United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Jeffrey T. Gilbert United States Magistrate Judge.
matter is now before the Court on motions in limine
filed by Plaintiff Securities and Exchange Commission (the
"SEC"). Plaintiffs Motions in Limine (the
"SEC's Motions"), [ECF No. 885]. For the
reasons stated below, the SEC's Motions in
Limine [ECF No. 885] are granted in part and denied in
district court has the inherent authority to manage the
course of a trial. Luce v. United States, 469 U.S.
38, 41 n.4 (1984). The court may exercise this power by
issuing an evidentiary ruling in advance of trial.
Id. A party may seek such a ruling by filing a
motion in limine, which requests the court's
guidance on what evidence will (or will not) be .admitted at
trial. Perry v. City of Chicago, 733 F.3d 248, 252
(7th Cir. 2013). Prudent motions in limine serve a
gatekeeping function by allowing the judge "to eliminate
from further consideration evidentiary submissions that
clearly ought not be presented to the jury."
Jonasson v. Lutheran Child & Family Servs., 115
F.3d 436, 440 (7th Cir. 1997). By defining the evidentiary
boundaries, motions in limine both permit "the
parties to focus their preparation on those matters that will
be considered by the jury" id, and help ensure
"that trials are not interrupted mid-course for the
consideration of lengthy and complex evidentiary
issues." United States v. Tokash, 282 F.3d 962,
968 (7th Cir. 2002).
all evidentiary matters, the court has broad discretion when
ruling on motions in limine. United States v. Ajayi,
808 F.3d 1113, 1121 (7th Cir. 2015); Jenkins v. Chrysler
Motors Corp., 316 F.3d 663, 664 (7th Cir, 2002).
Moreover, the court can change its ruling at trial,
"even if nothing unexpected happens."
Luce, 469 U.S. at 41. Rulings in limine are
speculative in effect; essentially, they are advisory
opinions. Wilson v. Williams, 182 F.3d 562, 570 (7th
Cir. 1999) (Coffey, J., concurring in part and dissenting in
court will grant a motion in limine to bar evidence
only where that evidence is clearly inadmissible for any
purpose. Taylor v. Union Pac. R. Co., 2010 WL
5421298, at *1 (S.D. Ill.Dec. 27, 2010). This is a high
standard. Thomas v. Sheahan, 514 F.Supp.2d 1083,
1087 (N.D. Ill. 2007). The moving party bears the burden of
establishing clear inadmissibility. Euroholdings Capital
& Lnv. Corp. v. Harris Trust & Sav. Bank, 602
F.Supp.2d 928, 934 (N.D. Ill. 2009). If the moving party
cannot satisfy her burden, the evidentiary ruling should be
deferred until trial. Green v. Goodyear Dunlop Tires N.
Am., Ltd., 2010 WL 747501, at *1 (S.D. Ill. Mar. 2,
2010). That is because, at trial, the court will have the
benefit of understanding "the context, foundation, and
relevance of the contested evidence within the framework of
the trial as a whole." Casares v. Bernal, 790
F.Supp.2d 769, 775 (N.D. Ill. 2011).
has filed five motions in limine. Defendants Randall
Goulding ("Randall") and David Goulding
("David") filed a joint response brief in
opposition to the SEC's Motions. Defendants'
Opposition to the SEC's Miscellaneous Motions in
Limine ("Defendants' Response"), [ECF No.
890]. In addition, David filed a separate response brief
addressing one of the SEC's Motions. Supplemental
Response of Defendant David Goulding in Opposition to the
SEC's Miscellaneous Motions in Limine -
Concerning Advice of Counsel Defense ("David's
Response"), [ECF No. 889], Relief Defendants Financial
Alchemy, LLC; Philly Financial, LLC; and Eric Irrgang
(collectively, "Relief Defendants") joined
Randall's and David's briefs, but also filed a
separate response brief raising a new argument that should be
addressed before turning to the merits of the SEC's
Motions. Reply Brief Pertaining to Relief Defendants'
Motion in Limine to Bar Any Admission of Evidence of
Various Other Items - Regarding Leslie Weiss, and Response in
Opposition to the SEC's Miscellaneous Motions in
Limine ("Relief Defendants' Response"),
[ECF No. 892], at 1.
Defendants assert in their response brief that the SEC's
claims against them in this case should be dismissed because
"it is unfathomable that the SEC can prove any
disgorgement damages in this matter, so as to implicate the
Relief Defendants." Id. ¶ 1. There are
multiple flaws with the procedural vehicle Relief Defendants
have chosen to present this argument to the Court. Relief
Defendants did not file a motion seeking to dismiss the
claims against them; rather, they seek that relief in a brief
responding to motions in limine that do not raise
the issue of whether the SEC can prove disgorgement damages.
Relatedly, Relief Defendants are seeking dispositive relief
predicated on a summary judgment-type argument. A motion
in limine is not the proper way to present such
arguments to the court for resolution. See Louzon v. Ford
Motor Company, 718 F.3d 556 (6th Cir. 2013).
Finally, Relief Defendants' brief is a short filing
devoid of any citations to the record or legal authority.
Such undeveloped and unsupported arguments are waived.
See Crespo v. Colvin, 824 F.3d 667, 674 (7th Cir.
2016) ("Moreover, 'perfunctory and undeveloped
arguments, and arguments that are unsupported by pertinent
authority, are waived (even where those arguments raise
constitutional issues).'") (quoting United
States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.
1991)). For these reasons, Relief Defendants have not
properly put before the Court their request to dismiss the
claims against them.
