United States District Court, D. Nevada
SHIGE TAKIGUCHI, FUMI NONAKA, MITSUAKI TAKITA, TATSURO SAKAI, SHIZUKO ISHIMORI, YUKO NAKAMURA, MASAAKI MORIYA, HATSUNE HATANO, AND HIDENAO TAKAMA, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
MRI INTERNATIONAL, INC., EDWIN J FUJINAGA, JUNZO SUZUKI, PAUL MUSASHI SUZUKI, LVT, INC., dba STERLING ESCROW, and DOES 1-500, Defendants.
on behalf of a class of about 8, 700 mostly Japanese
investors, initiated this action against defendants MRI
International (“MRI”), Edwin Fujinaga
(“Fujinaga”), Junzo Suzuki, Paul Suzuki, and LVT,
Inc. dba Sterling Escrow (“Sterling”) on July 5,
2013, asserting several claims in connection with the
collapse of an alleged Ponzi scheme. Since that time, ten
additional parties have been added to the case, including
operative complaint - the Fifth Amended Complaint (ECF No.
481) - asserts twelve causes of action: (1) violation of
§ 10(b) of the Securities Exchange Act of 1934, 15
U.S.C. § 78j and Rule 10b-5, 17 C.F.R. § 240.10B-5,
against Fujinaga, Junzo Suzuki, Paul Suzuki, and Keiko
Suzuki; (2) violation of § 20(a) of the Exchange Act of
1934, 15 U.S.C. § 77t against Fujinaga, Junzo Suzuki,
Paul Suzuki, and Keiko Suzuki; (3) violation of §
12(a)(1) of the Securities Act of 1933, 15 U.S.C. §
77l against MRI, Fujinaga, Junzo Suzuki, Paul
Suzuki, and Keiko Suzuki; (4) violation of § 15 of the
Securities Act of 1933, 15 U.S.C. § 77o against
Fujinaga, Junzo Suzuki, Paul Suzuki, and Keiko Suzuki; (5)
intentional fraud against MRI, Fujinaga, Junzo Suzuki, Paul
Suzuki, and Keiko Suzuki; (6) unjust enrichment against all
defendants; (7) breach of fiduciary duty against MRI,
Fujinaga, Junzo Suzuki, Paul Suzuki, Keiko Suzuki, and
Sterling; (8) aiding and abetting fraud against Sterling; (9)
breach of contract against MRI; (10) action for accounting
against MRI, Fujinaga, Junzo Suzuki, Paul Suzuki, Keiko
Suzuki, and Sterling; (11) constructive trust against all
defendants; and (12) constructive fraudulent transfer against
all defendants but MRI.
March 21, 2016, the court granted the plaintiffs' motion
for class certification. Plaintiffs thereafter provided the
required notice to the class members. Trial in this matter is
currently scheduled to begin on August 1, 2017. The deadline
for filing motions for summary judgment as to the original
defendants expired on November 1, 2016.
before the court are the plaintiffs' motions for partial
summary judgment against defendants (1) Paul Suzuki (ECF No.
520); (2) Junzo Suzuki (ECF No. 529); and (3) MRI and
Fujinaga ECF No. 530) (hereinafter collectively
“defendants”). Defendants have opposed (ECF Nos.
566, 563 & 559), and plaintiffs have replied (ECF Nos.
581, 577 & 580). In addition, the plaintiffs have filed
separate statements of fact, to which the defendants have
responded and plaintiffs have replied, and plaintiffs and
defendants have noted various evidentiary objections.
judgment shall be granted “if the movant shows that
there is no genuine issue as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). The burden of demonstrating the absence
of a genuine issue of material fact lies with the moving
party, and for this purpose, the material lodged by the
moving party must be viewed in the light most favorable to
the nonmoving party. Adickes v. S.H. Kress &
Co., 398 U.S. 144, 157 (1970); Martinez v. City of
Los Angeles, 141 F.3d 1373, 1378 (9th Cir. 1998). A
material issue of fact is one that affects the outcome of the
litigation and requires a trial to resolve the differing
versions of the truth. Lynn v. Sheet Metal Workers
Int'l Ass'n, 804 F.2d 1472, 1483 (9th Cir.
1986); S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306
(9th Cir. 1982).
the moving party presents evidence that would call for
judgment as a matter of law at trial if left uncontroverted,
the respondent must show by specific facts the existence of a
genuine issue for trial. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986). “[T]here is no
issue for trial unless there is sufficient evidence favoring
the nonmoving party for a jury to return a verdict for that
party. If the evidence is merely colorable, or is not
significantly probative, summary judgment may be
granted.” Id. at 249-50 (citations omitted).
“A mere scintilla of evidence will not do, for a jury
is permitted to draw only those inferences of which the
evidence is reasonably susceptible; it may not resort to
speculation.” British Airways Bd. v. Boeing
Co., 585 F.2d 946, 952 (9th Cir. 1978).
MRI and Edwin Fujinaga
plaintiffs seek summary judgment on all of the securities
claims alleged against MRI and Fujinaga. MRI and Fujinaga
argue that plaintiffs have not proven that the underlying
transactions were domestic, a necessary condition for their
federal securities claims. They further argue that plaintiffs
have failed to prove that MRI was a Ponzi scheme and maintain
that MRI was in fact a legitimate business.
opposition, plaintiffs principally argue that MRI and
Fujinaga's arguments are precluded by the doctrine of
collateral estoppel because those issues have already been
decided in a case brought by the Securities and Exchange
Commission against MRI and Fujinaga.
September 2013, the Securities and Exchange Commission
(“SEC”) filed a complaint against MRI and
Fujinaga that included a securities fraud claim under §
10(b) and Rule 10b-5. See Securities & Exch.
Comm'n v. Fujinaga, 2:13-cv-01658-JCM-CWH. On
October 3, 2014, the court in that case in granted the SEC
summary judgment on its claims against MRI and Fujinaga,
including the securities fraud claim. That order has been
appealed, and the appeal remains pending. Plaintiffs seek
application of collateral estoppel against MRI and Fujinaga
on the basis of the court's findings in that case.
court has broad discretion to determine when offensive
collateral estoppel should apply, and may decline to apply it
in cases where it would be unfair to the defendant and where
it would not promote judicial economy. Collins v. D.R.
Horton, 505 F.3d 874, 881-82 (9th Cir. 2007). Here, the
court's judgment in the related SEC case is on appeal.
Should this court rely on collateral estoppel to prevent MRI
and Fujinaga from presenting a defense here, a reversal of
any or all of the judgment in the SEC case could impact this
case and could duplicate and further prolong these
proceedings. Moreover, Fujinaga has elected to not invoke the
Fifth Amendment in these proceedings and apparently intends
to introduce evidence negating an inference of scienter. The
court's findings as to scienter in the SEC case was
based, in part, on Fujinaga's assertion of his Fifth
Amendment rights in that case. (See
2:13-cv-01658-JCM-CWH, Doc. #156 at 14 (Ord. dated Oct. 3,
2016)). For these reasons, the plaintiffs' request for
summary judgment on all the securities claims against MRI and
Fujinaga based on the doctrine of collateral estoppel is
Fujinaga's principal argument in opposition to summary
judgment is that plaintiffs have failed to prove a necessary
element of their securities claims: that the transactions at
issue qualified as “domestic transactions” as
required by Morrison v. National Australia Bank
Ltd., 561 U.S. 247, 267 (2010). Plaintiffs respond ...