throbber

`
`SECURITIES AND EXCHANGE COMMISSION,
`
`
`
`
`
`
`17-cv-02088-RMB-KNF
`
`MEMORANDUM OF LAW IN
`SUPPORT OF MOTION TO
`MODIFY SCHEDULING ORDER
`
`
`ECF CASE
`
`Plaintiff,
`
`Defendants.
`
`- against -
`
`
`AMIR WALDMAN, et al.,
`
`
`
`
`
`
`
`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 1 of 16
`
`
`
`
`
`
`Terry R. Miller
`millerte@sec.gov
`Stephen C. McKenna
`mckennas@sec.gov
`SECURITIES AND EXCHANGE COMMISSION
`1961 Stout Street, 17th Floor
`Denver, Colorado 80294
`(303) 844-1000
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`Plaintiff Securities and Exchange Commission (the “Commission”), submits this
`
`memorandum of law in support of its motion pursuant to Federal Rule of Civil Procedure
`
`16(b)(4) to modify the scheduling order to permit remaining discovery abroad that has been
`
`stayed by the Jerusalem District Court.
`
`The Commission requests a limited exception to the discovery deadline to permit
`
`completion of evidence gathering in Israel previously authorized by the Court in a Letter of
`
`Request and Addendum (together, “Letter of Request”) pursuant to the Hague Convention on the
`
`Take of Evidence Abroad in Civil or Commercial Matters (“Hague Convention”). Doc. Nos. 57
`
`& 103. The Commission obtained some of the evidence sought pursuant to the Letter of Request,
`
`but the Jerusalem District Court has stayed a portion of the discovery pending resolution of
`
`appeals filed by Defendant James Shaoul and two other witnesses who have opposed the
`
`evidence gathering process in Israel. The Commission requests that the exception have no impact
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 2 of 16
`
`on the dispositive motion deadlines and proposes that the parties and the Court revisit the status
`
`of the discovery remaining in Israel (“Remaining Discovery”), as necessary, after resolution of
`
`dispositive motions.
`
`Pursuant to Rule 1(E) of Individual Rules of Practice for Magistrate Judge Fox, (1) fact
`
`and expert discovery would otherwise end on May 30, 2018 (Doc. No. 111); (2) the parties have
`
`jointly requested one extension of the discovery cutoff: on March 23, 2018, the Parties submitted
`
`a joint request to extend the discovery cutoff to May 30 (Doc. No. 110); (3) the Court granted the
`
`parties previous request to extend the discovery cutoff (Doc. No. 111); and (4) Amir Waldman
`
`and Roger Shaoul oppose the relief requested, Lawrence Cluff does not oppose the relief
`
`requested, and James Shaoul has not responded to the Commission’s attempt to confer about this
`
`motion. The reasons given by Dr. Waldman for the opposition is that he views the discovery cut-
`
`off as a hard deadline and that the Commission has had enough time to conduct international
`
`discovery. Roger Shaoul adopted the same reasons. Finally, the requested exception to the
`
`discovery deadline will not affect any other scheduled deadlines. The Commission is confident it
`
`can successfully oppose defendants’ motions for summary judgment without the Remaining
`
`Discovery, and no trial date will be set until those motions are resolved.
`
`ARGUMENT
`
`“A schedule may be modified only for good cause and with the judge’s consent.” Fed. R.
`
`Civ. P. 16(b)(4). “[A] finding of ‘good cause’ depends on the diligence of the moving
`
`party.” McDonald v. Escape the Room Experience, LLC, No. 15CV7101 RA KNF, 2016 WL
`
`6561408, at *1 (S.D.N.Y. Oct. 3, 2016) (quoting Parker v. Columbia Pictures Indus., 204 F.3d
`
`326, 340 (2d Cir. 2000)). Diligence “is not, however, the only consideration,” and courts may
`
`consider other relevant factors, including any prejudice. Id. (quoting Kassner v. 2nd Avenue
`
`
`
`- 2 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 3 of 16
`
`Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007)). Courts also consider “(1) the imminence of
`
`trial; (2) whether the request is opposed; (3) prejudice to the non-moving party; (4) whether the
`
`moving party foresaw the need for additional discovery, in light of the discovery deadline set by
`
`the court; and (5) whether further discovery is likely to lead to relevant evidence.” Jeannite v.
