Ussec v. Premier Holding Corporation ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 23 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
U.S. SECURITIES & EXCHANGE No. 21-55249
COMMISSION,
D.C. No.
Plaintiff-Appellee, 8:18-cv-00813-CJC-KES
v.
MEMORANDUM*
PREMIER HOLDING CORPORATION;
RANDALL LETCAVAGE,
Defendants-Appellants,
and
JOSEPH GREENBLATT,
Defendant.
Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Argued and Submitted February 9, 2022
San Francisco, California
Before: HURWITZ and VANDYKE, Circuit Judges, and ERICKSEN,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Joan N. Ericksen, United States District Judge for the
District of Minnesota, sitting by designation.
Defendants Randall Letcavage and Premier Holding Corporation appeal a
summary judgment entered in favor of the Securities and Exchange Commission and
the district court’s subsequent imposition of civil remedies. We have jurisdiction
under 28 U.S.C. § 1291, and affirm.
We review a summary judgment de novo, with all facts and inferences being
drawn in favor of the non-moving party. See Slayman v. FedEx Ground Package
Sys., Inc., 765 F.3d 1033, 1041 (9th Cir. 2014). Evidentiary rulings made in
connection with a summary judgment, including orders precluding evidence, are
reviewed for abuse of discretion. See Nationwide Life Ins. Co. v. Richards, 541 F.3d
903, 909 (9th Cir. 2008). A district court’s determination of appropriate remedies is
also reviewed for abuse of discretion. See SEC v. Platforms Wireless Int’l Corp.,
617 F.3d 1072, 1096 (9th Cir. 2010); SEC v. First Pac. Bancorp, 142 F.3d 1186,
1190 (9th Cir. 1998).
1. Letcavage challenges the district court’s preclusion order that
prevented him from introducing certain evidence in opposition to the SEC’s motion
for summary judgment. The district court’s order was based on Letcavage’s failure
to meaningfully answer the SEC’s questions during depositions and his blanket
invocation of the Fifth Amendment during the enforcement proceeding. Even when
a defendant is entitled to invoke the Fifth Amendment in a civil proceeding, “a
district court has discretion in its response to a party’s invocation of the Fifth.” SEC
2
v. Colello, 139 F.3d 674, 677 (9th Cir. 1998). Here, Letcavage refused to
meaningfully answer any questions about the WePower note, the TPC assets, or his
employment agreement—the three central issues of this case. Therefore, the district
court’s preclusion order was a reasonable response to Letcavage’s decision and not
an abuse of discretion.
2. Defendants challenge the district court’s finding of scienter, which here
“refers to a mental state embracing intent to deceive, manipulate, or defraud.” Ernst
& Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976). The district court did not
abuse its discretion in making this determination. The district court can infer scienter
based on a defendant’s invocation of the Fifth Amendment when “independent
evidence exists of the fact to which the party refuses to answer.” Doe ex rel. Rudy-
Glanzer v. Glanzer, 232 F.3d 1258, 1264 (9th Cir. 2000). The SEC offered ample
independent evidence to justify an adverse inference of scienter in this case,
including numerous public and private statements by Letcavage.
3. Finally, Defendants challenge the district court’s imposition of
injunctive1 and monetary remedies. The district court properly analyzed the relevant
factors, including Letcavage’s repeated violations of security laws and lack of any
admission of wrongdoing, when crafting its injunctive remedies, and we find no
1
These included a permanent injunction against Defendants from committing future
securities violations and a 5-year bar preventing Letcavage from being an officer-
director or trading in penny stocks.
3
abuse of discretion. See SEC v. Murphy, 626 F.2d 633, 655 (9th Cir. 1980); First
Pac. Bancorp, 142 F.3d at 1193. The district court’s disgorgement order was
likewise proper. Defendants object to the district court’s disgorgement calculation,
but Defendants bear the burden of proving “that the disgorgement figure was not a
reasonable approximation.” Platforms Wireless, 617 F.3d at 1096 (citation omitted).
Because Defendants failed to meet their burden of proving that any of the purported
business expenses were actually incurred or were “legitimate,” Liu v. SEC, 140 S.
Ct. 1936, 1950 (2020), we find no abuse of discretion.
AFFIRMED.
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