2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4
5 SECURITIES AND EXCHANGE Case No. 3:22-cv-00269-ART-CSD COMMISSION, 6 ORDER DENYING MOTION TO STAY Plaintiff, (ECF No. 69) 7 v.
8 LORAL L. LANGEMEIER and LIVE OUT LOUD, INC., 9 Defendants. 10 11 Defendants Loral L. Langemeier and Live Out Loud, Inc. (“LOL”) move for a 12 stay of enforcement of judgment pending appeal. (ECF No. 69.) For the reasons 13 set forth below, the Court denies Defendants’ motion without prejudice. 14 I. DISCUSSION 15 Defendants argue that they are entitled to a stay of judgment pending 16 appeal pursuant to Rule 62 and under the four-factor test. Mi Familia Vota v. 17 Fontes, 111 F.4th 976, 981 (9th Cir. 2024). The Court addresses each argument 18 in turn. 19 A. RULE 62 20 Rule 62(b) provides that: “At any time after judgment is entered, a party 21 may obtain a stay by providing a bond or other security. The stay takes effect 22 when the court approves the bond or other security and remains in effect for the 23 time specified in the bond or other security.” Fed. R. Civ. P. 62(b). A party 24 appealing a judgment of a federal district court is entitled to a stay of monetary 25 judgment if they post a bond in accordance with Rule 62. Am. Mfrs. Mut. Ins. Co. 26 v. Am. Broad.-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966); Am. Civ. Liberties 27 Union of Nevada v. Masto, 670 F.3d 1046, 1066 (9th Cir. 2012). “The posting of a 28 bond protects the prevailing plaintiff from the risk of a later uncollectible 1 judgment and compensates him for delay in the entry of the final judgment.” 2 N.L.R.B. v. Westphal, 859 F.2d 818, 819 (9th Cir. 1988). 3 In determining whether an appellant has met their burden of showing a 4 need to deviate from the usual requirement of posting a full supersedeas bond, 5 the Ninth Circuit considers a five-factor test. Securities and Exch. Comm'n v. 6 Beasley, No. 222CV00612CDSEJY, 2024 WL 1199593, at *2 (D. Nev. Mar. 19, 7 2024); Kranson v. Fed. Express Corp., No. 11-CV-05826-YGR, 2013 WL 6872495, 8 at *1 (N.D. Cal. Dec. 31, 2013) (discussing factors used in Dillon v. City of Chicago, 9 866 F.2d 902, 904–05 (7th Cir. 1988)). The factors considered are: (1) the 10 complexity of the collection process; (2) the amount of time required to obtain a 11 judgment after it is affirmed on appeal; (3) the degree of confidence that the 12 district court has in the availability of funds to pay the judgment; (4) whether the 13 defendant’s ability to pay the judgment is so plain that the cost of a bond would 14 be a waste of money; and (5) whether the defendant is in such a precarious 15 financial situation that the requirement to post a bond would place other 16 creditors of the defendant in an insecure position. Dillon, 866 F.2d at 904–05. 17 Although Defendants appear to request a stay pursuant to Rule 62, they 18 have not made any argument as to why bond should not be required based on 19 the Dillon factors. They have failed to present any evidence that would allow the 20 Court to make a finding on Defendants’ ability to pay. The Court therefore denies 21 Defendants’ request for a stay without payment of bond pursuant to Rule 62 22 without prejudice. 23 II. UNSECURED STAY PENDING APPEAL 24 Defendants argue they are entitled to a stay pending appeal because they 25 are likely to succeed on the merits and will suffer irreparable injury. 