) ..........................................................................3 

Marksman Partners, L.P. v. Chantal Pharm. Corp., 

1996 U.S. Dist. LEXIS 13870 (C.D. Cal. Aug. 15, 1996) .........................................................4 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 4 of 18
PAGE iii - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

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1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

McFadden v. Ballard, Spahr, Andrews & Ingersoll, LLP, 

243 F.R.D. 1 (D.D.C. 2007) .......................................................................................................8 

Ministerio Roca Solida v. U.S. Dep’t of Fish & Wildlife, 

288 F.R.D. 500 (D. Nev. 2013)..................................................................................................6 

N.U. v. Wal-Mart Stores, Inc., 

2016 WL 3654759 (D. Kan. 2016) ............................................................................................3 

O’Neal v. Or. Dep’t of Justice, 

2015 WL 5308709 (D. Or. 2015) ...............................................................................................6 

Rutman Wine Co. v. E. & J. Gallo Winery, 

829 F.2d 729 (9th Cir. 1987) .....................................................................................................7 

Schoppe-Rico v. Lewis, 

2012 WL 3022441 (N.D. Cal. 2012) .......................................................................................10 

Siegert v. Gilley, 

500 U.S. 226 (1991) ...................................................................................................................6 

Skellerup Indus. Ltd. v. City of Los Angeles, 

163 F.R.D. 598 (C.D. Cal. 1995) .........................................................................................7, 10 

Thomas v. Cate, 

715 F. Supp. 2d 1012 (E.D. Cal. 2010)......................................................................................8 

Twin City Fire Ins. Co. v. Emp’rs Ins. of Wausau, 

124 F.R.D. 652 (D. Nev. 1989)..............................................................................................7, 9

Wenger v. Monroe, 

282 F.3d 1068 (9th Cir. 2002) ...................................................................................................6 

Wetta v. Templeton Asset Mgmt., 

1998 U.S. Dist. LEXIS 13321 (S.D.N.Y. Aug. 25, 1998) .........................................................4 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 5 of 18
PAGE 1 - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

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1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

Plaintiffs submit this memorandum in opposition to defendant Deloitte & Touche LLP’s 

Motion for Protective Order (“Motion”). 

I. INTRODUCTION 

This case has been pending for more than six months, and no documents have been 

produced by any party. Seeking to further delay the inevitable production of its audit 

workpapers, Deloitte seeks to stay all discovery until the pending motions to dismiss are resolved 

months from now. “The explosion of Rule 12(b)(6) motions in the wake of Bell Atlantic Corp v. 

Twombly and Ashcroft v. Iqbal has made speedy determinations of cases increasingly more 

difficult. . . . The fact that a non-frivolous motion is pending is simply not enough to warrant a 

blanket stay of all discovery.” BAC Home Loan Servicing, LP v. Advanced Funding Strategies, 

Inc., 2013 WL 6844766, at *5 (D. Nev. 2013) (internal citations omitted). Deloitte has not met 

the heavy burden required to obtain a discovery stay. 

Deloitte contends—but does not substantiate—that plaintiffs’ document requests present 

an undue burden and are disproportional to the needs of the case. As stated at page two of the 

Joint Report of Parties’ F.R.C.P. 26(f) Conference [Dkt. No. 94], filed on July 14, 2016, 

plaintiffs are willing to limit Deloitte’s initial production of documents to Deloitte’s audit 

workpapers. Plaintiffs’ counsel reiterated this compromise when the parties conferred before 

the filing of this Motion. 

Deloitte’s workpapers are relevant and important to resolution of the issues in this case. 

The First Amended Complaint (“FAC”) alleges that Aequitas made false statements regarding its 

financial condition to investors in violation of Oregon law, and that Deloitte has secondary 

liability because it participated in and materially aided Aequitas’ sales of securities, in part by 

performing the audits that are reflected in the workpapers. The workpapers are relevant to 

Aequitas’ primary liability for untrue statements regarding its financial condition (an issue 

common to all defendants in this action). The workpapers are also relevant to Deloitte’s 

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1918 8th Avenue, Suite 3300

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secondary liability, because they reflect the extent and importance of Deloitte’s involvement in 

Aequitas’ sales of securities. Furthermore, the workpapers are relevant to the defense afforded to 

Deloitte by ORS 59.115(3), which requires Deloitte to prove that it “did not know, and, in the 

exercise of reasonable care, could not have known, of the existence of facts on which the liability 

is based.” Thus, the workpapers are central to multiple liability issues in this case. 

