Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 1 of 7 1 James J. Pisanelli, Bar No. 4027 Debra L. Spinelli, Bar No. 9695 2 M. Magali Mercera, Bar No. 11742 PISANELLI BICE PLLC 3 400 South 7th Street, Suite 300 Las Vegas, Nevada 89101 4 Telephone: 702.214.2100 Facsimile: 702.214.2101 5 Email: jjp@pisanellibice.com Email: dls@pisanellibice.com 6 Email: mmm@pisanellibice.com 7 Jonathan D. Polkes (admitted pro hac vice) Stephen A. Radin (admitted pro hac vice) 8 Caroline Hickey Zalka (admitted pro hac vice) WEIL, GOTSHAL & MANGES LLP 9 767 Fifth Avenue New York, New York 10153 10 Telephone: 212.310.8770 Facsimile: 212.310.8007 11 Email: jonathan.polkes@weil.com Email: stephen.radin@weil.com 12 PISANELLI BICE Email: caroline.zalka@weil.com 13 Attorneys for Defendants Georges Antoun, Kevin DeNuccio, Sarita James, Jay Leupp, 400 SOUTH 7TH STREET, SUITE 300 14 Merrick D. Okamoto, Said Ouissal, Simeon Salzman, and Fred Thiel, and Nominal Defendant 15 Marathon Digital Holdings, Inc. LAS VEGAS, NEVADA 89101 16 UNITED STATES DISTRICT COURT 17 DISTRICT OF NEVADA 18 KIMBERLY BERNARD, Derivatively on Behalf of Case No.: 2:22-cv-00305-RFB-NJK MARATHON DIGITAL HOLDINGS, INC. (f/k/a 19 MARATHON PATENT GROUP, INC.), 20 Plaintiff, RESPONSE TO MOTION (ECF v. NOS. 34, 35, AND 36) TO 21 CONSOLIDATE, APPOINT LEAD FRED THIEL, GEORGES ANTOUN, KEVIN COUNSEL, AND INDEFINITELY 22 DENUCCIO, SARITA JAMES, JAY LEUPP, STAY MAY 31, 2022 DEADLINE TO SAID OUISSAL, MERRICK D. OKAMOTO, and RESPOND TO MOTIONS TO 23 SIMEON SALZMAN, DISMISS 24 Defendants, -and- 25 MARATHON DIGITAL HOLDINGS, INC. (f/k/a 26 MARATHON PATENT GROUP, INC.), 27 Nominal Defendant. 28 1 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 2 of 7 1 ROY STRASSMAN, Derivatively on Behalf of Case No.: 2:22-cv-00724-ART-EJY MARATHON DIGITAL HOLDINGS, INC. (f/k/a 2 MARATHON PATENT GROUP, INC.), 3 Plaintiff, RESPONSE TO MOTION (ECF v. NOS. 19, 20) TO CONSOLIDATE, 4 APPOINT LEAD COUNSEL, AND FRED THIEL, GEORGES ANTOUN, KEVIN INDEFINITELY STAY MAY 25, 5 DENUCCIO, SARITA JAMES, JAY LEUPP, 2022 DEADLINE TO RESPOND TO SAID OUISSAL, MERRICK D. OKAMOTO, and MOTIONS TO DISMISS 6 SIMEON SALZMAN, 7 Defendants, -and- 8 MARATHON DIGITAL HOLDINGS, INC. (f/k/a 9 MARATHON PATENT GROUP, INC.), 10 Nominal Defendant. 11 12 PRELIMINARY STATEMENT PISANELLI BICE 13 These are almost word-for-word identical shareholder derivative actions in which plaintiffs 14 purport to sue eight individuals on behalf of Nominal Defendant Marathon Digital Holdings, Inc. 400 SOUTH 7TH STREET, SUITE 300 15 (“Marathon”). The lawsuit besmirches the names of these eight individuals, alleging that they 16 breached their fiduciary duties as directors and officers of Marathon. The claims are meritless. LAS VEGAS, NEVADA 89101 17 Among other things, Nev. Rev. Stat. § 78.138(7) requires that a claim against a director or officer 18 of a Nevada corporation allege “intentional misconduct, fraud or a knowing violation of law.” No 19 intentional misconduct, fraud, or knowing violation of law is alleged in plaintiffs’ complaints. 20 Marathon and Defendants are entitled to have their motions to dismiss heard. Plaintiffs 21 have had Defendants’ moving papers since April 4, 2022. On April 18, 2022, the Court set a 22 deadline for a response in the Bernard action: May 31, 2022. The Local Rules require a response 23 in the Strassman action on May 25, 2022; that date has passed. Marathon and Defendants offered 24 the plaintiff in the Strassman action an extension until May 31, so that the two near-identical 25 complaints could be briefed in one rather than two rounds of briefing. Plaintiffs rejected that offer. 