26 Courts consider four factors in deciding whether to grant a request for a 27 stay pending appeal: “(1) whether the stay applicant has made a strong showing 28 that [it] is likely to succeed on the merits; (2) whether the applicant will be 1 irreparably injured absent a stay; (3) whether issuance of the stay will 2 substantially injure the other parties interested in the proceeding; and (4) where 3 the public interest lies.” Nken v. Holder, 556 U.S. 418, 425–26 (2009) (citation 4 omitted). The likelihood of success and irreparable injury are the most important 5 factors. Mi Familia Vota, 111 F.4th at 981. In the Ninth Circuit, those two factors 6 fall on a “sliding scale in which the required degree of irreparable harm increases 7 as the probability of success decreases.” Id. “On one end of the continuum, the 8 proponent must show a ‘strong likelihood of success on the merits’ and at least 9 ‘the possibility of irreparable injury to the [proponent] if preliminary relief is not 10 granted.’” Id. (citing Golden Gate Rest. Ass'n v. City & Cnty of San Francisco, 512 11 F.3d 1112, 1116–17 (9th Cir. 2008)). At the other end of the continuum, the 12 moving party must show either “a high degree of irreparable injury, or that the 13 balance of equities otherwise tips sharply in their favor.” Id. (cleaned up). 14 A. Likelihood of Success on the Merits 15 Defendants first argue they are likely to succeed on the merits on their 16 appeal because the Court lacks jurisdiction over NV Huskers, a business entity 17 that received payments on behalf of Langemeier and LOL, and because NV 18 Huskers has limited liability company protections. (ECF No. 69 at 8.) 19 The Court’s order awarded disgorgement of $404,807 based on 20 transaction-based compensation that Defendants received during the relevant 21 period. (ECF No. 59 at 7.) The Court explained that the SEC had met its burden 22 of showing that the $404,807 was a reasonable approximation of Defendants’ 23 profits causally connected to the violation based on evidence in the record 24 including Langemeier’s deposition and an invoice confirming that the sum was 25 paid to NV Huskers. (Id.) 26 This is the first time Defendants raise an argument related to limited 27 liability protections of NV Huskers. In their briefing on the motion for judgment, 28 Defendants argued only that the payments to Defendants, via NV Huskers, their 1 “designated payee,” should not be considered transaction-based compensation 2 but instead legitimate “marketing fees.” (ECF No. 50 at 6, 7.) Any limited liability 3 protections that NV Huskers may have do not affect the Court’s finding that 4 Defendants in this case, Langemeier and SEC, received profits causally connected 5 to the violations. 6 Defendants next argue that the Court’s disgorgement order was “illegal” 7 because the SEC did not sufficiently prove that the amount awarded represented 8 Defendants’ net profits or that the disgorgement awarded would go to victims, 9 citing Liu v. Sec. & Exch. Comm'n, 591 U.S. 71 (2020). 10 First, the record supports the Court’s finding that the amount awarded, 11 $404,807, represented Defendants’ net profits. In Liu, the Court held that “courts 12 must deduct legitimate expenses before ordering disgorgement under 13 § 78u(d)(5).” Id. at 91–92. In this case, Defendants failed to make any showing of 14 legitimate expenses, therefore the Court was unable to deduct anything. As such, 15 total profits were the same as net profits. 16 Second, the Court agrees with Defendants that the disgorgement ordered 17 must be awarded to victims. Liu, 591 U.S. at 75. “Disgorgement is designed to 18 deprive a wrongdoer of unjust enrichment, and to deter others from violating 19 securities laws by making violations unprofitable.” S.E.C. v. First Pac. Bancorp, 20 142 F.3d 1186, 1191 (9th Cir. 1998).
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2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4
5 SECURITIES AND EXCHANGE Case No. 3:22-cv-00269-ART-CSD COMMISSION, 6 ORDER DENYING MOTION TO STAY Plaintiff, (ECF No. 69) 7 v.