Deloitte does not address the relevant Rule 26(b)(1) factors governing proportionality, 

nor does it identify any legally cognizable “burden” associated with producing its workpapers, 

offering only a declaration from its litigation attorney stating that there are “thousands of 

workpapers” for Deloitte’s year-end 2013 and 2014 audits. Masuda Decl. [Dkt. No. 140], ¶ 3. 

But the normal inconveniences associated with litigation do not constitute “burden.” Plaintiffs 

submit a declaration from an accounting and auditing expert, who explains that the burden to 

produce audit workpapers is minimal. Any minimal inconvenience to Deloitte in producing 

thousands of workpapers is certainly proportional in this case seeking recovery of hundreds of 

millions of dollars of investor losses. 

Deloitte has not established good cause required for the unusual remedy of a blanket stay 

of discovery. The Federal Rules of Civil Procedure do not provide for a stay of discovery upon 

the mere filing of a motion to dismiss. This is not a case presenting threshold issues of 

jurisdiction or immunity that must be resolved before discovery can proceed. Nor does Deloitte 

conclusively establish that its motion to dismiss will succeed. Further, producing their 

workpapers now will prevent undue delay by permitting plaintiffs to begin evaluating Deloitte’s 

work and assembling evidence concerning the complex financial issues in this case. 

II. BACKGROUND REGARDING DISCOVERY 

After the lawsuit was filed on April 4, 2016, defendants insisted that the parties’ Rule 

26(f) conference—a prerequisite to conducting discovery—be delayed until June 30, 2016. At 

the Rule 26(f) conference, plaintiffs rejected defendants’ request that plaintiffs agree to stay 

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1918 8th Avenue, Suite 3300

Seattle, WA  98101

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discovery pending rulings on defendants’ motions to dismiss and asserted that defendants are 

required to participate in discovery in the absence of a protective order. See Joint Report of Rule 

26(f) Conference [Dkt. No. 94] at 2-5. In the Joint Report, plaintiffs offered to initially limit 

document discovery from Deloitte (and the other auditor defendant, EisnerAmper) to only the 

audit workpapers. Deloitte waited until September 29 to file a motion for protective order. 

III. A PROTECTIVE ORDER IS NOT JUSTIFIED 

Deloitte seeks to avoid discovery on the bases that the requested discovery is not relevant 

and proportional to the needs of the case, or that all discovery should be stayed pending 

resolution of its motion to dismiss. Each of these arguments should be rejected. 

A. The Audit Workpapers Are Relevant 

Deloitte fails to meet its burden to “show [that] discovery should not be allowed” and to 

“clarify[y], explai[n], and suppor[t] its objections.” Hatamian v. Advanced Micro Devices, Inc., 

2015 WL 7180662, at *1 (N.D. Cal. Nov. 16, 2015) (internal quotation marks omitted); see also

Carr v. State Farm Mut. Auto. Ins. Co., 312 F.R.D. 459, 464-69 (N.D. Tex. 2015) (imposing a 

burden on the party resisting discovery to “specifically object and show that the requested 

discovery does not fall within Rule 26(b)(1)’s scope of proper discovery”).1

 Deloitte cannot 

seriously argue that its workpapers are irrelevant to plaintiffs’ claims, which are based, in part, 

on Deloitte’s audit services. Its relevance arguments pertain to plaintiffs’ requests for documents 

relating to other services that Deloitte provided, beyond the audit services. See Motion at 7-8. 

Deloitte incorrectly argues that its workpapers are relevant only to Deloitte’s compliance 

with professional auditing standards, which it contends are not at issue in this action. This 

argument misses the mark. To prevail on their claim against Deloitte, plaintiffs will be required 

to show both Aequitas’ primary liability for untrue statements of fact concerning its financial 

 

1 See generally N.U. v. Wal-Mart Stores, Inc., 2016 WL 3654759, at *6 (D. Kan. 2016) (“[T]he 

amendments to Rule 26(b) do not alter the burden placed on a party resisting discovery . . . .”). 

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condition, as well as Deloitte’s participation and material aid in Aequitas’ unlawful sales of 

securities. Deloitte’s workpapers are relevant to both. 

Deloitte’s workpapers are directly relevant to the question of Aequitas’ primary liability. 