`
`City of New York Dep’t of Bldgs., No. 09 CIV. 3464 DAB KNF, 2010 WL 2542050, at *2
`
`(S.D.N.Y. June 21, 2010) (citations omitted).
`
`In this civil insider trading case, the Commission alleges that James Shaoul, who resides
`
`in Israel, tipped his brother Roger Shaoul and his friend Dr. Waldman with material nonpublic
`
`information about a tender offer for the purchase of Mobileye. Roger Shaoul tipped his friend,
`
`Lawrence Cluff, and all defendants purchased Mobileye securities based on the material
`
`nonpublic information. The Commission sought the deposition testimony for use at trial of James
`
`Shaoul and four other witnesses in Israel pursuant to the Hague Convention. The Commission
`
`scheduled the depositions of all five witnesses and obtained the deposition of two of these
`
`witnesses in Israel prior to the close of discovery. However, the Jerusalem District Court has
`
`stayed discovery as to James Shaoul, Ziv Sheleg (a financial adviser to Amir Waldman and
`
`James Shaoul), and Yossi Azarzar (a mutual friend of James Shaoul and Mobileye insiders, who
`
`made trades similar to Amir Waldman and Roger Shaoul)—specifically, the Remaining
`
`Discovery includes requests for documents and depositions from the three witnesses.
`
`As described below, the Commission acted diligently in pursuing the Remaining
`
`Discovery, and the other relevant factors weigh in favor of an exception to the discovery
`
`deadline for the Remaining Discovery.
`
`
`
`- 3 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 4 of 16
`
`I.
`
`THE COMMISSION PURSUED DISCOVERY IN ISRAEL WITH DILIGENCE.
`
`The Commission initiated the Hague Convention process with diligence by filing the
`
`Letter of Request shortly after Amir Waldman’s deposition, which he had delayed until
`
`November 8, 2017. The Commission then diligently worked with the Israeli authorities, and even
`
`hired an attorney in Israel to facilitate the evidence gathering process. The Remaining Discovery
`
`is not yet complete due to reasons outside of the Commission’s control, which is evidenced
`
`primarily by the fact that the Commission was able to obtain documents and testimony located in
`
`Israel prior to the discovery deadline from two of the five witnesses from whom such discovery
`
`was sought.
`
`A.
`
`The Commission diligently filed the Letter of Request.
`
`The Commission aggressively sought discovery since the dates these consolidated cases
`
`were filed. The case against Amir Waldman was filed on March 23, 2017, the same day that the
`
`Court granted the Commission’s request for expedited discovery. Doc. Nos. 1 & 5. The
`
`Commission served written discovery requests on Dr. Waldman on March 23, and his responses
`
`were due on March 28. The Commission also requested Dr. Waldman’s deposition in New York
`
`prior to April 5, 2017, which was the date scheduled for a show cause hearing. Doc. No. 5 at 3.
`
`Dr. Waldman requested, and the Commission agreed, to (1) extend the show cause hearing many
`
`months (it occurred in April 2018); (2) extend the deadline to respond to written discovery until
`
`June 30, 2017; and (3) schedule Dr. Waldman’s deposition after he responded to written
`
`discovery (it occurred many months later in Toronto, Canada). Declaration of Terry R. Miller
`
`¶ 2, attached hereto as Exhibit A (“Miller Decl.”).
`
`Dr. Waldman first responded to written discovery requests and made his initial
`
`disclosures on June 30, 2017. In the written disclosures and documents produced on June 30, the
`
`
`
`- 4 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 5 of 16
`
`Commission learned the identity and relevance of Ziv Sheleg and Moshe Ruach for the first time.
