Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 1 of 10

1 2 3 4 5 6

FREDERICK SANTACROCE, ESQ. SANTACROCE LAW OFFICES LTD. State Bar 5121 706 South Eighth St Las Vegas, NV 89101 (702) 598-1666 Email: Fasatty@yahoo.com

IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF NEVADA 8 * * * 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 vs. MARCO GLISSON, Defendant SECURITIES AND EXCHANGE COMMISSION, Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) COMES NOW, Defendant, Marco Glisson, by and through his attorney Frederick Santacroce, Esq., and files this Reply to Plaintiffs Opposition to Defendants Motion in Limine to Bifurcate Liability and Damage issues for Trial. // // // // // // // // Case No.: 2:09-cv-00104-LDG-GWF REPLY TO PLAINTIFFS OPPOSITION TO DEFENDANTS MOTION IN LIMINE TO BIFURCATE LIABILITY AND DAMAGE ISSUES FOR TRIAL

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 2 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

This Motion is made based upon the pleadings, papers and Affidavits on file herein, the following Memorandum of Points & Authorities, and any argument of counsel to be entertained at the time of any hearing of this matter. Dated: 12/10/2011 FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 3 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

TABLE OF CONTENTS PRELIMINARY STATEMENT......................................................................................... 5 LEGAL ARGUMENT I. BIFURCATION WILL PROVIDE CONVENIENCE, OR EXPEDITE AND ECONOMIZE THESE PROCEEDINGS....................... II. BIFURCATION WILL NOT PREJUDICE THE PLAINTIFF AND WILL NOT BE A WASTE OF RESOURCES...................................... 5

III. DAMAGES ARE NOT INTIMATELY TIED TO LIABILITY..................... 9

CONCLUSION...................................................................................................................... 10

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 4 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Other Authority: Cases:

TABLE OF AUTHORITIES

Dallal v. New York Times Co., 2009 WL 3680501, at *3 (2d Cir. 2009) ................... 5 M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1088 (9th Cir. 2005) .............. 5 Lincoln Benefit Co. V. Frangos, No. 2:09-cv-1466-RLH-PAL, 2010 ......................... WL 3613915 (D. NEV. Sept. 8, 2010). In the Matter of Sortwell, Inc., No.8-05167 JW, 2011 WL 4896475 (N.D. Cal. Oct. 12, 2011) ....................................................................... 6

Spellbound Developement Group, Inc. V. Pacific Handy Cutter, Inc. No. SACV 09- 951 DOC, 2011 WL 1810961, at 4 (C.D. Cal. May 12, 2011)........... 7 Onyx Pharm., Inc. V. Bayer Corp., No. C-09-2145 EMC, 2011 WL 45274 02 at 4 (N.D. Cal. Sept. 21, 2011) .............................................................. SEC v. Hughes Capital Corp., 917 F.Supp. 1080, 1085 (D.N.J., affd 124 F.3rd 449 (3rd Cir. 1997).................................................................. SEC v. First City Financial Corp., 890 F.2d. 1215, 1232 (D.C. Cir. 1989)................

9 9

Fed. R. Civ. P. 42(b)......................................................................................................... Section 20(d) of the Securities Act, 15 U.S.C. 77t(d).................................................. Section 21(d)(3) of the Exchange Act, 15 U.S.C. 78u(d)(3) ...................................... Section 20(g) of the Securities Act, 15 U.S.C. 77t(g).................................................. Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6).......................................

5, 7 8 8 8 9

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 5 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

PRELIMINARY STATEMENT

Defendant Marco Glisson filed his Motion in Limine to Bifurcate Liability and Damage Issues for Trial. Defendant relies on the Facts as set forth in his Motion in Limine and further relies on the Legal Argument set forth therein. LEGAL ARGUMENT