In the FAC, plaintiffs allege, for instance, that “Aequitas manufactured an appearance of 

financial strength by manipulating the value of assets carried on its books . . . .” FAC, ¶ 3. 

Plaintiffs further allege specific untrue statements of fact concerning matters concerning 

Aequitas’ financial condition, including use of investor funds (id., ¶¶ 136-145), the value of its 

portfolio of student loan receivables (id., ¶¶ 146-160), asset valuation (id., ¶¶ 161-168), and 

solvency (id., ¶¶ 169-175). Courts have recognized that audit workpapers are plainly relevant to 

these types of claims. See, e.g., Fein v. Numex Corp., 92 F.R.D. 94, 96-97 (S.D.N.Y. 1981) 

(auditor’s workpapers “plainly relevant” to allegations that the company misrepresented its 

financial condition in a prospectus); Marksman Partners, L.P. v. Chantal Pharm. Corp., 1996 

U.S. Dist. LEXIS 13870, at * 14-15 (C.D. Cal. Aug. 15, 1996) (auditor workpapers relevant to 

claims the company misrepresented its financial condition); In re Goodyear Tire & Rubber Co. 

Sec. Litig., 1991 WL 172930, at *3 (N.D. Ohio 1991); Wetta v. Templeton Asset Mgmt., 1998 

U.S. Dist. LEXIS 13321, at *4 (S.D.N.Y. Aug. 25, 1998) (workpapers relevant because they 

“likely document the valuation of defendants’ assets”). The accompanying Sowards Decl. 

further confirms that the requested workpapers are relevant to plaintiffs’ claims in this action.2

 

Similarly, Deloitte’s secondary liability under ORS 59.115(3) depends on the extent and 

importance of its involvement. See Ainslie v. First Interstate Bank, 148 Or. App. 162, 184 

(1997). In its motion to dismiss, Deloitte agrees that its audit reports are “the final product of a 

complex process involving discretion and judgment on the part of the auditor at every stage.” 

Deloitte Motion to Dismiss [Dkt. No. 85] at 19 (internal quotation marks omitted). Thus, the 

 

2

 Declaration of Rodney W. Sowards in Support of Plaintiffs’ Opposition to Defendant Deloitte 

& Touche LLP’s Motion for a Protective Order, ¶ 6. 

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1918 8th Avenue, Suite 3300

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workpapers are critical evidence of the extent and importance of Deloitte’s involvement. 

Further, Deloitte’s liability under ORS 59.115(3) is subject to the affirmative defense that it “did 

not know, and, in the exercise of reasonable care, could not have known, of the existence of the 

facts on which the liability is based.” The audit workpapers reflect the matters of Deloitte’s 

inquiry and are directly relevant to this affirmative defense. 

B. The Requested Workpapers Are Proportional to the Needs of the Case 

Deloitte further contends that the requested discovery is not proportional to the needs of 

the case. Motion at 7-8. However, Deloitte does not even address the factors set forth in Rule 

26(b)(1): “the importance of the issues at stake in the action, the amount in controversy, the 

parties’ relative access to relevant information, the parties’ resources, the importance of the 

discovery in resolving the issues, and whether the burden or expense of the proposed discovery 

outweighs its likely benefit.” Each of those factors favors plaintiffs. 

Deloitte’s perfunctory argument regarding proportionality relates to its obligation to 

produce documents beyond the audit workpapers. Motion at 7-8. Similarly, the only objection 

to proportionality asserted in Deloitte’s written objections is “to the extent it seeks information 

related to ‘any Aequitas Company’ when only certain Aequitas entities issued the securities at 

issue in the Complaint, or were allegedly audited by Deloitte.” Masuda Decl. [Dkt. No. 140], 

Ex. 4 (responses to RFP Nos. 7 & 8, pp. 12-14). Plaintiffs agree to limit Deloitte’s initial 

production to its audit workpapers. Thus, Deloitte does not need a protective order. 

The proportionality factors that the Court is to consider all favor plaintiffs. The amount 

in controversy is in the hundreds of millions of dollars. Deloitte and its lawyers have access to 

Deloitte’s workpapers, and plaintiffs do not. Deloitte’s resources outweigh the resources of the 

investor plaintiffs, who have suffered millions of dollars in losses. As explained above, the 

workpapers are highly relevant and important in resolving the merits of plaintiffs’ claims and 

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1918 8th Avenue, Suite 3300

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Deloitte’s anticipated defenses. The minimal burden of producing the workpapers, as discussed 

below, is outweighed by the importance of the discovery. 