`
`It also learned for the first time from these materials that James Shaoul communicated with
`
`Dr. Waldman about Mobileye during the relevant trading period. Miller Decl. ¶ 3.
`
`The Commission began seeking evidence in Israel as early as July 19, 2017, by
`
`conferring with counsel of record. On July 19, the Commission asked the parties to set aside the
`
`week of October 9, 2017, for depositions in Israel. Email dated July 19, 2017, attached hereto as
`
`Exhibit B. On August 4, the Commission circulated a draft letter of request to Dr. Waldman’s
`
`counsel, which requested depositions in Israel of four witnesses: Dr. Waldman, James Shaoul,
`
`Ziv Sheleg, and Moshe Ruach. Email dated August 4, 2017, attached hereto as Exhibit C. On
`
`August 14, counsel for the Commission conferred with the parties again, noting that it hoped to
`
`submit the letter of request “today or tomorrow. We need to file as soon as possible to give the
`
`Israeli Authority sufficient time to process the request by October.” Email dated August 14,
`
`2017, attached hereto as Exhibit D. Dr. Waldman responded that he did not want to be listed on
`
`the letter of request because he did not want to draw the attention of the Israeli authorities, and
`
`did not want to appear in the United States for a deposition because he feared arrest. Miller Decl.
`
`¶ 4. The Commission’s purpose has never been to use this action for other purposes and, on
`
`August 31, 2017, the Commission agreed to meet in Toronto for Dr. Waldman’s deposition on
`
`November 8 to accommodate Dr. Waldman’s concerns. Email dated August 31, 2017, attached
`
`hereto as Exhibit E.
`
`On September 8, just eight days after the Commission agreed to remove Dr. Waldman
`
`from the Letter of Request, the Commission circulated a proposed case management plan in
`
`advance of a Court conference where the Commission proposed an extension of the fact
`
`discovery cutoff to allow for discovery taken pursuant to the Hague Convention, and explained
`
`
`
`- 5 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 6 of 16
`
`that the “process has proven to be lengthy, but the SEC thinks that a carve-out of the agreed upon
`
`deadline makes more sense than an extension of all fact discovery.” Email dated September 8,
`
`2017, attached hereto as Exhibit F. The parties agreed that the discovery cutoff should not apply
`
`to discovery occurring in Israel and submitted the proposal to the Court on September 11.
`
`Doc. No. 50.
`
`On September 12 and 14, the parties deposed Mobileye pursuant to Rule 30(b)(6) and
`
`two Mobileye directors. Miller Decl. ¶ 5. From these depositions, the Commission learned
`
`additional significance of a group of friends that includes the two Mobileye directors, James
`
`Shaoul, Doron Sagie and Yossi Azarzar. Miller Decl. ¶ 5. On September 13, James Shaoul
`
`became a defendant. SEC v. Cluff, et al., Doc. No. 48.
`
`Because the parties had agreed that the discovery cutoff would not apply to depositions in
`
`Israel and because Dr. Waldman’s deposition was scheduled for November 8 but not certain to
`
`occur (the Commission had been trying to depose Dr. Waldman since March 2017), the
`
`Commission waited to submit the Letter of Request until after November 8, when the
`
`Commission would learn at least the following: (1) whether the Commission would need the
`
`assistance of Israel courts to compel attendance of Dr. Waldman at his own deposition; and
`
`(2) additional information that might obviate the need for depositions of some witnesses or
`
`reveal the need for depositions of other witnesses in Israel. It was prudent to wait for this
`
`information, especially in light of the parties’ agreement that the discovery cutoff would not
`
`apply to discovery in Israel and the fact that cost and time constraints counseled against more
`
`than one trip to Israel.
`
`The Commission submitted the Letter of Request for the Court’s approval one week after
`
`Dr. Waldman’s deposition (Doc. No. 55), which took place on November 8, 2017—more than
`
`
`
`- 6 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 7 of 16
`
`six months after the Commission initially asked to take Dr. Waldman’s deposition. Counsel for
`
`the Commission does not dispute that Dr. Waldman made his many requests for additional time
`
`to respond to discovery and appear at a deposition in good faith. Importantly, neither Dr.