SEC's Motion in Limine No. 1
SEC's Motion in Limine No. 1 relates to whether
and, if so, how the jury will be informed of the Court's
ruling on the parties' motions for summary judgment in
this case. See SEC v. Nutmeg Grp., LLC, 162
F.Supp.3d 754 (N.D. Ill. 2016). In that ruling, the Court
granted summary judgment in favor of the SEC with respect to
several alleged primary violations of the Investment Advisers
Act ("Advisers Act") committed by Randall and the
Nutmeg Group, LLC ("Nutmeg"). Specifically, the
Court found (1) Nutmeg did not maintain proper books and
records; (2) Nutmeg improperly commingled assets; (3) Nutmeg
did not conduct a required surprise examination or audit; (4)
Nutmeg and Randall did not disclose material facts related to
asset transfers, payments to Relief Defendants, and
commingling; and (5) Nutmeg and Randall made false or
misleading statements in investors' account statements
and Nutmeg's Form ADVs. Id. at 772-82. The SEC
did not seek summary judgment on its claims that Randall and
Nutmeg misvalued and misappropriated assets. Id. at
761. The Court denied summary judgment with respect to the
SEC's aiding and abetting claims alleged against Randall
and David. Id. at 782-86.
asserts the Court should tell the jury about the summary
judgment ruling and permit the SEC to describe the ruling
during its opening statement, closing argument, and witness
examinations. The SEC focuses most of its attention on the
argument that the primary violations found at summary
judgment satisfy the first element of aiding and abetting
liability, which requires a primary violation of the Advisers
Act. See Id. at 782. In response, Defendants contend
none of the aiding and abetting claims predicated on the
primary violations found at summary judgment will be before
the jury. Thus, Defendants say, the Court's summary
judgment ruling is irrelevant to the issues to be decided by
the jury and admitting evidence of the ruling would be
parties' dispute turns largely on the nature of the
claims that will be before the jury. Judge Hibbler addressed
that issue in his ruling on the SEC's Motion to Strike
Defendants' Jury Demand, which was issued in October
2011. Order and Statement Dated October 19, 2011, [ECF No.
390]; see also Minute Entry Dated December 21, 2011,
[ECF No. 451]. As Judge Hibbler explained, the SEC and
Defendants did not demand a jury trial in the original
complaint and answers filed in this case. Id. at 1.
But Defendants requested a jury trial when they answered the
SEC's Amended Complaint. Id. The SEC then moved
to strike Defendants' jury demand. Id. The Court
determined Defendants' jury demand was untimely with
respect to the factual matters alleged in the original
complaint. The Court therefore concluded those matters would
be resolved in a bench trial. The Court held that only the
new matters raised in paragraphs 62 to 68, 77 to 82, and 83
to 88 of the Amended Complaint would be resolved in a jury
trial. Id. at 2. In those paragraphs, the SEC
alleges: (1) Defendants used assets owned by Nutmeg's
funds (the "Funds") to pay for personal expenses
and other expenses unrelated to the Funds' operations;
(2) Defendants misvalued the Funds' securities by
inadequately discounting them, and (3) Defendants
misappropriated over $2.3 million from the Funds by inflating
fees and exchanging overvalued securities. Id. at
1-2. Only aiding and abetting claims related to these factual
allegations will be decided by a jury.
summary judgment ruling, the Court did not find any defendant
liable for misvaluing or misappropriating assets. The SEC did
not seek summary judgment on these claims, and the Court
denied Defendants' motion for summary judgment on them.
In light of the Court's rulings on Defendants' jury
demand and at summary judgment, the jury in this case will
not decide any aiding and abetting claim predicated on the
primary violations the Court held a Defendant committed in
its summary judgment ruling. Therefore, the SEC's main
argument -that a jury should be informed of the existence of
a primary violation as a predicate for aiding and abetting
claims the jury will decide - does not hold water. To the
extent the SEC wants to tell the jury that Defendants were
held liable for primary violations that are not the predicate
for the aiding and abetting claims the jury will be asked to
decide, the Court agrees with Defendants that any probative
value that evidence could have on the issues properly before
the jury is outweighed by the prejudicial effect it could
have upon Defendants.
also contends it should be allowed to "confront
Defendants" with the summary judgment ruling if they
"argue that they believed they were acting properly
while helping Nutmeg to do things that already have been
deemed to be violations of the [Advisers] Act."
Plaintiffs Reply in Support of Its Motions in Limine
("The SEC's Reply"), [ECF No. 893], at 3. As a
threshold matter, in ruling on the summary judgment motions,
the Court did not make any findings about whether Defendants
believed they were acting properly. Indeed, the
Court denied the SEC's motion with respect to the aiding
and abetting claims because the SEC failed to show that,
based on the undisputed facts then before' the Court,
"any reasonable jury would find Defendants had a general
awareness of illegality and impropriety."
Nutmeg, 162 F.Supp.3d at 785-86; see also
Id. at 783-86. Nonetheless, the Court agrees with the
SEC that depending upon what arguments Defendants make or
evidence they attempt to introduce at trial, it may be that
one or more of the Court's summary judgment rulings will
be relevant, probative, and admissible for a particular
purpose. The Court cannot predict now the circumstances under
which that might occur and the parties' briefs are not
specific enough to allow the Court to make those judgments.
But the parties are on notice that there may be circumstances
under which the Court could decide that the jury should be
informed of one or more of the Court's rulings on the
motions for summary judgment.
summary, the jury in this case will not be tasked with
deciding all of the primary violations and aiding and
abetting claims alleged by the SEC. Most of those claims have
been or will be decided by the Court through summary judgment
and a bench trial. All of the aiding and abetting claims
predicated on the primary violations found at summary
judgment will be resolved in a bench trial. The Court's
ruling on summary judgment did not resolve any of the primary
violations on which Defendants properly requested a jury
trial. Therefore, subject to the caveat in the preceding