C. Deloitte Fails to Meet Its Heavy Burden to Show Good Cause for a Discovery Stay 

A party seeking a protective order must meet a “heavy burden” to show the “good cause” 

necessary to deny discovery. Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975). 

Deloitte contends that “good cause” exists because (1) it has a pending motion to dismiss; (2) the 

requested discovery would subject it to “undue burden”; and (3) a discovery stay would promote 

the interests of the just, speedy, and inexpensive determination of this action. Deloitte is 

mistaken on all counts. 

1. Deloitte’s motion to dismiss is not “good cause” to stay discovery. 

The mere pendency of a motion to dismiss does not provide the requisite showing of 

“good cause.” Gray v. First Winthrop Corp., 133 F.R.D. 39, 40 (N.D. Cal. 1990). “Had the 

Federal Rules contemplated that a motion to dismiss under [Rule] 12(b)(6) would stay discovery, 

the Rules would contain a provision to that effect.” Id. 

Although the Ninth Circuit has explained that courts may stay discovery pending the 

resolution of a dispositive motion, courts generally do so only in limited circumstances. Where a 

motion to dismiss attacks the pleadings on the basis of “threshold issues”—e.g., jurisdiction, 

venue, immunity, or other defects that may not be cured through amendment—a stay of 

discovery may be appropriate. Siegert v. Gilley, 500 U.S. 226, 231-32 (1991). Indeed, such 

were the circumstances in three of the four cases that Deloitte cites in support of its motion. See, 

e.g., Wenger v. Monroe, 282 F.3d 1068, 1076-77 (9th Cir. 2002) (jurisdictional challenge); 

O’Neal v. Or. Dep’t of Justice, 2015 WL 5308709, at *1-2 (D. Or. 2015) (jurisdictional 

challenge); Ministerio Roca Solida v. U.S. Dep’t of Fish & Wildlife, 288 F.R.D. 500, 506 (D. 

Nev. 2013) (“threshold immunity question[s],” as distinct from “factual issues,” should be 

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1918 8th Avenue, Suite 3300

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decided before the parties engage in discovery”).3

 Those circumstances are not present here, 

however. The pending motions to dismiss do not challenge plaintiffs’ complaint on the basis of 

any “threshold issues.” 

With respect to a non-jurisdictional challenge such as Deloitte’s pending motion to 

dismiss, “[a] district court may ... stay discovery when it is convinced that the plaintiff will be 

unable to state a claim for relief.’” Twin City Fire Ins. Co. v. Emp’rs Ins. of Wausau, 124 F.R.D. 

652, 653 (D. Nev. 1989) (quoting Wood v. McEwen, 644 F.2d 797, 801 (9th Cir. 1981)).4 

Deloitte speculates that its motion to dismiss will succeed (as would every defendant that has 

filed a similar motion). Motion at 6-8. But this type of “[i]dle speculation does not satisfy Rule 

26(c)’s good cause requirement.” Skellerup Indus. Ltd. v. City of Los Angeles, 163 F.R.D. 598, 

600 (C.D. Cal. 1995) (alteration in original). Further, Deloitte’s opinion is merely unjustified 

wishful thinking. Deloitte seeks to excuse itself from the litigation by arguing (without a single 

legal authority supporting its position) that it cannot be liable unless its audit reports were 

included in offering documents through which Aequitas sold securities. Motion at 7. But, as 

described in plaintiffs’ opposition to Deloitte’s motion to dismiss, Deloitte’s proposed new 

standard for liability is contrary to law, which imposes no such requirement and instead provides 

liability to all parties that participate or provide material aid in the underlying primary violation 

 

3

 Deloitte’s fourth authority, Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729 (9th Cir. 

1987), presented circumstances in which the plaintiff sought discovery after the claims had 

already been dismissed. Rutman Wine is therefore also distinguishable and should not guide this 

Court’s decision. 

4 Baldwin v. United States, 2011 WL 5177698, at *2 (D. Colo. Nov. 1, 2011) (“[W]hile courts 

have frequently imposed a stay when issues relating to jurisdiction or immunity have been 

raised, motions relating to a failure to state a claim are not unique nor do they raise similar 

concerns that the defendants are unnecessarily subject to litigation.”) See also Burgoon v. 