`
`Waldman nor Roger Shaoul filed an opposition to the Letter of Request at the time the
`
`Commission made its submission.
`
`In sum, the Commission pursued discovery since the day it filed this action in March
`
`2017, but Dr. Waldman sought and obtained many extensions of time for discovery. The
`
`Commission began seeking discovery in Israel just weeks after Dr. Waldman responded to
`
`written discovery, but the Commission agreed to meet him in Toronto rather than submit a Letter
`
`of Request for his deposition in Israel. The Commission submitted the Letter of Request after his
`
`deposition to ensure that all necessary witnesses were listed and that there would be a need for
`
`only one trip. There was no unreasonable delay, but even if there were, equity should not permit
`
`Dr. Waldman to argue that the Commission failed to act diligently because it accommodated his
`
`requests.
`
`B.
`
`The Commission Diligently Sought Discovery Pursuant to the Letter of
`Request.
`
`
`In the Letter of Request, the Commission sought the collection of documents and the
`
`deposition testimony of five witnesses who reside in Israel, including James Shaoul. The
`
`following summarizes the efforts made to obtain the Remaining Discovery and the activity
`
`leading to the stay orders issued by the Jerusalem District Court:
`
`• On January 21, 2018, The Israeli authorities responded to the Commission’s
`request for appointment of a private attorney to assist with the case by asking for
`an official confirmation for the appointment of a private attorney to assist with the
`case. Doc. No. 99-1.1 Among other things, the appointment of a private attorney
`would help the Israeli courts complete discovery more quickly.
`
`1 The authorities also asked for the addresses of two witnesses who were listed on Dr. Waldman’s initial disclosures.
`Dr. Waldman did not disclose their addresses.
`
`
`
`- 7 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 8 of 16
`
`
`
`
`
`
`
`
`
`
`
`
`• On January 25, the Commission submitted a proposed addendum to the Letter of
`Request that included a request for the appointment of Eric Sherby to assist the
`Israeli courts in summoning witnesses and scheduling depositions. Doc. No. 103;
`see Transcript of Feb. 7, 2018 Conference at 17-19, attached hereto as Exhibit G.
`
`• Dr. Waldman objected to the request for the addendum, admittedly without a legal
`basis to oppose the request. Ex. G at 20. Judge Berman executed the Addendum
`on February 7. Doc. No. 103.
`
`• James Shaoul was served on January 29. SEC v. Cluff, et al., Doc. No. 89. On
`January 31, the Commission emailed Asaf Biger for help obtaining discovery
`from his client, James Shaoul. Email dated January 31, 2018, attached hereto as
`Exhibit H. Prior to September 13, 2017, counsel for Roger Shaoul provided the
`contact information for Asaf Biger and represented to the Commission that Asaf
`Biger was James Shaoul’s counsel. Declaration of Terry R. Miller for submission
`to the Israeli Magistrates Court ¶ 9, attached hereto as Exhibit I; see also Miller
`Decl. at ¶ 9(h).
`
`• Since September 13, Mr. Biger had been in periodic communication with counsel
`for the Commission and counsel for Roger Shaoul, including by email, Ex. I ¶¶ 9-
`14, a personal appearance at the deposition of Amir Waldman, Ex. I ¶ 12, and the
`depositions of Doron Sagie and Moshe Ruach. Miller Decl. ¶ 6.
`
`• On February 14, 2018, the Commission served James Shaoul personally (with a
`copy to his Israeli counsel, Asaf Biger) with written discovery requests and a
`notice of his deposition scheduled for March 23. Email dated February 14, 2018,
`attached hereto as Exhibit J.
`
`• James Shaoul did not respond to the February 14 written discovery requests and
`failed to appear at his March 23 deposition. Miller Decl. ¶ 7.
`
`• On or about February 11, the Directorate of Courts (the “DOC”), which serves as
`Israel’s Central Authority under the Hague Evidence Convention, approved this
`Court’s Letter of Request and sent the Letter of Request to the Magistrates Court.
