Opinion
22-cv-00256-JCM-EJY
04-07-2023
THEODURUS STROUS, DERIVATIVELY ON BEHALF OF SCIO DIAMOND TECHNOLOGY CORP., Plaintiff, v. BERNARD MCPHEELY, KARL LEAVERTON, GERALD MCGUIRE, LEWIS SMOAK, ADAMAS ONE CORP. and JOHN G. GRDINA, Defendants, and SCIO DIAMOND TECHNOLOGY CORP., Nominal Defendant.
SPENCER FANE LLP MUCKLEROY LUNT, LLC Mary E. Bacon Martin A. Muckleroy BEST & FLANAGAN LLP Amy S. Conners EVANGELISTA WORLEY, LLC John A. Sullivan Brian Linnerooth CLARK HILL PLLC Ryan J. Lorenz
SPENCER FANE LLP
MUCKLEROY LUNT, LLC
Mary E. Bacon
Martin A. Muckleroy
BEST & FLANAGAN LLP
Amy S. Conners
EVANGELISTA WORLEY, LLC
John A. Sullivan
Brian Linnerooth
CLARK HILL PLLC
Ryan J. Lorenz
STIPULATION TO PARTIALLY EXTEND BRIEFING SCHEDULE RE DEFENDANTS' MOTIONS TO DISMISS PLAINTIFF'S SECOND AMENDED DERIVATIVE ACTION AND CLASS ACTION COMPLAINT
(Second Request)
Plaintiff Theodurus Strous (“Plaintiff”) and Defendants Bernard McPheely, Karl Leaverton, Gerald McGuire, Lewis Smoak (collectively, the “Scio Defendants”), Adamas One Corp., and John Grdina (collectively, along with Gerald McGuire, the “Adamas Defendants”, and along with the Scio Defendants, the “Defendants”)), by and through their undersigned counsel, stipulate to extend the remaining briefing schedule on the Defendants' motions to dismiss the Plaintiff's Second Amended Derivative Action and Class Action Complaint (the “SAC”). This is the second request to extend the briefing schedule on the Defendants' Motions to Dismiss and seeks a partial extension. Following are the events to Dated:
On February 10, 2022, Plaintiff filed the Complaint against Defendants Bernard McPheely, Karl Leaverton, Gerald McGuire, and Lewis Smoak.
On September 30, 2022, Plaintiff Theodurus Strous filed the Amended Complaint against Defendants Bernard McPheely, Karl Leaverton, Gerald McGuire, and Lewis Smoak, and added two additional Defendants: Adamas One Corporation and John G. Grdina.
On November 15, 2022, the Court granted Defendants' Stipulation to Extend Defendants' time to Respond to Plaintiff's Amended Complaint.
The briefing schedule per the Court's Order has been partially satisfied as follows: On January 20, 2023, Plaintiff filed the SAC.
On February 17, 2023, the Scio Defendants and Adamas Defendants filed separate motions to dismiss the SAC with the Adamas Defendants also joining in the motion to dismiss of the Scio Defendants.
Presently pending is Plaintiff's opposition brief to Defendants' Motions to Dismiss that is due to be filed on April 6, 2023, and Defendants' reply briefs that are due on May 11, 2023.
The parties propose the following amended schedule:
a. On May 15, 2023, Plaintiff shall file an opposition to Defendants' motions to dismiss and/or inform the Court of how it wishes to proceed based on the facts set forth below; and
b. On June 21, 2023, Defendants shall file their reply briefs to Plaintiff's opposition to the motions to dismiss and/or file a response to Plaintiff's proposed course of how to proceed.
Good cause exists for the proposed extension, as set forth below:
1. Plaintiff's SAC alleges a derivative claim under Federal Rule of Civil Procedure 23.1 against all Defendants and alleges demand is futile as to Scio's Board of Directors. In determining the demand futility issue, the pertinent inquiry is directed at the Board of Directors who were Scio board members at the time of the filing of the original action on February 22, 2022.
2. It has very recently come to the attention of the parties that the SCIO Defendants resigned as Scio Board members in March 2020 and that no new Board was appointed or in place on February 22, 2023, or thereafter, as Scio's Nevada corporate charter was revoked.
3. As a result, there is an issue of how to proceed (and whether Plaintiff has standing to proceed) under these circumstances where there appears to be no Board in place at a company whose charter has been revoked at the time the original action was filed. Thus, no demand could have been made, nor can the demand futility issue be properly addressed.
4. The parties seek an opportunity to determine the effect of the combination of a corporation whose charter was revoked and entire Board resigning prior to suit being brought and no new Board appointed because of the demand/demand futility issue and accordingly, how to proceed.
5. The Parties believe that this extension, if granted, will not unreasonably delay this case and that the extension will serve to preserve the Court's and the parties' resources and advance judicial economy under the circumstances present in this litigation.
6. Neither Plaintiff nor Defendants will be prejudiced by the stipulation.
Therefore, the parties propose the following amended briefing schedule for Defendants' Motions to Dismiss:
1. Defendants moved to dismiss the Second Amended Complaint on Friday, February 17, 2023.
2. On or before Monday, May 15, 2023, Plaintiff shall file an opposition to Defendants' motions to dismiss and/or inform the Court of how it wishes to proceed based on the facts set
forth above concerning the requirements of Federal Rule of Procedure 23.1; and
3. On or before Wednesday, June 21, 2023, Defendants shall file their reply briefs to Plaintiff's oppositions to the motions to dismiss and/or file a response to Plaintiff's proposed course of how to proceed based on the facts set forth above concerning the requirements of Federal Rule of Civil Procedure 23.1.
4. All rights are reserved with regards to any further requests for extensions of deadlines. This schedule can be modified by further written agreement of the parties or order of the court.
5. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation of this Order.
ORDER
Per the parties' stipulation, IT IS SO ORDERED.
1. On or before Monday, May 15, 2023, Plaintiff shall file an opposition to Defendants' motions to dismiss and/or inform the Court of how it wishes to proceed based on the facts set forth above concerning the requirements of Federal Rule of Procedure 23.1; and
2. On or before Wednesday, June 21, 2023, Defendants shall file their reply briefs to Plaintiff's oppositions to the motions to dismiss and/or file a response to Plaintiff's proposed course of how to proceed based on the facts set forth above concerning the requirements of Federal Rule of Civil Procedure 23.1.
3. All rights are reserved with regards to any further requests for extensions of deadlines. This schedule can be modified by further written agreement of the parties or order of the court.
4. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation of this Order.