Narconon of N. Cal., 125 F. Supp. 3d 974, 993-94 (N.D. Cal. 2015) (holding that pending 

motions to dismiss did not bar discovery, “especially [where] there is nothing to show that any 

deficiency in [the] complaint would be incapable of being cured through amendment”). 

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of Oregon Securities Law. Plfs. Opp. to Deloitte Motion to Dismiss [Dkt. No. 122] at 9-16. 

Whether a party “participates or provides material aid” depends on the extent and importance of 

the defendant’s involvement, and no per se exception such as Deloitte’s proposed new standard 

has any basis in law. Ainslie, 148 Or. App. at 184. Simply put, it is far from certain that Deloitte 

will be able to avoid liability based on its proposed legal standard. Deloitte has not provided 

convincing proof that plaintiffs will be unable to state a claim for relief. 

2. Deloitte fails to demonstrate “good cause” related to undue burden. 

Deloitte asserts that complying with plaintiffs’ discovery requests would subject it to 

“undue burden.” Motion at 5-6. Good cause can be established only by showing that “specific 

prejudice or harm will result if no protective order is granted.” Foltz v. State Farm Mut. Auto. 

Ins. Co., 331 F.3d 1122, 1130 (9th Cir. 2003). “Broad allegations of harm, unsubstantiated by 

specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.” Beckman Indus. v. 

Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (internal quotation marks omitted). 

Accordingly, a party “must specifically establish the nature of any alleged burden, usually by 

affidavit or other reliable evidence.” Thomas v. Cate, 715 F. Supp. 2d 1012, 1032 (E.D. Cal. 

2010) (emphasis added).5

Because plaintiffs agree to limit the requested discovery to Deloitte’s audit workpapers, 

the majority of Deloitte’s unsupported assertions of burden are not relevant. With respect to the 

workpapers, Deloitte states only that there are “thousands of work papers” for the 2013/2014 

audits of the six Aequitas entities through which Aequitas sold securities to plaintiffs. Motion at 

5-6. Deloitte bases its conclusory statement on an attorney declaration, without any direct 

 

5 See also McFadden v. Ballard, Spahr, Andrews & Ingersoll, LLP, 243 F.R.D. 1, 11 (D.D.C. 

2007) (“I join every other member of the federal judiciary who has considered the question of 

burdensomeness and refuse to consider an objection of burdensomeness without a specific 

showing, usually made by affidavit, of why the demand is unreasonably burdensome.”). 

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support from Deloitte or any specific description or quantification of the burden in producing 

these workpapers. This conclusory assertion falls far short of the required specific showing of 

burden. “[A] showing that discovery may involve some inconvenience and expense does not 

suffice to establish good cause for issuance of a protective order. . . . Some extraordinary 

justification must be shown to satisfy the good cause requirement of Fed. R. Civ. P. 26(c).” Twin 

City Fire Ins. Co., 124 F.R.D. at 653. District courts have routinely rejected similar claims by 

accounting firms that producing their workpapers would subject them to undue burden: 

No claim is made by Andersen that the [audit work]papers sought, although 

perhaps quantitatively significant, cannot be collected with modest effort. The 

documents sought are specifically defined, readily identifiable and likely to be 

located in but a few locations. 

Fein, 92 F.R.D. at 97.6 

The holding of Fein applies with even more force today. Although workpapers were kept 

in paper files at the time Fein was decided, they are now kept electronically and could be easily 

located and produced with minimal effort. As described in the Sowards Declaration, Auditing 

workpapers are typically stored together as a unit as electronic files, and could be easily 

produced without significant burden to Deloitte. Sowards Decl., ¶ 8. 

3. A stay will prejudice Plaintiffs and will delay determination of this action. 

Deloitte claims that a stay of discovery will promote the “just, speedy and inexpensive” 

determination of this action. Motion at 8-10. But the requested stay would achieve exactly the 

opposite result. By definition, an order staying all discovery will delay these proceedings. See, 

e.g., BAC Home Loan Servicing, 2013 WL 6844766, at *5 (noting that “prohibiting or delaying 

 

6 See also In re Goodyear Tire & Rubber Co. Sec. Litig., 1991 WL 172930, at *4 (“[O]nce the 

unsupported arguments are swept aside, the facts of the present case are very similar to those in 

[Fein v.] Numex, and this Court similarly rejects Price Waterhouse’s claim of 

burdensomeness.”). 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 14 of 18
PAGE 10 - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

all discovery will often cause unwarranted delay”); Schoppe-Rico v. Lewis, 2012 WL 3022441, 

at *1 (N.D. Cal. 2012) (“[S]taying discovery would only further delay resolution of the case if 

the motion to dismiss is denied.”). 