`See Declaration of Eric Sherby ¶ 3(a) attached hereto as Exhibit K (“Sherby
`Decl.”).
`• On Feb. 20, the Magistrates Court issued an order (the “February Order”),
`appointing Eric Sherby to oversee the evidence-gathering process. Mr. Sherby’s
`office received the February Order on Feb. 22, and that same day, copies of that
`Order and the Letter of Request were sent to each of the five Israeli witnesses to
`schedule discovery deadlines and deposition dates. Sherby Decl. ¶ 3(b).
`• Having received no response from witnesses Yossi Azarzar, Ziv Sheleg, and
`James Shaoul, Mr. Sherby sent follow-up letters to each of them (to Shaoul,
`through his Israeli attorney, Mr. Biger). Sherby Decl. ¶ 3(d).
`
`
`
`- 8 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 9 of 16
`
`• Eventually Mr. Azarzar informed Mr. Sherby (through counsel) that he would,
`subject to certain conditions, produce documents and attend a deposition.
`However Mr. Azarzar apparently changed his mind after learning that two other
`witnesses intended to file motions to cancel the February Order. Sherby Decl.
`¶ 3(e).
`• Mr. Sherby sent a second follow-up letter to Mr. Sheleg. On the eve of the
`expiration of the thirty-day deadline for moving to cancel, counsel for Mr. Sheleg
`contacted Mr. Sherby to request an extension of that deadline. Mr. Sherby agreed
`to the requested extension. Sherby Decl. ¶ 3(f).
`• Eventually Mr. Sheleg filed a Motion to cancel (entitled “motion to dismiss”).
`Mr. Azarzar joined that motion. Sherby Decl. ¶ 3(g).
`• James Shaoul filed a separate motion to cancel the February Order. His motion
`was filed on the last business day before the expiration of his deadline. In support
`of his motion, James Shaoul filed a declaration (in Hebrew) in which he asserted
`(inter alia) that it would take him hundreds of hours to comply with this Court’s
`Request for documents. Sherby Decl. ¶ 3(h).
`• James Shaoul’s motion dated March 25, filed just two days after he failed to
`appear at a deposition noticed under the Federal Rules of Civil Procedure, is 27
`pages long and attaches an order from this Court and a declaration signed by
`James Shaoul. March 25 Motion, attached as Exhibit L, see also Miller Decl. ¶ 8.
`This motion shows that James Shaoul is familiar with this case and, rather than
`just passively ignoring his discovery obligations as a party, he is vigorously
`opposing requests to provide evidence in this case.
`• Counsel for the Commission prepared Exhibit I, a lengthy declaration with
`exhibits on April 6, 2018. That declaration explains the efforts Commission
`counsel undertook to involve James Shaoul in the Hague Convention process
`Ex. I ¶¶ 6-19, the obstreperous arguments James Shaoul made to the Magistrates
`Court to avoid giving evidence, Ex. I ¶¶ 20-33 and further the diligence of the
`Commission to obtain evidence within the discovery window, see, e.g., Ex. I ¶¶ 5,
`32-33.
`• On April 12, the Magistrates Court denied the motion filed by Mr. Sheleg and
`denied the motion filed by James Shaoul. Sherby Decl. ¶ 3(i)-(j).
`• On April 20, Mr. Sherby filed a motion to compel production. On April 24, the
`Magistrate Court granted the motion to compel. Sherby Decl. ¶ 3(k)-(l).
`• Shortly before their scheduled depositions, James Shaoul and Mr. Sheleg filed
`separate appeals in the Jerusalem District Court challenging the Magistrates
`Court’s rulings (the February Order and the order to compel production). James
`Shaoul and Mr. Azarzar joined in Ziv Sheleg’s appeal. Sherby Decl. ¶ 3(m).
`• On April 29, the Jerusalem District Court granted a request for stay of the
`evidence-taking as to Ziv Sheleg and Yossi Azarzar, pending resolution of their
`appeal. Sherby Decl. ¶ 3(n).
