Berland v. The Conclave, LLC

• Court: District Court, S.D. California
• Decided: October 31, 2022
• Docket: 3:20-cv-00922
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 UNITED STATES DISTRICT COURT 16 SOUTHERN DISTRICT OF CALIFORNIA 17 18 BRIAN G. BERLAND, et. al., Case No.: 20-cv-00922-H-WVG

19 Petitioners, ORDER DENYING PETITIONERS’ 20 v. MOTION FOR AN ORDER TO SHOW CAUSE RE CONTEMPT 21 THE CONCLAVE, LLC, et al.,

22 Respondents. [Doc. No. 86.] 23 24 On June 21, 2022, Petitioners Brian G. Berland, Laurita Berland, Vincent Berland, 25 Roxane M. Blake, Aaron Bollig, Steve Burns, Troy E. Burns, Michael Carey, Patrick 26 Carey, Michael Carpenter, Sonya Carpenter, Merrill Conant, Ross Edwards, Kevin Fralick, 27 Tom Gawlick, Justin Jones, William Kalahurka, Jeffrey Menzie, Pamela Menzie, Progenex 28 Investment Group, LLC, D. Paul Rittman, David Schmidt, Scott Schneider, Mark Shields, 1 The Shields Group, LLC, Michael Speer, Dennis Stanley, Gail Stanley, Ronnie Stanley, 2 Randy Staten, Gina Staten, Curtis L. Thomas, Nancy L. Thomas, Carol Thomeczek, 3 William D. Turley, Sheri Turley, Gavin Unruh, Kimberly Unruh, Annetta Vahsholtz, 4 Dennis Vahsholtz, Richard Weiser, Roger Winter, Timothy C. Winter, Jimmy Woodward, 5 Larry Woodward, Mark Zortman, and Anita Zortman (collectively, the “Petitioners”) filed 6 a motion requesting that the Court issue an order to show cause why Respondents Dagobah 7 LLC, Page10 Ventures, LLC, and Ryan Page (collectively, the “Page Respondents”) and 8 certain non-parties Gravity Brands, LLC (“Gravity”), Mulligan Capital, LLC (“Mulligan 9 Capital”), Matthew Page, Paul Gomez, and Luke Adams (collectively, the “Non-Party 10 Respondents”), should not be held in contempt of Court. (Doc. No. 86.) 11 On June 22, 2022, Entity Petitioner Neville Holdings Inc. and Third-Party 12 Respondent Cameron N. Verdi, through their counsel, filed a joinder petition in support of 13 Petitioners’ motion. (Doc. No. 87.) On September 12, 2022, the Non-Party Respondents 14 filed their opposition to the motion. (Doc. No. 92.) On September 13, 2022, the Page 15 Respondents filed their opposition to the motion. (Doc. No. 93.) On September 20, 2022, 16 Petitioners filed a reply in support of the motion. (Doc. No. 94.) On October 31, 2022, the 17 Court held a hearing on the motion. Thomas Frost appeared for the Petitioners, Ryan Bell 18 appeared for the Page Respondents, and William Cole appeared for the Non-Party 19 Respondents. For the reasons that follow, the Court denies the Petitioners’ request for an 20 order to show cause re contempt. 21 Background 22 The factual background of this lengthy arbitration dispute is laid out in this Court’s 23 prior orders. (Doc. Nos. 48, 73.) Petitioners are a group of passive investors in the 24 Progenex enterprise that filed a demand for arbitration regarding various federal and state 25 law securities claims as well as breach of fiduciary duty and corporate waste. (Doc. No. 26 10-2 Ex. 1 at 2–3.) Respondents are a group of management and holding companies and 27 their principals who managed the enterprise of Progenex Holdings, LLC (“Progenex”). 28 (Doc. No. 48 at 3.) Gravity, Mulligan Capital, Matthew Page, Paul Gomez, and Luke 1 Adams are not parties to the arbitration. (Doc. No. 34-1 Ex. 1 at 5-6.) 2 Petitioners initiated the underlying arbitration before JAMS on January 27, 2016. 3 (Id. at 2.) The arbitration agreement required that “[t]he award shall be made within ninety 4 (90) days from the date the arbitration proceedings are initiated.” (Doc. No. 38-2 Ex. 11 5 at 32.) The arbitration was held March 19–23, 2018. (Id.) On February 4, 2019, the 6 Arbitrator issued an Interim Award, which found that the Petitioners had “failed to prove 7 their federal and state securities law claims . . . dilution, and breach of fiduciary 8 duty/corporate waste claims against Respondents.” (Doc. No. 10-2 Ex. 1 at 3.) But the 9 Interim Award also provided that the Arbitrator intended to exercise her equitable authority 10 and order the adjustment of ownership interests in Progenex in her final award. (Id.) On 11 July 31, 2019, the Arbitrator reopened the arbitration hearings to review allegedly new 12 material evidence. (Doc. No. 23-2 Ex. A at 1.) 