Even if Deloitte’s motion to dismiss were granted, it would not result in the termination 

of litigation against the other defendants in this action and would not relieve Deloitte from 

producing the audit workpapers, which are relevant to Aequitas’ primary liability, an issue 

common to plaintiffs’ claims against all defendants. See Skellerup Indus. Ltd., 163 F.R.D. at 600 

(concluding that staying discovery would be wasteful where third-party discovery involving 

defendant likely would continue in any event). Deloitte has been sued in Oregon state court by 

two groups of investors asserting claims identical to plaintiffs’.7

 The Receiver does not object to 

plaintiffs’ discovery from Deloitte, and has specifically requested a copy of Deloitte’s 

workpapers.8 Thus, a stay will only delay Deloitte’s inevitable production of these documents. 

IV. CONCLUSION 

For all of the reasons above, plaintiffs respectfully request that the Court deny Deloitte’s 

Motion for Protective Order. 

 

 

7 Albers v. Deloitte & Touche LLP, Mult. Cnty. Cir. Ct. No. 16CV32562 (filed Oct. 4, 2016); 

Wurster v. Deloitte & Touche LLP, Mult. Cnty. Cir. Ct. No. 16CV25920 (filed Aug. 11, 2016). 

8

 Joint Report [Dkt. No. 94] at 4.

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 15 of 18
PAGE 11 - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

 DATED this 17th day of October, 2016. 

HAGENS BERMAN SOBOL SHAPIRO LLP 

By: /s/ Steve W. Berman 

Steve W. Berman (admitted pro hac vice) 

Karl P. Barth (admitted pro hac vice) 

1918 Eighth Avenue, Suite 3300 

Seattle, WA 98101 

Telephone: (206) 623-7292 

Facsimile: (206) 623-0594 

steve@hbsslaw.com 

karlb@hbsslaw.com 

-ANDKeith A. Ketterling, OSB No. 913368 

Timothy S. DeJong, OSB No. 940662 

Jacob S. Gill, OSB No. 033238 

Nadia H. Dahab, OSB No. 125630 

STOLL STOLL BERNE LOKTING & 

SHLACHTER P.C. 

209 SW Oak Street, Suite 500 

Portland, OR 97204 

Telephone: (503) 227-1600 

Facsimile: (503) 227-6840 

kketterling@stollberne.com 

tdejong@stollberne.com 

jgill@stollberne.com 

ndahab@stollberne.com 

-ANDLee M. Gordon (admitted pro hac vice) 

HAGENS BERMAN SOBOL SHAPIRO LLP 

301 N. Lake Ave., Suite 920 

Pasadena, California 91101 

Telephone: (213) 330-7150 

Facsimile: (213) 330-7152 

lee@hbsslaw.com 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 16 of 18
PAGE 12 - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

-ANDRobert S. Banks, Jr., OSB No. 821862 

Darlene D. Pasieczny, OSB No. 124172 

SAMUELS YOELIN KANTOR LLP 

111 SW 5th Ave., Suite 3800 

Portland, Oregon 97204-3642 

Telephone (503) 226-2966 

Facsimile (503) 222-2937 

bbanks@SamuelsLaw.com 

darlenep@SamuelsLaw.com 

Attorneys for Plaintiffs 

 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 17 of 18
PAGE 13 - PLAINTIFFS’ OPPOSITION TO DEFENDANT DELOITTE & TOUCHE 

 LLP’S MOTION FOR PROTECTIVE ORDER 

Hagens Berman Sobol Shapiro LLP

1918 8th Avenue, Suite 3300

Seattle, WA  98101

TEL. (206) 623‐7292   FAX (206) 623‐0594

CERTIFICATE OF SERVICE 

 I hereby certify that, on October 17, 2016, this document was filed through the 

Court’s ECF system and will be sent electronically to the registered participants as identified on 

the docket, and that paper copies will be sent by U.S. mail, postage prepaid, to anyone indicated 

as non-registered participants. 

 s/ Steve W. Berman 

 Steve W. Berman 

Case 3:16-cv-00580-AC Document 147 Filed 10/17/16 Page 18 of 18