`
`
`
`- 9 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 10 of 16
`
`• On May 1, counsel for the Commission reported to Magistrate Judge Fox during a
`status conference that the Commission was hopeful that discovery would be
`complete by the May 30 deadline.
`• On May 2, Doron Sagie appeared for a deposition in Tel Aviv, Israel. He had
`previously disclosed documents requested by the Commission. Miller Decl. ¶ 6.
`• On May 2, the Jerusalem District Court issued an order staying the evidence-
`taking as to James Shaoul, pending resolution of his appeal. In staying the
`evidence-taking as to the three appellants/witnesses, the Jerusalem District Court
`required that they post security equivalent to approximately $7,200, which is an
`amount (presumably) sufficient to cover travel costs of the Commission for a
`return trip to Israel. Sherby Decl. ¶ 3(o)-(p). The Jerusalem District Court did not
`suggest that the appellants had a likelihood of success, but noted that absent a stay
`the appeals would become moot if the parties conducted the scheduled depositions
`Sherby Decl. ¶ 4.
`
`• On May 6, James Shaoul failed to appear in Tel Aviv for a deposition noticed
`under Fed. R. Civ. P. 30. Certificate of Nonappearance of James Shaoul, attached
`hereto as Exhibit M and Notice of Deposition attached as Exhibit N. Although
`one effect of the stay orders issued by the Jerusalem District Court was that Israeli
`law did not compel the attendance of James Shaoul at the deposition, Rule 30 was
`sufficient to compel his attendance under the power of this Court because he is a
`party to this action. Societe Nationale Industrielle Aerospatiale v. U.S. Dist.
`Court, 482 U.S. 522, 539-540 (1987) (neither the Hague Convention nor foreign
`law deprives the Court of jurisdiction it otherwise possesses of a foreign national
`party).
`
`• On May 6, Moshe Ruach appeared for a deposition in Tel Aviv. He had
`previously disclosed documents requested by the Commission. Miller Decl. ¶ 6.
`
`The activity described above shows that, since filing the Letter of Request, the
`
`Commission diligently pursued discovery in Israel and, at considerable cost, promptly responded
`
`to the vigorous efforts of James Shaoul, Mr. Sheleg, and Mr. Azarzar to avoid providing
`
`evidence in this matter. The Commission paid for a private attorney to promptly advance the
`
`evidence gathering, and the Commission and Mr. Sherby remained in repeated contact with the
`
`authorities in Israel. The Commission has made numerous attempts to obtain discovery and
`
`depositions from James Shaoul as a defendant in this action, but he has failed to respond. The
`
`Commission obtained valuable evidence in Israel pursuant to the Letter of Request. The final
`
`obstacle to obtaining the Remaining Discovery – the stay orders issued by the Jerusalem District
`
`
`
`- 10 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 11 of 16
`
`Court – did not result from delay by the Commission and, in any event, would have posed the
`
`same problem regardless of when the Commission submitted the Letter of Request.
`
`C.
`
`The Commission’s diligence weighs in favor of an exception for the Hague
`Depositions.
`
`
`As evidenced by the discovery it did obtain in Israel on May 2 and May 6, Miller Decl.