13 In December 2019, various individuals who had made secured loans to Matrix 14 Solutions, LLC (“Matrix Solutions”) – one of the companies involved in the Progenex 15 enterprise – notified Respondent Ryan Page that they intended to exercise their right to 16 foreclose on the company given their unpaid debts. (Doc. Nos. 59-5 March 2, 2020 Page 17 Decl. ¶¶ 63–68; 59-8 April 21, 2021 Page Decl. ¶ 44.) The group of foreclosing lenders 18 claimed to be owed $4,200,000 in the aggregate. (Doc. Nos. 34-1 Ex. 3 at 3; 59-5 March 19 2, 2020 Page Decl. ¶¶ 12–30.) On December 30, 2019, a foreclosure auction was held; no 20 parties other than Mulligan Capital bid on Matrix Solutions. (Doc. No. 59-5 March 2, 2020 21 Page Decl. ¶¶ 106–07.) As a result of the foreclosure, Mulligan Capital acquired all of 22 Matrix Solutions’ property, intellectual property, and assets, which included the property, 23 intellectual property, and assets of Progenex pursuant to an agreement between the two 24 entities. (Doc. Nos. 59-6 June 5, 2020 Page Decl. ¶¶ 6, 12; 59-8 April 21, 2021 Page Decl. 25 ¶¶ 18–19.) 26 On January 27, 2020, upon learning of the foreclosure, the Arbitrator issued a 27 Temporary Restraining Order (“TRO”) enjoining the transfer or assignment of any 28 Progenex assets or completing or facilitating any transfer of assets pursuant to the non- 1 judicial foreclosure. (Doc. No. 34-1 Ex. 2 at 6.) But Petitioners did not file a motion 2 requesting for the Court to issue an order confirming the TRO until May 21, 2020. (Doc. 3 No. 1.) On July 27, 2020, the Court denied the motion to confirm the TRO noting several 4 deficiencies with the application. (Doc. No. 19.) On July 20, 2020, Mulligan Capital and 5 several of its members filed suit in the Third District Court for the State of Utah seeking a 6 declaratory ruling that the foreclosure of the assets and property of Matrix Solutions and 7 Progenex Holdings by Mulligan Capital was valid and final (the “Utah Action”). (Doc. 8 No. 62-4 Ex. 3.) The parties have not provided the Court with any recent developments in 9 the Utah Action, which is still ongoing. 10 On November 9, 2020, the Arbitrator granted a preliminary injunction. (Doc. No. 11 34-1 Ex. 1.) Petitioners moved to confirm the preliminary injunction on November 12, 12 2020. (Doc. No. 34.) Following briefing, on February 9, 2021, the Court granted the 13 Petitioners’ motion to confirm the Preliminary Injunction as an Order of the Court (the 14 “Preliminary Injunction”). (Doc. No. 48.) The Preliminary Injunction restrained and 15 enjoined Respondents The Conclave, LLC, Progenex Holdings, LLC, Riverpine, LLC, 16 Dagobah, LLC, Page10 Ventures, LLC, Ryan Page, Steve Shamion, and their principals, 17 assigns, affiliates, successors, or anyone acting at or under Respondents’ discretion or in 18 concert with them (collectively, the “Enjoined Parties”) from the following acts: 19 1. Directly or indirectly transferring, setting off, changing, selling, pledging, assigning, liquidating, hiding, secreting, or otherwise disposing of, or 20 withdrawing, conveying, assigning and/or otherwise moving any property or 21 assets owned and/or licensed by Progenex of any type whatsoever, specifically including, without limitation, the Progenex brand trademark and 22 any other intellectual property utilized in any fashion in connection with any 23 of the businesses engaged in by Progenex, its