26 Instead, plaintiffs seek – and appear to have granted themselves – indefinite extensions of 27 time. In plaintiffs’ world, the filing of two near-identical complaints (instead of the usual practice, 28 one complaint with two plaintiffs) entitles plaintiffs to an indefinite time to file a formal 2 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 3 of 7 1 consolidated complaint and exempts them from complying with court deadlines for responses to 2 motions to dismiss. Upon learning of plaintiffs’ position, Marathon and Defendants offered to 3 stipulate to consolidation with a deadline for filing a consolidated complaint. Plaintiffs refused to 4 stipulate or propose a deadline. Plaintiffs instead filed multiple motions for the obvious purpose 5 of delay: stipulations take days; briefing and decisions on motions take months. 6 Today is May 27, 2022. If plaintiffs need a short amount of time beyond the May 31, 2022 7 deadline to commit to dates for a consolidated complaint addressing the deficiencies in plaintiffs’ 8 current complaints and briefing a new motion to dismiss, they need only ask. Marathon and 9 Defendants will extend plaintiffs’ counsel every reasonable professional courtesy – but not the 10 many weeks plaintiffs seek by moving for consolidation rather than stipulating to consolidation. 11 If plaintiffs choose to default in the hope that the Court will retroactively extend deadlines, 12 then the Court should dismiss plaintiffs’ actions with prejudice to plaintiffs re-filing new actions PISANELLI BICE 13 asserting the claims asserted here in this Court or any other Court. If the Court chooses to forgive 14 plaintiffs’ default, the Court should order that plaintiffs file a consolidated complaint within seven 400 SOUTH 7TH STREET, SUITE 300 15 (7) days of the Court’s Order and respond to any renewed motion to dismiss within twenty-one 16 (21) days of the filing of the renewed motion. LAS VEGAS, NEVADA 89101 17 STATEMENT OF FACTS AND ARGUMENT 18 On February 18, 2022, plaintiff Kimberly Bernard commenced Case No. 2:22-cv-305- 19 RFB-NJK. ECF No. 1. On March 25, 2022, service was effectuated. ECF No. 6. On April 4, 2022, 20 Marathon and Defendants filed a motion to dismiss the Bernard action. ECF No. 11. Plaintiff 21 Bernard requested two months to oppose the motion to dismiss, and the parties stipulated to a May 22 31, 2022 due date for plaintiff’s opposition. ECF No. 18. On April 18, 2022, the Court so ordered 23 the schedule. ECF No. 26. 24 On May 5, 2022, plaintiff Roy Strassman commenced Case No. 2:22-cv-724-ART-EJY. 25 ECF No. 1. Plaintiff Strassman’s complaint copied, nearly word-for-word, the entirety of the com- 26 plaint filed by Plaintiff Bernard, as follows, ignoring the deficiencies identified in the motion to 27 dismiss the Bernard complaint filed on April 4, 2022: 28 3 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 4 of 7 1 Bernard Strassman Bernard Strassman Bernard Strassman Bernard Strassman Compl. ¶ Compl. ¶ Compl. ¶ Compl. ¶ Compl. ¶ Compl. ¶ Compl. ¶ Compl. ¶ 2 1 1 24 24 47 47 70 73 2 2 25 25 48 48 71 74 3 3 3 26 26 49 49 72 75 4 4 27 27 50 50 73 76 4 5 5 28 28 51 51 74 77 6 6 29 29 52 52 75 78 5 7 7 30 30 53 55 76 79 8 8 31 31 54 56 77 80 6 9 9 32 32 55 57 78 81 10 10 33 33 56 58 79 82 7 11 11 34 34 57 59 80 83 