`
`¶ 6, among the other reasons above, the Commission acted with diligence to obtain discovery
`
`pursuant to the Letter of Request prior to May 30. However, for reasons outside of its control the
`
`Commission was unable to obtain all of the evidence it sought in the Letter of Request. Courts
`
`will find good cause under the diligence standard when the completion of discovery abroad
`
`cannot be completed for reasons outside of a litigant’s control, for instance where delay results
`
`from actions of foreign authorities when processing a request for assistance. In re Cathode Ray
`
`Tube (CRT) Antitrust Litig., 2014 WL 4954634, *3-4 (N.D. Cal. 2014) (“[T]he AG’s office has
`
`been in frequent communication with Dutch authorities seeking a resolution of these issues, even
`
`going so far as to hire a Dutch agent to seek a resolution of this issue, but has so far been
`
`thwarted by misfiled documents, conflicts of interest, and other administrative issues outside the
`
`AG’s control.”). The same result is appropriate when a request for extension of the discovery
`
`deadline is analyzed under the “recently amended Rules 1 and 26 of the Federal Rules of Civil
`
`Procedure.” City of Almaty, Kazahkstan v. Ablyazov, No. 15CV05345-AJN-KHP, 2018 WL
`
`2148430, at *1, *3 (S.D.N.Y. May 10, 2018) (“Factor 3 also weighs in favor of extending the
`
`discovery deadline. Plaintiffs (and Defendants) faced certain unavoidable obstacles in obtaining
`
`discovery because of the complexity of the case, the quantity of non-party discovery and the fact
`
`that a number of witnesses and the three individual Defendants are located outside of the United
`
`States in jurisdictions that require compliance with Hague Convention procedures.”). More
`
`generally, where, as here, a party attempts to schedule depositions well before the close of
`
`
`
`- 11 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 12 of 16
`
`discovery but cannot complete the deposition prior to the deadline, courts find good cause to
`
`extend discovery for purposes of the noticed deposition. E.g. Carlson v. Geneva City Sch. Dist.,
`
`277 F.R.D. 90, 95 (W.D.N.Y. 2011).
`
`The Commission has obtained discovery in Israel from some witnesses prior to the
`
`discovery deadline but, despite its diligence, the Commission will not be allowed to complete the
`
`discovery before the discovery deadline without a modification. Accordingly, good cause exists
`
`for the limited exception requested by the Commission.
`
`II.
`
`
`
`OTHER RELEVANT FACTORS WEIGH IN FAVOR OF A LIMITED
`EXCEPTION.
`
`The other factors considered by courts when determining whether to extend discovery all
`
`weigh in favor a limited exception for the Remaining Discovery.
`
`Imminence of Trial. Trial is not imminent. There is no pretrial conference scheduled, and
`
`the requested exception will not interfere with resolution of dispositive motions.
`
`Whether the Request is Opposed. The defendants who oppose the exception for the
`
`Remaining Discovery, Dr. Waldman and Roger Shaoul, indicated that they will file dispositive
`
`motions, which will push back trial even further. This factor does not weigh heavily against the
`
`requested exception.
`
`Prejudice to the Defendants. The requested exception will not prejudice the defendants
`
`because it will not interfere with any scheduled deadlines or the unscheduled dispositive motion
`
`briefing and will not bar any of the parties from raising specific claims of prejudice once the
`
`witnesses become available in Israel. In light of the prejudice to the Commission and the truth-
`
`seeking function of discovery generally, this factor weighs in favor of the requested exception.
`
`Whether the Commission foresaw the need for additional discovery, in light of
`
`the discovery deadline set by the court. The Commission foresaw the need for the Remaining
`
`
`
`- 12 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 13 of 16
`
`Discovery and acted diligently, as described above. The Commission was able to obtain
`
`discovery in Israel pursuant to the Letter of Request prior to the discovery deadline. However, it
`
`did not foresee the order by the Jerusalem District Court staying the Remaining Discovery. In the
`
`appeal by Mr. Sheleg joined by James Shaoul and Mr. Azarzar, the witnesses asserted one
`
`primary argument that, if successful, would prevent the evidence gathering under the Letter of
`
`Request entirely (as opposed to arguments to limit the scope of evidence gathering). Sherby
`
`Decl. ¶ 5. They argued that this case is not a civil or commercial matter and, therefore, the Israeli
`
`Magistrates Court should not offer the assistance requested by this Court under the Hague
`
`Evidence Convention and approved by the Israel Central Authority. Id. The Commission
`
`believes that this Court, the Israeli Central Authority, and the Magistrates Court in Jerusalem
`
`were all correct that use of the Hague Convention in this civil matter is proper, which is
`
`consistent with the Commission’s prior practice in Israel in successfully obtaining assistance in
`
`evidence gathering pursuant to the Hague Evidence Convention. See Sherby Decl. ¶ 6.