principals, assigns, affiliates, and or successors; 24 2. Completing or facilitating in any manner any transfer of assets of Progenex 25 pursuant to the December 2019 non-judicial foreclosure of the assets of 26 MATRIX SOLUTIONS, LLC; 27 3. Failing and refusing to provide full and complete access to any or all financial information, bank accounts, business agreements, and Progenex-related 28 financial correspondence, emails, texts, or other documentation to the 1 independent expert accountant, Tony Yip (the “Accountant’), appointed by the Arbitrator to complete an accounting of the Progenex enterprise; 2 4. Failing and refusing to timely cooperate with the reasonable requests for 3 information by the Accountant; 4 5. Failing and refusing to provide all passwords, login, and account information, 5 and records to the Accountant of the accounting program(s) utilized by and for Progenex or any Enjoined Parties' separate accounting systems related to 6 or concerning the Progenex enterprise, including all subsidiary accountings; 7 6. Failing and refusing to provide to the Accountant all passwords and login 8 account information and records for any merchant servicing account(s) utilized by and for the Progenex or any Enjoined Parties’ separate merchant 9 sales related to or concerning the Progenex enterprise, including all subsidiary 10 sales and transactions. 11 (Doc. No. 34-1 Ex. 1 at 8–9.) 12 Following the Court’s order confirming the Preliminary Injunction, the Petitioners, 13 on April 27, 2021, filed their first motion for an order to show cause why the Page 14 Respondents and certain non-parties should not be held in contempt of court. (Doc. No. 15 52.) The Petitioners alleged that the Page Respondents and the non-party respondents 16 violated (i) the asset freeze provisions of the Preliminary Injunction, and (ii) the document 17 production provisions of the Preliminary Injunction. (Id.) On June 4, 2021, the Court 18 issued an order denying the Petitioners first motion for an order to show cause re contempt 19 in its entirety. (Doc. No. 73.) 20 On June 24, 2021, the Page Respondents filed a motion to vacate the Arbitrator’s 21 appointment of Ronnie Stanley as provisional manager of Progenex Holdings, LLC. (Doc. 22 No. 74.) The Court stated that it is not the role of district courts to provide appellate review 23 of every individual order issued during an arbitration and denied the Page Respondent’s 24 motion. (Doc No. 84.) 25 On September 30, 2022, over four years after the arbitration was held, the Arbitrator 26 issued a Final Award. (Doc. No. 97-1.) Following the language of the Interim Award, the 27 Final Award similarly found that the Petitioners had “failed to prove their federal and state 28 securities law claims . . . dilution, and breach of fiduciary duty/corporate waste claims 1 against Respondents.” (Doc. No. 97-1 at 6.) The Final Award also set forth the 2 capitalization table of Progenex, suspended and held the interests of Conclave and its 3 members in Progenex in abeyance,1 and continued the tenure of Ronnie Stanley as 4 Progenex’s manager. (Doc. No. 97-1 at 33.) 5 Additionally, the Arbitrator continued and turned the Preliminary Injunction into a 6 Permanent Injunction (the “Permanent Injunction”) and incorporated it as part of the Final 7 Award.2 (Doc. No. 97-1 Ex. B.) The Permanent Injunction’s terms largely mirror the 8 Preliminary Injunction’s terms, with a few minor changes. (Id.) Specifically, the 9 Permanent Injunction restrained and enjoined the Enjoined Parties from the following acts: 10 1. Directly or indirectly transferring, setting off, changing, selling, pledging, assigning, liquidating, hiding, secreting, or otherwise disposing of, or 11 withdrawing, conveying, assigning and/or otherwise moving any property or 12 assets owned and/or licensed by Progenex of any type whatsoever, specifically including, without limitation, the “Progenex” brand trademark 13 and any other intellectual property utilized in any fashion in connection with 14 any of the businesses engaged in by Progenex, its principals, assigns, affiliates, and or successors; 15 2. Completing or facilitating in any manner any transfer of assets of Progenex 16 pursuant to the December 2019 non-judicial foreclosure of the assets of 17 MATRIX SOLUTIONS, LLC; 18 3. Failing and refusing to provide full and complete access to any or all financial information, bank accounts, business agreements, and Progenex-related 19 financial correspondence, emails, texts, or other documentation to facilitate 20 an accounting of the Progenex Entities3; 21 4. Failing and refusing to timely cooperate with the reasonable requests for such

22 1 The Arbitrator stated that the interests shall be held in abeyance “until there is a judicial determination 23 as to whether Conclave and its embers shall be dissociated with or expelled from membership in 24 Progenex.” (Doc. No. 97-1 at 33.) 2 The Arbitrator held that the Permanent Injunction “shall be dissolved upon the issuance of a final 25 judgment in the Mulligan Utah Action or by another court of competent jurisdiction or upon resolution by settlement of the new claims related to acts and omissions of Ryan Page and Mulligan and its 26 members commencing in or about December 2019 . . . including the Mulligan nonjudicial foreclosure of the Matrix assets and indirectly the Progenex assets.” (Doc. No. 97-1 at 33.) 27 3 The Arbitrator defines the “Progenex Entities” as Progenex Holdings, LLC, the Conclave LLC, and 28 Matrix Solutions LLC. (Doc. No. 97-1 Ex. B at 5.) 1 information; 2 5. Failing and refusing to provide all requested passwords, login, and account information, and records of the accounting program(s) utilized by and for the 3 Progenex Entities or any Enjoined Parties’ separate accounting systems 4 related to or concerning the Progenex Entities, including all subsidiary accountings; 5 6. Failing and refusing to provide to all requested passwords and login account 6 information and records for any merchant servicing account(s) utilized by and 7 for the Progenex Entities or any Enjoined Parties’ separate merchant sales related to or concerning the Progenex enterprise, including all subsidiary sales 8 and transactions. 9 (Doc. No. 97-1 Ex. B at 9.) 10 The Court notes that the parties have not yet moved to confirm the Final Award, 11 including the Permanent Injunction. The parties may submit papers to the Court to confirm 12 it in accordance with the Local Rules. 13 By the present motion, Petitioners request that the Court issue an order to show cause 14 why Respondents Ryan Page, Dagobah LLC, and Page10 Ventures, as well as non-parties 15 Gravity Brands, LLC, Mulligan Capital, LLC, Matthew Page, Paul Gomez, and Luke 16 Adams should not be held in contempt of Court for (i) allegedly violating the asset freeze 17 provisions of the Court’s injunction and (ii) for allegedly concealing material evidence 18 from the Court. (Doc. No. 86.) The Page Respondents maintain that this Court should not 19 hold them in contempt because the conduct Petitioners object to does not constitute an asset 20 transfer and because they have not transferred any assets or property of Progenex since the 21 December 2019 foreclosure and have not otherwise violated the Preliminary Injunction. 22 (Doc. No. 93.) The Non-Party Respondents similarly maintain that the conduct Petitioners 23 object to does not violate the Court’s Preliminary Injunction and that even if the Court 24 found that the conduct did violate the Preliminary Injunction, the Court should not hold 25 them in contempt because the Petitioners have not provided evidence that they were acting 26 in concert with the Enjoined Parties. (Doc. No. 92.) 