8 LORAL L. LANGEMEIER and LIVE OUT LOUD, INC., 9 Defendants. 10 11 Defendants Loral L. Langemeier and Live Out Loud, Inc. (“LOL”) move for a 12 stay of enforcement of judgment pending appeal. (ECF No. 69.) For the reasons 13 set forth below, the Court denies Defendants’ motion without prejudice. 14 I. DISCUSSION 15 Defendants argue that they are entitled to a stay of judgment pending 16 appeal pursuant to Rule 62 and under the four-factor test. Mi Familia Vota v. 17 Fontes, 111 F.4th 976, 981 (9th Cir. 2024). The Court addresses each argument 18 in turn. 19 A. RULE 62 20 Rule 62(b) provides that: “At any time after judgment is entered, a party 21 may obtain a stay by providing a bond or other security. The stay takes effect 22 when the court approves the bond or other security and remains in effect for the 23 time specified in the bond or other security.” Fed. R. Civ. P. 62(b). A party 24 appealing a judgment of a federal district court is entitled to a stay of monetary 25 judgment if they post a bond in accordance with Rule 62. Am. Mfrs. Mut. Ins. Co. 26 v. Am. Broad.-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966); Am. Civ. Liberties 27 Union of Nevada v. Masto, 670 F.3d 1046, 1066 (9th Cir. 2012). “The posting of a 28 bond protects the prevailing plaintiff from the risk of a later uncollectible 1 judgment and compensates him for delay in the entry of the final judgment.” 2 N.L.R.B. v. Westphal, 859 F.2d 818, 819 (9th Cir. 1988). 3 In determining whether an appellant has met their burden of showing a 4 need to deviate from the usual requirement of posting a full supersedeas bond, 5 the Ninth Circuit considers a five-factor test. Securities and Exch. Comm'n v. 6 Beasley, No. 222CV00612CDSEJY, 2024 WL 1199593, at *2 (D. Nev. Mar. 19, 7 2024); Kranson v. Fed. Express Corp., No. 11-CV-05826-YGR, 2013 WL 6872495, 8 at *1 (N.D. Cal. Dec. 31, 2013) (discussing factors used in Dillon v. City of Chicago, 9 866 F.2d 902, 904–05 (7th Cir. 1988)). The factors considered are: (1) the 10 complexity of the collection process; (2) the amount of time required to obtain a 11 judgment after it is affirmed on appeal; (3) the degree of confidence that the 12 district court has in the availability of funds to pay the judgment; (4) whether the 13 defendant’s ability to pay the judgment is so plain that the cost of a bond would 14 be a waste of money; and (5) whether the defendant is in such a precarious 15 financial situation that the requirement to post a bond would place other 16 creditors of the defendant in an insecure position. Dillon, 866 F.2d at 904–05. 17 Although Defendants appear to request a stay pursuant to Rule 62, they 18 have not made any argument as to why bond should not be required based on 19 the Dillon factors. They have failed to present any evidence that would allow the 20 Court to make a finding on Defendants’ ability to pay. The Court therefore denies 21 Defendants’ request for a stay without payment of bond pursuant to Rule 62 22 without prejudice. 23 II. UNSECURED STAY PENDING APPEAL 24 Defendants argue they are entitled to a stay pending appeal because they 25 are likely to succeed on the merits and will suffer irreparable injury. 26 Courts consider four factors in deciding whether to grant a request for a 27 stay pending appeal: “(1) whether the stay applicant has made a strong showing 28 that [it] is likely to succeed on the merits; (2) whether the applicant will be 1 irreparably injured absent a stay; (3) whether issuance of the stay will 2 substantially injure the other parties interested in the proceeding; and (4) where 3 the public interest lies.” Nken v. Holder, 556 U.S. 418, 425–26 (2009) (citation 4 omitted). The likelihood of success and irreparable injury are the most important 5 factors. Mi Familia Vota, 111 F.4th at 981. In the Ninth Circuit, those two factors 6 fall on a “sliding scale in which the required degree of irreparable harm increases 7 as the probability of success decreases.” Id. “On one end of the continuum, the 8 proponent must show a ‘strong likelihood of success on the merits’ and at least 9 ‘the possibility of irreparable injury to the [proponent] if preliminary relief is not 10 granted.’” Id. (citing Golden Gate Rest. Ass'n v. City & Cnty of San Francisco, 512 11 F.3d 1112, 1116–17 (9th Cir. 2008)). At the other end of the continuum, the 12 moving party must show either “a high degree of irreparable injury, or that the 13 balance of equities otherwise tips sharply in their favor.” Id. (cleaned up). 14 A. Likelihood of Success on the Merits 15 Defendants first argue they are likely to succeed on the merits on their 16 appeal because the Court lacks jurisdiction over NV Huskers, a business entity 17 that received payments on behalf of Langemeier and LOL, and because NV 18 Huskers has limited liability company protections. (ECF No. 69 at 8.) 19 The Court’s order awarded disgorgement of $404,807 based on 20 transaction-based compensation that Defendants received during the relevant 21 period. (ECF No. 59 at 7.) The Court explained that the SEC had met its burden 22 of showing that the $404,807 was a reasonable approximation of Defendants’ 23 profits causally connected to the violation based on evidence in the record 24 including Langemeier’s deposition and an invoice confirming that the sum was 25 paid to NV Huskers. (Id.) 26 This is the first time Defendants raise an argument related to limited 27 liability protections of NV Huskers. In their briefing on the motion for judgment, 28 Defendants argued only that the payments to Defendants, via NV Huskers, their 1 “designated payee,” should not be considered transaction-based compensation 2 but instead legitimate “marketing fees.” (ECF No. 50 at 6, 7.) Any limited liability 3 protections that NV Huskers may have do not affect the Court’s finding that 4 Defendants in this case, Langemeier and SEC, received profits causally connected 5 to the violations. 6 Defendants next argue that the Court’s disgorgement order was “illegal” 7 because the SEC did not sufficiently prove that the amount awarded represented 8 Defendants’ net profits or that the disgorgement awarded would go to victims, 9 citing Liu v. Sec. & Exch. Comm'n, 591 U.S. 71 (2020). 10 First, the record supports the Court’s finding that the amount awarded, 11 $404,807, represented Defendants’ net profits. In Liu, the Court held that “courts 12 must deduct legitimate expenses before ordering disgorgement under 13 § 78u(d)(5).” Id. at 91–92. In this case, Defendants failed to make any showing of 14 legitimate expenses, therefore the Court was unable to deduct anything. As such, 15 total profits were the same as net profits. 16 Second, the Court agrees with Defendants that the disgorgement ordered 17 must be awarded to victims. Liu, 591 U.S. at 75. “Disgorgement is designed to 18 deprive a wrongdoer of unjust enrichment, and to deter others from violating 19 securities laws by making violations unprofitable.” S.E.C. v. First Pac. Bancorp, 20 142 F.3d 1186, 1191 (9th Cir. 1998). The Court retains jurisdiction over the 21 administration of any funds paid by Defendants, and those funds may only be 22 disbursed pursuant to an order by the Court. (ECF No. 64 at 5.) Defendants cite 23 no authority for their argument that the SEC was required to submit evidence as 24 to what victims would receive those funds in its motion for judgment. 25 Because Defendants have failed to show a likelihood of success, the Court 26 declines to address the remaining factors and denies the motion for a stay of 27 judgment. 28 1 III. ALTERNATIVE REQUEST FOR SUPERSEDEAS BOND 2 At the end of their reply, Defendants request in the alternative that the 3 || Court set a supersedeas bond which is “limited to 12 months interest on the 4 || judgment at the current federal reserve interest rate of 4.33%.” (ECF No. 73 at 9.) 5 || Because this request was not made initially, it has not been fully briefed. 6 || Defendants may renew their request with appropriate authority and argument. 7 IV. CONCLUSION 8 It is therefore ordered that Defendants’ motion to stay the enforcement of 9 || judgment without a supersedeas bond (ECF No. 69) is DENIED without prejudice. 10 It is further ordered that Defendants’ motion for an extension of time (ECF 11 || No. 72), requesting an additional day to file their reply, is GRANTED nunc pro 12 || tunc. 13 14 DATED: July 24, 2025 15 an Ares Nosed? 17 ANNER TRAUM 18 UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28