12 12 35 35 58 60 81 84 8 13 13 36 36 59 61 82 85 14 14 37 37 60 63 83 86 9 15 15 38 38 61 64 84 87 16 16 39 39 62 65 85 88 10 17 17 40 40 63 66 86 89 18 18 41 41 64 67 87 90 11 19 19 42 42 65 68 88 91 20 20 43 43 66 69 89 92 12 21 21 44 44 67 70 90 93 PISANELLI BICE 22 22 45 45 68 71 91 94 13 23 23 46 46 69 72 92 95 14 The Strassman complaint made just four changes to the Bernard complaint: (1) the Strassman 400 SOUTH 7TH STREET, SUITE 300 15 complaint double-spaces rather than single-spaces block quotes; (2) the Strassman complaint 16 replaces female gender pronouns for the plaintiff with male gender pronouns; (3) the Strassman LAS VEGAS, NEVADA 89101 17 complaint corrects a typo (the Bernard complaint stated in paragraph 60 that “the Company Board 18 was comprised of eight (6) members,” while the Strassman complaint replaces “eight (6) 19 members” with “six (6) members”); and (4) the Strassman complaint skips paragraph numbers 53, 20 54, and 62 in its numbering of paragraphs, resulting in a 95 paragraph complaint rather than a 92 21 paragraph complaint. 22 On May 11, 2022, Marathon and Defendants filed a motion to dismiss the Strassman action 23 on the same grounds that Marathon and Defendants moved to dismiss the Bernard action. 24 Strassman ECF No. 11. On May 17, 2022, the undersigned counsel proposed briefing the identical 25 motion to dismiss on the same schedule the Court ordered in the Bernard action. Radin Decl. ¶ 3. 26 On May 18, 2022, plaintiffs’ counsel informed the undersigned counsel that plaintiffs intended to 27 move to consolidate the cases and file a consolidated complaint before briefing the pending 28 motions to dismiss. The undersigned counsel offered to stipulate to consolidation and asked 4 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 5 of 7 1 plaintiff’s counsel to propose a date for the filing of the consolidated complaint. Id. ¶ 4. 2 Plaintiff’s counsel declined to stipulate or propose a date. Id. Instead, on May 23, 2022, 3 plaintiffs filed multiple motions. The motions seek (1) consolidation – to which Marathon and 4 Defendants had offered to stipulate, (2) a “Co-Lead Derivative Counsel” stamp of approval by the 5 Court – completely unnecessary but something to which Marathon and Defendants would have 6 stipulated to if asked, and (3) the only contested subject of the motions – a stay postponing the 7 deadlines set in the Court’s April 18, 2022 Order, indefinitely. Bernard ECF No. 34, 35, and 36; 8 Strassman ECF No. 19, 20. 9 Marathon and Defendants oppose the indefinite stay plaintiffs seek and appear to have 10 granted themselves notwithstanding the Court’s April 18, 2022 Order. Counsel for the plaintiffs in 11 the two actions admit that “from the inception of the litigation” they have been “coordinating 12 together.” Bernard ECF No. 34 at 3; Strassman ECF No. 20 at 2. Plaintiffs do not explain why PISANELLI BICE 13 two plaintiffs “coordinating together” chose to file a second near-identical complaint a month after 14 a motion to dismiss their first complaint had been filed, rather than opposing the motion to dismiss 400 SOUTH 7TH STREET, SUITE 300 15 or addressing deficiencies in their new complaint. Plaintiffs do not explain why the drafting of a 16 consolidated complaint combining two near-identical complaints would require more than an hour LAS VEGAS, NEVADA 89101 17 or two of work by any one of the four law firms representing plaintiffs. 