Weinstein v. Katapult Group, Inc.
- Phyllis Hamilton
- 4:21-cv-05175
- U.S. District Court · Northern District of California
- 6
In Weinstein v. Katapult Group, Inc., Judge Hamilton allowed some fundraising discovery but denied Andrew Weinstein’s other stock-option and capitalization requests.
Andrew Weinstein and Katapult Group, Inc.; the order determines which documents Katapult must produce in response to Weinstein’s discovery requests.
What happened
In Weinstein v. Katapult Group, Inc., Andrew Weinstein asked Katapult Group, Inc. to produce documents in five groups of requests for production. The requests concerned fundraising, capitalization tables, stock-option values, board materials, stock-option plans and agreements, and option activity.
The court allowed discovery about Katapult’s prior fundraising because it could help determine the fair value of Weinstein’s services in his quantum meruit claim. But it found capitalization tables, documents about option values, materials about other people’s option awards, third-party option agreements, and records identifying other option awardees were not relevant or were too broad. The court also found that certain narrower board materials and Weinstein-specific records were enough for him to begin assessing damages.
Judge Phyllis J. Hamilton overruled Katapult’s relevance objection to the fundraising request and permitted that discovery. She sustained Katapult’s objections and denied the other requests for the additional materials described in the order.
The detailed version
- Weinstein v. Katapult Group, Inc. · No. 4:21-cv-05175
- Phyllis Hamilton
- Apr. 15, 2022
Background
Andrew Weinstein submitted a discovery letter brief concerning Katapult Group, Inc.’s responses to several requests for production. The requests sought documents relating to Katapult’s fundraising and financing, capitalization tables, the value of stock options, board minutes and resolutions concerning options, stock-option plans and agreements, and the granting, exercise, expiration, termination, or forfeiture of options.
Weinstein said the documents were relevant to claims involving the value of his services, his rights under an Advisor Agreement, damages, and Katapult’s performance of contractual obligations. Katapult objected primarily on relevance and privacy grounds, including that some documents contained personal financial information of nonparties.
Legal standard
Federal Rule of Civil Procedure 26(b)(1) permits discovery of nonprivileged information relevant to a party’s claim or defense and proportional to the needs of the case. The party resisting discovery bears the burden of explaining and supporting its objections.
Rulings on the requests
- Request No. 9—fundraising and financing: The court overruled Katapult’s relevance objection and permitted discovery into Katapult’s prior fundraising. The court reasoned that Weinstein’s compensation involved quarterly cash payments and a stock-option award, so he needed an opportunity to determine the fair and reasonable value of his services for his quantum meruit claim. - Requests Nos. 12 and 21—capitalization tables: The court sustained Katapult’s relevance objection and denied Weinstein’s request. It found that the capitalization tables would not help determine whether the stock-option award described in the Advisor Agreement was owed to Weinstein. - Request No. 13—documents about option values: The court sustained Katapult’s objection and denied the request. It concluded that the available measure of damages for denial of stock options was based on the publicly available value of the stock. - Request No. 15—board minutes, votes, and resolutions: The court sustained Katapult’s relevance objection and denied Weinstein’s request for additional materials for now. The court found that minutes and materials concerning stock options from November 1, 2014, through July 31, 2017, together with all Weinstein-specific materials from 2014 to the present, were sufficient for him to begin determining damages. It found that Weinstein did not need records concerning stock-option awards to other parties to establish his entitlement to the award described in his agreement. - Requests Nos. 19 and 20—stock-option plans and agreements: The court found the form stock-option plans and agreements relevant because the Advisor Agreement specifically incorporated them. Katapult stated that it would provide those forms in response to Requests Nos. 17 and 18. The court nevertheless sustained Katapult’s objection to producing agreements with third parties and denied Weinstein’s request for those additional materials. - Requests Nos. 22–24—option grants, exercises, expirations, terminations, and forfeitures: The court sustained Katapult’s relevance objection and denied Weinstein’s broad request. It found that identifying other stock-option awardees was irrelevant to assessing Weinstein’s entitlement to damages.
Disposition
The order permitted discovery concerning Katapult’s prior fundraising, but sustained objections and denied the other discovery requests or additional materials described above. It was a discovery ruling and did not decide the merits of Weinstein’s underlying claims.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.