27 /// 28 /// 1 Legal Standards 2 A district court has the inherent power to enforce its orders through civil contempt. 3 See Shillitani v. United States, 384 U.S. 364, 370 (1966); Cal. Dep’t of Soc. Servs. v. 4 Leavitt, 523 F.3d 1025, 1033 (9th Cir. 2008). “Civil contempt . . . consists of a party’s 5 disobedience to a specific and definite court order by failure to take all reasonable steps 6 within the party’s power to comply.” Inst. of Cetacean Rsch. v. Sea Shepherd Conservation 7 Soc’y, 774 F.3d 935, 945 (9th Cir. 2014) (citing In re Dual-Deck Video Cassette Recorder 8 Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993)). 9 To establish a prima facie case for civil contempt, “[t]he moving party has the burden 10 of showing by clear and convincing evidence that the contemnors violated a specific and 11 definite order of the court.” F.T.C. v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 12 1999) (citing Stone v. City and Cty. of San Francisco, 968 F.2d 850, 856 n.9 (9th Cir. 13 1992)). Clear and convincing evidence requires “more than proof by a preponderance of 14 the evidence and less than proof beyond a reasonable doubt.” Singh v. Holder, 649 F.3d 15 1161, 1168 (9th Cir. 2011). Evidence may only be considered “clear and convincing” if it 16 demonstrates that the factual contentions are “highly probable.” Sophanthavong v. 17 Palmateer, 378 F.3d 859, 866 (9th Cir. 2004). “The contempt need not be willful.” In re 18 Dual-Deck, 10 F.3d at 695 (internal quotation marks and citation omitted). “Contempt 19 sanctions, however, are not warranted where the nonmoving party’s action ‘appears to be 20 based on a good faith and reasonable interpretation’ of the court’s order.” Newmark Realty 21 Capital, Inc. v. BGC Partners, Inc., No. 16-cv-01702-BLF, 2018 WL 2416242, at *2 (N.D. 22 Cal, May 29, 2018) (quoting In re Dual-Deck, 10 F.3d at 695). 23 If the Court finds a prima facie case of civil contempt, the burden shifts to the alleged 24 contemnor to demonstrate that it took all reasonable steps to comply yet was unable. Stone, 25 968 F.2d at 856 n.9. “A party’s inability to comply with a judicial order constitutes a 26 defense to a charge of civil contempt.” Affordable Media, 179 F.3d at 1239; see U.S. v. 27 Rylander, 460 U.S. 752, 757 (1983) (“While the court is bound by the enforcement order, 28 it will not be blind to evidence that compliance is now factually impossible. Where 1 compliance is impossible, neither the moving party nor the court has any reason to proceed 2 with the civil contempt action.”). “[T]he party asserting the impossibility defense must 3 show ‘categorically and in detail’ why he is unable to comply.” Id. (citing N.L.R.B. v. 4 Trans Ocean Export Packing, Inc., 473 F.2d 612, 616 (9th Cir. 1973)); see Rylander, 460 5 U.S. at 757 (“It is settled, however, that in raising this defense, the defendant has a burden 6 of production.”). Substantial compliance also is a defense to civil contempt—“[i]f a 7 violating party has taken ‘all reasonable steps’ to comply with the court order, technical or 8 inadvertent violations of the order will not support a finding of civil contempt.” Gen. Signal 9 Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986); see Inst. of Cetacean Rsch., 10 774 F.3d at 945. 11 In contempt proceedings, the propriety of the underlying order is not at issue; rather, 12 the question for the Court is whether the alleged contemnor has the present ability to obey 13 the Court’s order. See Maggio v. Zeitz, 333 U.S. 56, 69 (1948). “[A] contempt proceeding 14 does not open to reconsideration the legal or factual basis of the order alleged to have been 15 disobeyed and thus become a retrial of the original controversy.” Id.; Rylander, 460 U.S. 16 at 756–57. 