`
`Accordingly, the basis for the stay orders was not reasonably foreseeable based on the
`
`Commission’s understanding of a civil action and based on its prior practice in Israel.
`
`Whether further discovery is likely to lead to relevant evidence. The need for relevant
`
`evidence weighs heavily in favor of an exception. See United States v. Nixon, 418 U.S. 683, 709
`
`(1974) (“The need to develop all relevant facts in the adversary system is both fundamental and
`
`comprehensive.”). The testimony of James Shaoul goes to the heart of this case. James Shaoul is
`
`an upstream tipper of the other defendants. Dr. Waldman and Roger Shaoul both argued many
`
`times in this case that the Commission lacks evidence that James Shaoul obtained material
`
`nonpublic information in an improper manner. This is likely to be a key issue at trial because
`
`evidence of suspicious trading is overwhelming. The deposition of James Shaoul in Israel also is
`
`
`
`- 13 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 14 of 16
`
`necessary because, despite being a party to this case, James Shaoul has given every indication
`
`that he will not appear at trial. While he has retained counsel in Israel and vigorously opposed
`
`the Letter of Request in the Israeli court system, he has ignored all deadlines and discovery
`
`obligations imposed by this Court. If the jury in this matter is going to hear testimony from a
`
`central figure in this case, it will only be through a deposition conducted in Israel pursuant to the
`
`Letter of Request.
`
`Ziv Sheleg is a financial advisor to Amir Waldman and James Shaoul who offered them
`
`advice about Mobileye stock while they possessed and traded on material nonpublic information.
`
`Evidence from Mr. Sheleg will help confirm or refute Dr. Waldman’s explanation for his trading.
`
`Yossi Azarzar is a mutual friend of James Shaoul and Mobileye insiders who made unusual and
`
`remarkably timed purchases of Mobileye securities at the same time as Dr. Waldman and Roger
`
`Shaoul but, unlike Dr. Waldman, was able to transfer the profits of his trading outside of the
`
`Court’s jurisdiction before the trading was detected. Evidence from Mr. Azarzar will help
`
`confirm or refute the evidence that James Shaoul possessed material nonpublic information about
`
`the tender offer.
`
`Counsel for the Commission has conferred with counsel for James Shaoul, Mr. Sheleg,
`
`and Mr. Azarzar, and asked each of them to voluntarily provide evidence. All have declined, and
`
`all indications are that none of these individuals will come to the United States to provide
`
`evidence at trial. The jury is entitled to hear evidence from these witnesses—especially James
`
`Shaoul—and discovery authorized by this Court in the Letter of Request is the only mechanism
`
`available to compel evidence from these reluctant witnesses.
`
`One last factor weighs heavily in favor of an exception to the discovery cutoff for the
`
`Remaining Discovery. The Hague Convention is an international treaty that promotes the spirit
`
`
`
`- 14 -
`
`

`

`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 15 of 16
`
`of comity among its member states. The Israeli courts have worked diligently to address the
`
`vigorous efforts of James Shaoul to avoid discovery and have stayed his deposition. They did not
`
`cancel the ordered discovery. The upshot of the stay orders is that the Jerusalem District Court
`
`determined that it is best to consider the appeal in due course and not on an expedited basis.
`
`Denying the exception for Remaining Discovery will moot the orderly review contemplated by
`
`the Jerusalem District Court. On the other hand, comity and respect for the Jerusalem District
`
`Court will be served by an exception for the Remaining Discovery.
`
`CONCLUSION
`
`For the reasons above, the Commission requests that the Court enter an order (1) granting
`
`an exception to the discovery deadline for the Remaining Discovery in Israel, and (2) directing
`
`the parties to address the status of the Remaining Discovery after resolution of dispositive
`
`motions.
`
`
`
`Dated: May 25, 2018
`
`
`
`
`
`
`
`
`
`
`
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket