U.S. Securities and Exchange Commission v. Law Offices of Samuel Kornhauser

Opinion

Assistant General Counsel 2 Washington, DC Bar Number 431906 Special Trial Counsel 4 Washington, DC Bar Number 490866 5 U.S. Securities and Exchange Commission 6 100 F Street NE Washington, DC 20549-9613 7 (202)551- 7921 (Reicher) ReicherE@sec.gov 8 Attorneys for the U.S. SEC 9 Law Offices of Samuel Kornhauser 11 155 Jackson Street, Suite 1807 12 San Francisco, California, 94111 Telephone: (415) 981-6281 13 CA Bar No. 83528 samuel.kornhauser@gmail.com 14 15 Attorney for Plaintiffs 16 UNITED STATES DISTRICT COURT 18 NAVELLIER & ASSOCIATES, INC. AND 19 LOUIS NAVELLIER, Case No. 3:21-cv-00395-ART-CSD 20 Plaintiffs, JOINT DISCOVERY PLAN AND SCHEDULING ORDER 21 vs. U.S. SECURITIES AND EXCHANGE 22 COMMISSION, 23 Defendant. 24 25 Pursuant to the Court’s Order Setting Case Management Conference, ECF 53, the Parties 26 submit this Joint Proposed Discovery Plan and Scheduling Order. 27 28 1 The Defendant filed a motion to dismiss Plaintiffs’ case in the entirety on sovereign 2 immunity, res judicata, and other grounds. ECF 48. Plaintiffs opposed the motion, ECF 55, and 3 Defendant submitted a reply, ECF 58. The motion to dismiss is therefore fully briefed. 4 The Parties agree that discovery should be stayed, but their reasons for the stay differ in 5 part. 6 7 Plaintiff Navellier & Associates, Inc. filed for Chapter 11 bankruptcy protection on 8 September 5, 2025, which Plaintiffs believe may have stayed further litigation in this case, 9 including the SEC’s motion to dismiss, pending an order to lift the automatic stay. Plaintiffs submit 10 that proceedings in this case are and should be stayed pending a determination by the bankruptcy 11 court as to whether the automatic stay of this litigation should be lifted.1 12 The Commission does not believe NAI’s bankruptcy filing automatically stays this case. 13 Subject to various exceptions, the automatic stay protects the debtor from actions against it. “The 14 15 stay provides debtors with protection against hungry creditors and assures creditors that the 16 debtor’s other creditors are not racing to various courthouses to pursue independent remedies to 17 drain the debtor’s assets. It also provides the debtor with some breathing space so that the debtor 18 can focus on reorganization rather than the defense of pending litigation.” Porter v. Nabors 19 Drilling USA, L.P., 854 F.3d 1057, 1061 (9th Cir. 2017) (italics added) (citations omitted). Here, 20 NAI, the debtor, is one of the plaintiffs and it needs no protection from hungry creditors. The 21 22 23 24 25 1 Plaintiffs have not filed for such relief in the bankruptcy court. The Commission’s position is 26 that if Plaintiffs believe this case should be stayed, they should file a motion in either this Court or the bankruptcy court; a Joint Discovery Plan is not the appropriate mechanism to seek such a stay. 27 1 |] Commission’s defense of this lawsuit does not represent a race to the courthouse to capture NAT’ 2 assets.” ; Although the Parties disagree on what impact, if any, NAI’s bankruptcy has on the presen 4 case, the Parties agree that if either the Court determines this case is not stayed by the bankruptc 5 6 proceeding or if the bankruptcy stay is lifted, discovery and initial disclosures should be staye 7 pending resolution of the pending motion to dismiss, which argues (among other things) tha 8 || sovereign immunity has not been waived. If the motion is granted, there would be no need fo 9 || discovery. The Parties propose that if the Court denies the motion to dismiss, they will submit 10 joint discovery plan and scheduling order no later than two weeks after the Court denies the motio I] to dismiss. 12 13 Respectfully submitted this 21st day of January, 2026. ERIC REICHER 15 16 /s/ Eric Reicher 17 Eric Reicher Special Trial Counsel 18 U.S. Securities and Exchange Commission 20 /s/ Samuel Kornhauser 21 Samuel Kornhauser 22 Counsel for Plaintiffs 23 || SO ORDERED. 94 || DATED: January 21, 2026. ( Craig S. Denney 25 United States Magistrate#*Judge 2% ? Whether using debtor assets to fund this litigation is appropriate, particularly since the debtor has neither sought nor obtained permission from the bankruptcy court to retain counsel for this 27 || litigation pursuant to 11 U.S.C. § 327, is a separate question. 28