17 Discussion 18 I. Whether Petitioners Have Shown By Clear and Convincing Evidence That The Page Respondents and/or the Non-Party Respondents Violated The 19 Preliminary Injunction’s Asset Freeze Provisions 20 “Arbitration awards are not self-enforcing. Rather, they must be given force and 21 effect by being converted to judicial orders by courts.” Aguilar v. Carter’s Inc., No. 1:19- 22 CV-03178-SMJ, 2020 WL 7974335, at *1 (E.D. Wash. Nov. 17, 2020). The Preliminary 23 Injunction contains two “asset freeze” provisions, which enjoin: (1) transferring or 24 otherwise moving “any property or assets owned and/or licensed by Progenex [Holdings, 25 LLC]4 of any type whatsoever,” (the “General Asset Freeze” provision), and 26

27 4 (See Doc. No. 34-1 Ex. 1, Arbitrator’s Preliminary Injunction, at 3 (abbreviating “Progenex 28 Holdings LLC” as “Progenex”).) 1 (2) “completing or facilitating in any manner any transfer of assets of Progenex [Holdings, 2 LLC] pursuant to the December 2019 non-judicial foreclosure of the assets of Matrix 3 Solutions, LLC” (the “Foreclosure Freeze” provision). (Doc. No. 34-1 Ex. 1 at 9.) 4 Petitioners contend that the Page Respondents and the Non-Party Respondents have 5 violated the General Asset Freeze and the Foreclosure Freeze provisions by filing petitions 6 with the U.S. Patent and Trademark Office (“USPTO”) regarding the registered ownership 7 of the Progenex trademarks. (Doc No. 86 at 14–15.) The Court considers the entire record 8 and the following exhibits5: a July 29, 2022 petition letter to the director of the USPTO, an 9 August 3, 2021 petition to the USPTO, an August 9, 2021 USPTO inquiry letter, an August 10 30, 2021 response to the inquiry letter, and a January 22, 2022 granting of the petition 11 (collectively, the “August 2021 USPTO Action”). (Doc. No. 86-2 Exs. B, C, D, F, G.) 12 The August 2021 USPTO Action is a continuation of the dispute over the Progenex 13 trademarks discussed in the Court’s prior contempt order. (Doc. No. 73 at 9–10.) The 14 USPTO records show that on December 30, 2019, the Progenex trademarks were assigned 15 from Progenex to Matrix Solutions and then from Matrix Solutions to Mulligan Capital. 16 (Doc. No. 59-7 Ex. 1.) On March 30, 2020, the assignments from Progenex to Matrix 17 Solutions and then Matrix Solutions to Mulligan Capital were registered with the USPTO. 18 (Id.) 19 On October 14, 2020, Third-Party Respondent Cameron Verdi filed a correction by 20 declaration of incorrect filing with the USPTO. (Doc. No. 86-2 Ex. B.) Cameron Verdi 21 filed the correction to “reflect that Progenex Holdings LLC always was, and remains, the 22 duly registered owner of all Progenex trademarks.” (Doc. No. 44-1 at 2.) As a result, the 23

24 5 The Court’s review is limited to whether the conduct after the Court’s February 9, 2021 Injunction 25 constitutes contempt. See Arkwright Advanced Coating, Inc. v. MJ Sols. GmbH, No. CIV. 14-5030 26 DSD/TNL, 2015 WL 5602840, at *1 (D. Minn. Sept. 23, 2015) (noting that the “arbitration award at issue is not a court order and, as such, cannot serve as the basis for a contempt order”); Donel Corp. v. Kosher 27 Overseers Ass’n of Am., Inc., No. 92–8377, 2001 WL 1135625, at *1 (S.D.N.Y. Sept. 26, 2001) (finding no contempt based on conduct occurring after the arbitration award, but before the court confirmed that 28 award, because the award was “not enforceable until it was confirmed by [the] Court”). 