Opinion
01-30-2024
Zhengjun DONG, et al., Plaintiffs–Respondents, v. GTV MEDIA GROUP., INC. et al., Defendants, G–Club Operations LLC, Nonparty–Appellant.
Weddle Law PLLC, New York (Brian M. Witthuhn of counsel), for appellant. HGT Law, New York (Joo Yun Kim of counsel), for respondents.
Weddle Law PLLC, New York (Brian M. Witthuhn of counsel), for appellant.
HGT Law, New York (Joo Yun Kim of counsel), for respondents.
Webber, J.P., Friedman, González, Shulman, Pitt–Burke, JJ.
Order, Supreme Court, New York County (Andrew Borrok, J.), entered January 3, 2023, which, to the extent appealed from, denied nonparty G–Club Operations LLC’s motion to quash the subpoena served by plaintiffs, unanimously affirmed, with costs.
[1, 2] Plaintiffs’ subpoena states that they seek documents material and necessary to establish their allegations that defendants GTV Media Group, Inc. and Saraca Media Group, Inc., as well as Wengui Guo, violated sections 5 and 12(a)(1) of the Securities Act of 1933 (15 USC §§ 77e; 77l) in soliciting investments in GTV securities through memberships in G–Club. G–Club failed to demonstrate that the disclosure sought is "utterly irrelevant" (see Velez v. Hunts Point Multi–Serv. Ctr., Inc., 29 A.D.3d 104, 112, 811 N.Y.S.2d 5 [1st Dept. 2006]). Contrary to G–Club’s position, Section 12 liability is not limited to those who actually transfer title but also includes solicitation (Pinter v. Dahl, 486 U.S. 622, 647, 108 S.Ct. 2063, 100 L.Ed.2d 658 [1988]; see also Silva Run Worldwide Ltd. v. Gaming Lottery Corp., 1998 WL 167330, *8, 1998 U.S. Dist. LEXIS 4699 [S.D.N.Y. April 8, 1998, 96CV3231 (RPP)]).
G–Club’s reliance on clauses in its membership agreement requiring arbitration and waiving class actions is irrelevant because in this action plaintiffs are not suing G–Club for the sale of the memberships. Nor does the disclaimer conclusively establish that defendants did not solicit investments in GTV through G–Club memberships or otherwise foreclose defendants’ potential Securities Act liability (15 USC § 77n).
We have considered G–Club’s remaining contentions and find them unavailing.