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PORTLAND, OREGON 97204-3158

503.778.2100 FAX: 503.778.2200

PAGE 1 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

Milo Petranovich, OSB No. 813376

petranovichm@lanepowell.com

Peter D. Hawkes, OSB No. 071986

hawkesp@lanepowell.com

SreeVamshi C. Reddy, OSB No. 140560

reddyv@lanepowell.com

LANE POWELL PC

601 SW Second Avenue, Suite 2100

Portland, Oregon 97204-3158

Telephone: 503.778.2114

Attorneys for Defendant Integrity Bank & Trust

UNITED STATES DISTRICT COURT

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

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 No. 3:16-cv-00580-AC

Defendant Integrity Bank & Trust’s

MOTION FOR CLARIFICATION

AND/OR RECONSIDERATION

(ORAL ARGUMENT REQUESTED)

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PAGE 2 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

I. LOCAL RULE 7-1 CERTIFICATION

Pursuant to L.R. 7.1(a), counsel for defendant Integrity Bank & Trust (“Integrity”) has 

conferred by telephone with counsel for plaintiffs in good faith regarding discovery and the issues 

raised in the instant motion, but the parties have been unable to agree on the proper scope or 

sequence of discovery.

II. MOTION

Integrity respectfully moves the Court to clarify and/or reconsider its February 21, 2017 

Opinion and Order (ECF No. 213, hereinafter “February 2017 Opinion and Order”), which granted 

in part and denied in part Integrity’s Motion for a Protective Order in the above-captioned matter.

Pursuant to 28 U.S.C. § 636(b)(1)(A) and Rule 72(a) of the Federal Rules of Civil 

Procedure, Integrity has also simultaneously filed Objections to the February 2017 Opinion and 

Order, and, in the alternative, requested that the Court recommit this dispute to Your Honor for 

clarification regarding the scope of the rulings with respect to Integrity set forth in the February 

2017 Opinion and Order.

III. MEMORANDUM OF LAW

A. Introduction.

Integrity respectfully requests that the Court clarify and/or reconsider its February 2017 

Opinion and Order, which, despite the Court’s clear language to the contrary, serves to expand the 

scope of discovery, rather than focusing and limiting the scope in accordance with “the needs of 

the case.” See Fed. R. Civ. P. 26(b)(1).

B. Relevant Factual Background.

Integrity sets forth below only those facts necessary to provide context for the instant 

motion. A more detailed recitation of the relevant facts is contained in the pleadings accompanying 

the instant motion.

1. Plaintiffs’ document requests and Integrity’s motion for protective order. 

Plaintiffs served their extensive First Requests for Production of Documents on Integrity on 

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PAGE 3 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

September 29, 2016 (hereinafter, “Plaintiffs’ RFPs” or the “Document Requests”), attached as 

Exhibit 1 to the Declaration of Milo Petranovich (hereinafter “Petranovich Decl.”). Plaintiffs’ 

RFPs contain thirty-six (36) individual requests, most of which are burdensome, overly broad, 

irrelevant and disproportionate to the needs of this litigation, particularly at this stage. Plaintiffs 

have attempted, unsuccessfully, to plead a secondary liability claim against Integrity with respect 

to two named plaintiffs, and yet they seek what amounts to full merits-based discovery for a 

certified class action.1 

On November 28, 2016, Integrity filed a Motion for Protective Order and Supporting 

Memorandum (ECF No. 175), requesting that the Court issue a protective order against Plaintiffs’ 

RFPs, pending: 

(i) disposition of Integrity’s Motion to Dismiss Plaintiffs’ First 

Amended Complaint, (ECF Nos. 95 and 135), and the Joint Motion 

to Dismiss the First Amended Complaint, (ECF No. 74) (“Joint 

Motion”), and (ii) the lifting of the discovery stay in the SEC action. 

Alternatively, Integrity moves to limit plaintiffs’ discovery to those 

documents to be produced under its Response to Plaintiffs’ First 

Request for Production, pending (i) and (ii) above.

(Integrity’s Mot. for Prot. Order at 2, attached as Exhibit 2 to Petranovich Decl.)

Integrity set forth a number of reasons why a stay of discovery is appropriate, including 

the pending motions to dismiss, the stay of discovery in the SEC Receivership action and the 

inevitably imminent filing of a second amended complaint. (Id. at 3-7.) Integrity also requested, 

in the alternative, that discovery be limited to “the documents Integrity has agreed to produce in 

its Response to Plaintiffs’ First Requests for Production of Documents, essentially all the 

documents in Integrity’s customer files of those two named plaintiffs in the First Amended 

Complaint (“FAC”) who were customers of Integrity,” and that ESI be excluded. (Id. at 3, 7.) 

 1 Notably, Plaintiffs’ Document Requests require production of ESI, with extensive instructions 

and guidelines regarding the type and manner of production, despite the fact that the Parties agreed, 

when they filed their Joint Report of Parties’ F.R.C.P. 26(f) Conference with the Court on 

November 2, 2016 (ECF No. 163, hereinafter the “Joint Report”) that “production of ESI is not 

appropriate at this time * * * [and] to discuss such issues in conjunction with the production of 

ESI in due course.” (Joint Report at 7.)