I. BIFURCATION WILL PROVIDE CONVENIENCE, OR EXPEDITE AND ECONOMIZE THESE PROCEEDINGS Rule 42(b) gives the Court discretion to bifurcate issues and claims "for convenience, to avoid prejudice, or to expedite and economize." Fed. R. Civ. P. 42(b). See, Dallal v. New York Times Co., 2009 WL 3680501, at *3 (2d Cir. 2009) ("The district court was well within its discretion in bifurcating the liability and damages phases of the trial, a sensible means of achieving expedition and economy."); M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1088 (9th Cir. 2005) (affirming bifurcation of liability and damages phases for trademark infringement claims). While the court has broad discretion in deciding whether or not to bifurcate, the court must consider whether bifurcation would be convenient, avoid prejudice or expedite and economize. The decision whether to bifurcate is made on a case by case basis and is very fact specific. In the instant case, the facts support bifurcation for the following reasons: The Plaintiffs case is based, and entirely depends on the Plaintiffs ability to prove that Defendant Glisson was engaged in the business of being a securities dealer when he was

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 6 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13

investing and otherwise trading in the stock of CMKM Diamonds, Inc., (herein CMKM) from December 2005 to April 2007. Only if the Plaintiff meets that burden do we get to the more complex and laborious calculation of damages and penalties. Plaintiff argues that in their case in chief they will use virtually the same witnesses to prove damages as well as liability and therefore there is an overlap of witnesses and no need for bifurcation. (Plaintiffs Opposition to Defendants Motion to Bifurcate Liability and Damages, pages 7-8.) What the Plaintiff fails to mention is that they have identified thousands of pages of documents, as exhibits. ( Plaintiffs Pretrial Order Exhibit List and Amended Exhibit List ) These complex documents consists of bank records, stock transfers, trading records and

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 moving on to the more laborious damage phase, if necessary. By Bifurcating the court will be accomplishing the goal of giving the Plaintiffs their day in court while economizing the courts calendar as well as the costs to the court and the Parties. litigants, will have to endure the excruciating hours and perhaps days of testimony relating to these accountings, bank statements and stock transfers for what might be an unnecessary scythian task. It makes much more sense to bifurcate, litigating the liability portion of the case and then, accountings, among other things, and relate mostly to the damage portion of the Plaintiffs case. The Plaintiff will have the laborious task of admitting these documents at trial. If this court does not bifurcate the liability and damage portions of this case, the court as well as the

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 7 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13

In Lincoln Benefit Co. V. Frangos, No. 2:09-cv-1466-RLH-PAL, 2010 WL 3613915 (D. NEV. Sept. 8, 2010). The court denied a motion to bifurcate because the evidence and issues were so interrelated that bifurcation would compound the costs and time for the court and the parties. In the instant case, the opposite is true. The issues and the evidence are not so interrelated. There is a clear line. The evidence necessary to prove liability is not necessarily the same evidence to establish the amount and scope of damages. In the instant case, unlike Frangos, bifurcation would actually minimize the costs and time for the Court and the parties because the thousand of pages of accountings, trading records, stock transfers and bank records, and the like, may never have to be introduced. The Plaintiff cites In the Matter of Sortwell, Inc., No.8-05167 JW, 2011 WL 4896475 (N.D.

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Here, we have the clear issue liability as separate and distinct from damage calculations. Essentially, if the Plaintiff prevails on the liability portion of the case, the damage portion becomes an accounting contest. of damages ... courts have exercised discretion against bifurcating such interrelated issues. Where the Defendant takes issue in this reasoning is that unlike Sortwell, Spellbound and Onyx, the issues in this case are not so interrelated as to deny bifurcation. To the contrary, the issues in this case are so divisible that bifurcation is exactly what rule 42(b) contemplated. Cal. Oct. 12, 2011); Spellbound Developement Group, Inc. V. Pacific Handy Cutter, Inc. No. SACV 09- 951 DOC, 2011 WL 1810961, at 4 (C.D. Cal. May 12, 2011) and., No. C-09-2145 Onyx Pharm., Inc. V. Bayer Corp., No. C-09-2145 EMC, 2011 WL 45274 02 at 4 (N.D. Cal. Sept. 21, 2011) all for the proposition that where issues of liability is not separable from issues

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 8 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