1 USPTO changed the Progenex trademarks’ ownership registration back to Progenex 2 Holdings. (Doc. No. 44-2 Ex. C.) 3 In response, Gravity, a non-party to the arbitration, filed a petition on August 3, 2021 4 requesting that the USPTO: (1) remove Cameron Verdi’s October 14, 2020 filing, and (2) 5 list Gravity as the registered owner of the Progenex trademarks pursuant to the December 6 31, 2019 assignment from Mulligan Capital to Gravity. (Doc Nos. 86-2 Exs. C, D; 92 at 7 5.) After Gravity responded to the USPTO clarifying an error in the initial petition,6 the 8 USPTO issued a letter granting Gravity’s petition. (Doc No. 86-2 Ex. B.) The USPTO 9 stated that Verdi’s filing “will be considered as unauthorized” and that the Progenex 10 trademarks’ ownership information “will be updated to show the current owner as the 11 petitioner, Gravity Brands LLC.” (Id.) 12 Petitioners argue that by initiating and completing the August 2021 USPTO Action 13 the “Enjoined Parties7 caused Progenex to transfer all Progenex trademarks to Gravity in 14 January 2022” and thereby violated both the General Asset Freeze and the Foreclosure 15 Freeze provisions of the Preliminary Injunction. (Doc No. 86 at 15.) Petitioners overstate 16 the record. 17 As the Court indicated in its previous order on Petitioners’ first motion for an order 18 to show cause re contempt, the evidence in the record shows that in December 2019 the 19 entirety of Progenex’s assets and property were transferred to Mulligan Capital via a non- 20 judicial foreclosure of Matrix Solutions.8 (Doc. Nos. 59-6 June 5, 2020 Page Decl. ¶ 6; 21 22 6 On August 9, 2021, the USPTO issued an inquiry letter to Gravity seeking clarification as to the trademarks’ owner because Gravity had listed Mulligan Capital as the owner in its August 3, 2021 23 petition, not Gravity. (Doc No. 86-2 Exs. C, F.) On August 30, 2021, Gravity responded to the 24 USPTO’s letter and indicated that they had made an error and that Gravity was the owner. (Doc No. 86- 2 Ex. G.) 25 7 Petitioners define the “Enjoined Parties” as both the Page Respondents and the Non-Party Respondents. (Doc. No. 86 at 1.) 26 8 According to Ryan Page’s declarations and the complaint in the Utah Action, there was a security agreement between Progenex Holdings and Matrix Solutions, whereby Matrix Solutions made several 27 loans to Progenex Holdings, and secured its loans with Progenex Holdings’ assets, including its 28 trademarks and websites. (Doc. Nos. 59-5 March 2, 2020 Page Decl. ¶ 31; 59-8 April 21, 2021 Page Decl. 1 59-8 April 21, 2021 Page Decl. ¶¶ 4–11, 23; 73 at 9.) The Page Respondents and Non- 2 Party Respondents now provide that an additional assignment occurred on December 31, 3 2019, whereby Mulligan Capital assigned the Progenex trademarks to Gravity. (Doc Nos. 4 92 at 4; 93 at 9; 93-5 Ex. A.) On December 14, 2020, the assignment from Mulligan Capital 5 to Gravity was registered with the USPTO. (Doc. Nos. 92 at 4; 93-5 Ex. A.) 6 The assignment from Mulligan Capital to Gravity occurred in December 2019, 7 before the Arbitrator issued a TRO and well before the Court confirmed the Preliminary 8 Injunction. The August 2021 USPTO Action documents that assignment. The August 9 2021 USPTO Action therefore could not have “caused Progenex to transfer all Progenex 10 trademarks to Gravity” as Petitioners suggest because that had already occurred years prior. 11 Additionally, the USPTO’s January 22, 2022 letter describes the authority of its assignment 12 branch as “record[ing] assignments and security interests of registered trademarks.” (Doc 13 No. 86-2 Ex. B at 4.) Such “[r]ecordation is a ministerial function. The office neither 14 makes a determination of the legality of the transaction nor the right of the submitting party 15 to take the action.” Transferring Ownership/Assignments FAQs, USPTO, 16 https://www.uspto.gov/learning-and-resources/transferring-ownership-assignments- 17 faqs#type-browse-faqs_160521 (last visited Oct. 31, 2022). Petitioners’ allegations 18 concerning the August 2021 USPTO Action are far from satisfying the clear and 19 convincing evidence standard required for a contempt order. 20 The Court notes that the Utah Action has jurisdiction over many of the relevant 21 entities involved in the 2019 foreclosure. Discovery is ongoing in the Utah Action, which 22 provides the parties with an avenue to obtain information not disclosed here or in the 23 arbitration. 24 Under the present record, the Court concludes Petitioners have not met their burden 25