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PAGE 4 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

Integrity argued that Plaintiffs’ Document Requests are “overbroad and disproportionate 

to the claim in this case” under the plain language of Rule 26 of the Federal Rules of Civil 

Procedure (“Rule 26”) and the recent amendment thereto, and premised on a faulty reading of the 

reach of the Oregon Securities Law, the requirements of federal pleading and the scope of 

reasonable discovery in light thereof. (Id. at 7.)

2. The Court’s rulings in the February 2017 Opinion and Order. The Court 

granted in part and denied in part Integrity’s motion for a protective order by Opinion and Order 

issued on February 21, 2017. (ECF No. 213, attached as Exhibit 3 to Petranovich Decl. (hereinafter 

“February 2017 Opinion and Order”).) The February 2017 Opinion and Order cross-references 

and incorporates the Opinion and Order issued by the Court on November 28, 2016, in which the 

Court granted in part and denied in part defendant Deloitte & Touche LLP’s and defendant 

EisnerAmper LLP’s motions for a protective order. (ECF No. 174, attached as Exhibit 4 to 

Petranovich Decl. (hereinafter “November 2016 Opinion and Order”).)

In both the November 2016 and February 2017 Opinions and Orders, the Court ultimately 

held that only “limited, focused merits discovery should proceed.” (Nov. 2016 Opinion and Order 

at 18-19; Feb. 2017 Opinion and Order at 8.) In the November 2016 Opinion and Order, the Court 

explicitly concluded that “Plaintiffs’ requests for production are disproportionate to the needs of 

the case at this stage.” (Nov. 2016 Opinion and Order at 19.) The Court also noted that:

In a complex case where pending motions to dismiss raise credible 

legal and factual issues, “the needs of the case” have not yet been 

finally established. Delaying discovery or limiting its scope until 

those issues are decided is appropriate and implements the 2015 

Amendment’s mandate for a renewed consideration of the time and 

money litigants must expend on discovery.

(Id. at 18.)

Despite the Court’s clearly manifested intent to limit and focus discovery in this matter,

the plain language of the Court’s specific discovery rulings with respect to Integrity has the 

opposite effect. Some of these rulings, if interpreted literally, expand the scope of discovery, rather 

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503.778.2100 FAX: 503.778.2200

PAGE 5 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

than focusing and limiting the scope in accordance with “the needs of the case.” See Fed. R. Civ. 

P. 26(b)(1).

The Court held that Integrity was required to produce, within forty-five (45) days of entry 

of the Order, the following:

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 Ameritrade2 [sic] 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.

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.

(Feb. 2017 Opinion and Order at 11-12 (emphasis added).)

Integrity respectfully requests clarification from the Court with respect to Rulings 2, 3 and 

5, which are italicized in the above list. Ruling No. 2 – “[a]ll documents Integrity sent or received 

regarding the ACF Notes” – is unclear in that the ruling does not specify from whom the documents 

in question were received or to whom the documents were sent. If the ruling was intended to 

include all documents sent, for example, to Integrity’s clients regarding the ACF Notes, then 

 2 Integrity and Plaintiffs have agreed that the reference in Ruling 6 is intended to be to Integrity 

and not to TD Ameritrade.

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PAGE 6 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

potentially thousands of client account statements and related emails, which are irrelevant to the 

claims at issue in the instant litigation, would be included in the mandated production, making 

such production extremely burdensome and expensive. For the same reasons, Integrity requests

clarification regarding Ruling No. 3, regarding the AIOF-II Notes. Furthermore, with respect to 

Ruling No. 2, neither of the named plaintiffs claims to have purchased an ACF Note through 

Integrity, making the costly and time-consuming production of “all documents” related to the ACF 

Notes even more irrelevant to any party’s claim or defense and disproportionate to the needs of 

the case. See Fed. R. Civ. P. 26(b)(1). Integrity, however, has no objection to producing a form 

of subscription agreement and any promotional materials related to the ACF or AIOF-II Notes to 

Plaintiffs.

Integrity also requests clarification with respect to Ruling No. 5 – “[a]ll documents 

Integrity sent to and received from any Aequitas company regarding securities issued by or 

proposed to be issued by any Aequitas company.” If the Court’s ruling was intended to include, 

for example, emails, then thousands of potential documents could be implicated, the vast majority 

of which would be irrelevant to the scope of the instant litigation. Integrity has no objections to 

the remainder of the Court’s rulings.

To the extent that the Court intends the above-referenced rulings to be interpreted 

expansively, Integrity respectfully requests that the Court reconsider Rulings 2, 3 and 5, as beyond 

the scope of discovery contemplated by Rule 26 and the recent proportionality amendment thereto.

C. Legal Standard.

Rule 26 provides, in relevant part:

Unless otherwise limited by court order, the scope of discovery is as 

follows: Parties may obtain discovery regarding any nonprivileged 

matter that is relevant to any party’s claim or defense and 

proportional to the needs of the case, considering 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 

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PAGE 7 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

outweighs its likely benefit. Information within this scope of 

discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1) (emphasis added).