II. BIFURCATION WILL NOT PREJUDICE THE PLAINTIFF AND WILL NOT BE A WASTE OF RESOURCES Plaintiff argues that Bifurcation at this late date will prejudice Plaintiff and waste resources. This case was originally set for trial In November, 2011. Due to a conflict in the courts calendar the trial was moved to February, 2012. The trial however, has now been set for April, 2012. ( The April, 2012 date was set as a result of a Defense request, due to a conflict in the trial calendar of Defense counsel. Plaintiff was gracious enough to Stipulate to continue the trial to April, 2012). Nevertheless, the Trial is now some four months away. Any argument by Plaintiff that Bifurcation at this late date will prejudice Plaintiff... is disingenuous. Four months is ample time to revise the Joint Pretrial Order. No additional time will be required to prepare to proceed to address the issues related to the question of liability that would be presented at a single trial. Both sides were prepared to go to trial in November, 2011 and nothing has changed. If anything, it would be easier and less time consuming and more cost efficient to prepare for a single issue trial than to prepare for a complex multi faceted un-bifurcated trial. III. DAMAGES ARE NOT INTIMATELY TIED TO LIABILITY Plaintiff argues that remedies are intimately tied into liability and not so complex as Glisson would argue.... The SEC seeks an order disgorging Defendant of all ill-gotten gains from his alleged violative conduct, together with prejudgment interest thereon and various other civil remedies. The SEC also seeks civil penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. 78u(d)(3). The SEC further seeks an order, permanently prohibiting Defendant from participating in any offering of penny stock

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 9 of 10

1 2 3 4

pursuant to Section 20(g) of the Securities Act, 15 U.S.C. 77t(g), and Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6). The Plaintiff has the initial burden of establishing that the disgorgement figure it seeks reasonably approximates the amount of unjust enrichment. SEC v. Hughes Capital Corp., 917

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

F.Supp. 1080, 1085 (D.N.J., affd 124 F.3rd 449 (3rd Cir. 1997)(quoting SEC v. First City Financial Corp., 890 F.2d. 1215, 1232 (D.C. Cir. 1989) In order for the Plaintiff to meet its burden of establishing that disgorgement reasonably approximates the amount of unjust enrichment, it will involve extensive documentary trading records, banking records, and accounting summaries. The Plaintiffs Pretrial Order Exhibit List and Amended Exhibit List indicates these documents to number in the hundreds, if not thousands of pages. The Plaintiff attempts to minimize their burden, but the fact remains that their calculations will have to be supported by documentary evidence and will be scrutinized by the defense. Assuming, arguendo, the Plaintiff is able to make a prima facie case for disgorgement the burden then falls to the Defendant to demonstrate that the amount sought is not reasonable. Hughes Capital Corp., 917 F.Supp. at 1085. This shift in burden will require additional forensic accounting and examination of the voluminous accounting records. The Plaintiff would have the Court believe that their burden is not complex or onerous. Plaintiff argues that the question of disgorgement can be resolved simply by looking at the total proceeds of illegal activity. ( Plaintiffs Opposition to Defendants Motion to Bifurcate

22 23 24 25 26 27 28 9 Liability and Damages pg. 11. ) However, the simply looking proposed by the Plaintiff involves hundreds if not thousands of documents. It is not as simple as the Plaintiff portrays.

Case 2:09-cv-00104-LDG-GWF Document 93

Filed 12/12/11 Page 10 of 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

CONCLUSION The Plaintiffs damages and relief theories and requests are numerous, complex and require proof involving extensive documentary (trading records, banking records, summaries thereof) evidence. Given the facts and circumstances of this case, there exists a strong case for the Court to grant the instant motion to bifurcate issues for trial. Based on the foregoing, it is respectfully requested that Defendant Marco Glissons Motion to Bifurcate Liability and Damage Issues for Trial be granted. DATED this 10th day of December, 2011.

FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant CERTIFICATE OF SERVICE

18 19 20 21 22 23 24 25 26 27 28 10 I hereby certify that this document was filed through the ECF system and has been sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) on December 12, 2011 and paper copies sent to those indicated as non-registered. FREDERICK SANTACROCE, ESQ. /s/ Frederick Santacroce ____________________________________ FREDERICK SANTACROCE, Esq. Nevada Bar No. 5121 SANTACROCE LAW OFFICES, LTD 706 S. 8th St Las Vegas, Nevada 89101 Telephone: (702) 598-1666 Fax: (702) 385-1327 Attorney for Defendant