Securities and Exchange Commission v. Rayat
- Lewis Liman
- 1:21-cv-04777
- U.S. District Court · Southern District of New York
- 5
Securities and Exchange Commission v. Rayat: Judge Liman denied defendants’ request to limit the Commission’s requests for admission.
Harmel S. Rayat and RenovaCare, Inc., whose request to limit the Securities and Exchange Commission’s requests for admission was denied; the Commission may proceed with those requests subject to the defendants’ permitted individual responses and objections.
What happened
In Securities and Exchange Commission v. Rayat, Harmel S. Rayat and RenovaCare, Inc. asked the court to limit the Securities and Exchange Commission’s requests for admission to 25 total requests for both defendants.
The Commission had served 451 requests on Rayat and 279 on RenovaCare, totaling 1,010 including subparts. Defendants argued that the requests were excessive, concerned disputed facts, and could replace testimony from other witnesses.
Judge Lewis J. Liman denied the motion. He ruled that the number of requests alone did not justify protection in this complex securities-fraud case and explained that defendants could respond by admitting, denying, qualifying, or objecting to individual requests where appropriate.
The detailed version
- Securities and Exchange Commission v. Rayat · No. 1:21-cv-04777
- Lewis Liman
- May 19, 2022
Background
The Securities and Exchange Commission charged Harmel S. Rayat and RenovaCare, Inc. with securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and related regulations. The complaint alleges that, from July 2017 through January 2018, the defendants secretly distributed false or misleading information about RenovaCare and another company through StreetAuthority, LLC, without disclosing their involvement. The complaint further alleges that Rayat and associates sold RenovaCare shares after its stock price rose and that the defendants later denied involvement in the promotion.
The case’s scheduling order required requests for admission to be served by May 30, 2022, and discovery to be completed by August 15, 2022. On April 29, 2022, the Commission served 451 requests for admission on Rayat and 279 on RenovaCare. Including subparts, the requests totaled 1,010 for both defendants.
The Motion
Defendants sought a protective order, which is an order limiting or protecting a party from discovery, restricting the Commission to 25 requests for admission, including subparts, for both defendants collectively. They argued that the requests were excessive, included assumptions central to the case, concerned facts Rayat allegedly did not know firsthand, repeated allegations in the complaint, and could eliminate the need for testimony from third parties.
Court’s Analysis
Judge Liman denied the motion. Federal Rule of Civil Procedure 36 permits requests for admission about facts, the application of law to facts, opinions about those matters, and the authenticity of documents. The court explained that Rule 36 does not set a numerical limit and that the number of requests alone is not enough to justify a protective order. Whether to limit requests depends on the needs of the case.
The court determined that the number of requests was not excessive here because this was a complex securities-fraud case involving circumstantial evidence. It also noted that many requests were repeated for both defendants, while many subparts concerned document authentication or whether communications occurred on particular dates. The court found that the requests were not oppressive or unduly burdensome as a whole.
The court rejected defendants’ other arguments as well. Requests may address issues central to the case, facts alleged in the complaint, and matters that could reduce the need for testimony; narrowing issues is one purpose of requests for admission. The court also explained that a defendant lacking sufficient information may state that it cannot answer after a reasonable inquiry, may admit part and deny or qualify the remainder, or may object when a proper basis exists. A defendant may not object solely because the request concerns a genuine issue for trial.
Disposition
The motion for a protective order was DENIED. The Clerk of Court was directed to close Docket No. 70.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.