A court order “may be revised at any time before the entry of a judgment adjudicating all

the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b). The Court also has an

inherent common-law authority “to rescind an interlocutory order over which it has jurisdiction[.]” 

Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 887 (9th Cir. 2001). 

In evaluating a motion for reconsideration, the Court must consider whether:

1. There are material differences in fact or law from that presented 

to the Court and, at the time of the Court’s decision, the party 

moving for reconsideration could not have known of the factual 

or legal differences through reasonable diligence;

2. There are new material facts that happened after the Court’s 

decision;

3. There has been a change in the law that was decided or enacted 

after the Court’s decision; or

4. The movant makes a convincing showing that the Court failed 

to consider material facts that were presented to the Court before 

the Court’s decision.

Lyons v. Nike, Inc., 920 F. Supp. 2d 1161, 1163 (D. Or. 2013) (citation omitted).

Here, Integrity does not seek reconsideration of the Court’s rulings, only clarification of 

those rulings as set forth above. However, to the extent the Court’s rulings in the February 2017 

Opinion and Order manifest the Court’s intent, Integrity respectfully requests that the Court 

reconsider Rulings 2, 3 and 5, as beyond the scope of discovery contemplated by Rule 26.

D. Argument.

The expansive scope of Plaintiffs’ Document Requests would necessarily encompass 

information that is not “relevant to any party’s claim or defense” or “proportional to the needs of 

the case” as required by Rule 26. See Fed. R. Civ. P. 26(b)(1). In its Motion for a Protective 

Order, Integrity argued that, based on the perfunctory allegations in the First Amended Complaint

with respect to the two named plaintiffs who had any connection to Integrity, discovery should be 

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PAGE 8 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

limited to those two plaintiffs’ specific claims – a position supported by the plain language of Rule 

26 and the Oregon Securities Law. (Integrity’s Mot. for Prot. Order at 3, 7.) 

If Rulings 2, 3 and 5 – which collectively order production of all documents Integrity sent 

or received regarding the ACF and AIOF-II Notes and related to any securities-related 

communication with any Aequitas entity – are interpreted literally, then they expand the scope of 

discovery beyond even Plaintiffs’ Document Requests. If ESI and emails are included, as 

Plaintiffs will undoubtedly claim, then responding to Plaintiffs’ RFPs will be extremely costly, 

time-consuming and burdensome. ESI is premature at this stage of the litigation – a fact that even 

Plaintiffs conceded in the Joint Report to the Court. (Joint Report at 7.) The expansive document 

production contemplated by a literal reading of the Court’s rulings is not only disproportionate to 

the needs of this case, but also appears to be directly at odds with the Court’s desire to limit and 

focus discovery in this matter. Accordingly, Integrity respectfully requests that the Court clarify 

the rulings in question.

Integrity has no objections to the remainder of the Court’s rulings, assuming that ESI and 

emails are not contemplated by the rulings. In addition, Integrity is also willing to produce a form 

of subscription agreement and any promotional materials related to the ACF or AIOF-II Notes, as 

well as all agreements that Integrity executed with registered investment advisers related to 

“Aequitas securities” – a practical compromise that is also proportional to the needs of the case.

If the Court’s intent was as stated in the February 2017 Opinion and Order, then Integrity 

respectfully requests that the Court reconsider Rulings 2, 3 and 5. Integrity respectfully submits 

that the Court “failed to consider material facts that were presented to the Court before the Court’s 

decision.” Lyons v. Nike, Inc., 920 F. Supp. at 1163. Specifically, Integrity submits that the Court 

did not address Integrity’s request for alternative relief to a discovery stay in the form of a 

limitation on discovery pursuant to the proportionality standard set forth in Rule 26(b)(1). 

(Integrity’s Mot. for Prot. Order at 3, 7.) The Court appears to limit its discussion, in the February 

2017 Opinion and Order, to whether a complete stay of discovery is warranted, and not on whether 

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PAGE 9 - DEFENDANT INTEGRITY BANK & TRUST’S MOTION FOR 

CLARIFICATION AND/OR RECONSIDERATION

a limitation on the scope of discovery directed at irrelevant and burdensome document requests is 

appropriate. (Compare Integrity’s Mot. for Prot. Order at 3, 7, with Feb. 2017 Opinion and Order 

at 7-8 and Nov. 2016 Opinion and Order at 11-19.)

IV. CONCLUSION

For the reasons set forth above, Integrity respectfully requests that the Court clarify its 

February 21, 2017 Order with respect to Rulings 2, 3 and 5 directed at Integrity. If the Order 

represents the Court’s intent, Integrity respectfully requests that the Court reconsider Rulings 2, 3 

and 5 as beyond the scope of discovery contemplated by Rule 26.

DATED: March 7, 2017

LANE POWELL PC

By /s/ Milo Petranovich

Milo Petranovich, OSB No. 813376

Peter D. Hawkes, OSB No. 071986

SreeVamshi C. Reddy, OSB No. 140560

Telephone: 503.778.2100

Attorneys for Defendant Integrity Bank & Trust

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