26 Holdings’ assets, and then Mulligan Capital obtained all of Matrix Solutions’ assets. (Doc. Nos. 59-6 June 27 5, 2020 Page Decl. ¶ 6; 59-8 April 21, 2021 Page Decl. ¶¶ 4–11.) Petitioners have not presented any evidence that this non-judicial foreclosure has been held to be legally invalid by a court of competent 28 jurisdiction. 1 of showing by clear and convincing evidence that the August 2021 USPTO Action violates 2 a specific and definite order of this Court. See Affordable Media, 179 F.3d at 1239. As a 3 result, the Court denies Petitioners’ motion for an order to show cause why the Page 4 Respondents and the Non-Party Respondents should not be held in contempt for 5 purportedly violating the asset freeze provisions of the Preliminary Injunction.9 6 II. Whether Petitioners Have Shown By Clear and Convincing Evidence That The Page Respondents and/or the Non-Party Respondents Violated The Injunction 7 By Concealing Material Evidence From The Court 8 Petitioners also argue that the Page Respondents and the Non-Party Respondents 9 violated the Preliminary Injunction by concealing material evidence from the Court, 10 specifically, the entity Gravity. (Doc No. 86 at 2, 10–11.) Petitioners argue that this 11 concealment “violated the prohibitions set forth in ¶¶ 1-2 of the [Preliminary] Injunction” 12 or, in other words, the asset freeze provisions of the Preliminary Injunction. (Doc. No. 86 13 at 2.) Petitioners fail to show by clear and convincing evidence how the parties to the 14 arbitration violated the asset freeze provisions of the Preliminary Injunction or that they 15 directed or acted in concert with any of the Non-Party Respondents to do so. (See Doc 16 Nos. 86, 94.)10 Further, no provision of the Preliminary Injunction covers the Page 17 Respondents’ and Non-Party Respondents’ alleged non-disclosure to the Court. (See Doc. 18 No. 34-1 Ex. 1 at 8–9.) Accordingly, the Court denies the Petitioners’ motion for an order 19 to show cause why the Page Respondents and the Non-Party Respondents should not be 20 held in contempt. 21 22

23 9 The Court need not delve into which, if any, of the Page Respondents or the Non-Party 24 Respondents were (or could even be held) responsible for the August 2021 USPTO Action because Petitioners have not met their burden of proving by clear and convincing evidence that the August 2021 25 USPTO Action involved the transferring or otherwise moving of “property or assets owned and/or licensed by Progenex [Holdings, LLC]” or the “completing or facilitating in any manner any transfer of 26 assets of Progenex.” 10 Petitioners argue that Ryan Page’s declarations to the arbitrator are evidence of a violation of the 27 Preliminary Injunction. (Doc No. 86 at 10–11.) Ryan Page’s declarations, which contain numerous 28 caveats and qualifiers, do not rise to the level of clear and convincing evidence needed for a contempt 1 Conclusion 2 Petitioners have asked this Court to find the Page Respondents and Non-Party 3 ||Respondents in contempt of the Preliminary Injunction. Petitioners’ request, however, 4 || does not provide clear and convincing evidence of a violation of the Preliminary Injunction. 5 || After a review of the entire record and relevant standards, the Court denies Petitioners’ 6 ||motion for an order to show cause re contempt in its entirety. 7 IT IS SO ORDERED. 8 || DATED: October 31, 2022 - | \buLen | shill 10 MARILYN ©. HUFF, Distri ge UNITED STATES DISTRICT COURT 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28