18 Deadlines in Court Orders should be enforced. If plaintiffs choose to oppose the pending 19 motions to dismiss with a consolidated complaint addressing the deficiencies in plaintiffs’ existing 20 complaints, they may do so on May 31, 2022 – the date the Court so ordered on April 18, 2022. 21 Marathon and Defendants will promptly respond to any such consolidated complaint. If plaintiffs 22 need a short amount of additional time to oppose the pending motions to dismiss plaintiffs’ two 23 complaints, or commit to a date for a consolidated complaint curing the deficiencies in plaintiffs’ 24 first two complaints, Marathon and Defendants will extend every reasonable professional courtesy. 25 But if plaintiffs choose to default in the hope that the Court will extend the deadlines plaintiffs 26 have chosen to ignore, then the Court should dismiss plaintiffs’ actions with prejudice to plaintiffs 27 re-filing new actions asserting the claims asserted here in this Court or any other Court. If the 28 Court chooses to forgive plaintiffs’ default, the Court should order, as stated above, that plaintiffs 5 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 6 of 7 1 file a consolidated complaint within seven (7) days of the Court’s Order and respond to any 2 renewed motion to dismiss within twenty-one (21) days of the filing of the motion. 3 CONCLUSION 4 For all of these reasons, Marathon and Defendants oppose plaintiffs’ motion to indefinitely 5 extend the deadlines set in this Court’s April 18, 2022 Order and request that the Court dismiss 6 plaintiffs’ actions with prejudice to plaintiffs re-filing new actions asserting the claims asserted 7 here in this Court or any other Court, or, if the Court chooses to forgive plaintiffs’ default, the 8 alternative relief stated above. 9 DATED this 27th day of May 2022. 10 PISANELLI BICE PLLC 11 By: /s/ M. Magali Mercera 12 James J. Pisanelli, Bar No. 4027 Debra L. Spinelli, Bar No. 9695 PISANELLI BICE 13 M. Magali Mercera, Bar No. 11742 400 South 7th Street, Suite 300 14 Las Vegas, Nevada 89101 400 SOUTH 7TH STREET, SUITE 300 15 -and- 16 Jonathan D. Polkes (admitted pro hac vice) LAS VEGAS, NEVADA 89101 Stephen A. Radin (admitted pro hac vice) 17 Caroline Hickey Zalka (admitted pro hac vice) WEIL, GOTSHAL & MANGES LLP 18 767 Fifth Avenue New York, New York 10153 19 Attorneys for Defendants Georges Antoun, Kevin 20 DeNuccio, Sarita James, Jay Leupp, Merrick D. Okamoto, Said Ouissal, Simeon Salzman, and Fred 21 Thiel, and Nominal Defendant Marathon Digital Holdings, Inc. 22 23 24 25 26 27 28 6 WEIL:\98647916\1\61707.0006 Case 2:22-cv-00305-RFB-NJK Document 39 Filed 05/27/22 Page 7 of 7 1 CERTIFICATE OF SERVICE 2 I HEREBY CERTIFY that I am an employee of PISANELLI BICE PLLC and that, on this 3 27th day of May 2022, I caused to be served via the Court’s CM/ECF program true and correct 4 copies of the above and foregoing RESPONSE TO MOTION (ECF NO. 34, 35, AND 36) TO 5 CONSOLIDATE, APPOINT LEAD COUNSEL, AND INDEFINITELY STAY MAY 31, 6 2022 DEADLINE TO RESPOND TO MOTIONS TO DISMISS in the Bernard action and 7 RESPONSE TO MOTIONS (ECF NOS. 19, 20) TO CONSOLIDATE, APPOINT LEAD 8 COUNSEL, AND INDEFINITELY STAY MAY 25, 2022 DEADLINE TO RESPOND TO 9 MOTIONS TO DISMISS in the Strassman action to all parties via electronic service. 10 /s/ Cinda Towne 11 An employee of PISANELLI BICE PLLC 12 PISANELLI BICE 13 14 400 SOUTH 7TH STREET, SUITE 300 15 16 LAS VEGAS, NEVADA 89101 17 18 19 20 21 22 23 24 25 26 27 28 7 WEIL:\98647916\1\61707.0006