Court Orders Discovery of Defendants’ Net Worth in Blockchain Innovation Lawsuit

News | July 10, 2024 By:

On Wednesday, June 26, 2024, the United States District Court for the Northern District of California granted a motion to compel discovery of net worth information from two individual defendants in a lawsuit regarding allegations of breach of fiduciary duty and aiding and abetting breach of fiduciary duty.

The case, Blockchain Innovation LLC v. Franklin Resources Inc. et al., involves claims by plaintiff Blockchain Innovation against defendants Franklin Resources, FT Fintech Holdings, Franklin Templeton Companies, Jennifer Johnson, and Roger Bayston. Blockchain Innovation is seeking punitive damages from Johnson for aiding and abetting breach of fiduciary duty and from Bayston for breach of fiduciary duty.

During the discovery process, Blockchain Innovation served interrogatories and document requests on the defendants seeking information about their current net worth, including financial statements and documents used to determine net worth. The three corporate defendants—Franklin Resources, FT Fintech Holdings, and Franklin Templeton Companies—had provided the requested information, but the two individual defendants, Johnson and Bayston, declined to do so.

Blockchain Innovation then filed a motion to compel seeking an order requiring Johnson and Bayston to provide the discovery regarding their net worth. Johnson and Bayston opposed the motion, arguing that the request was premature since the case is in the early stages. They also argued that Blockchain Innovation had violated a protective order during a deposition by revealing information about Bayston’s compensation.

In granting the motion to compel, United States Magistrate Judge Thomas S. Hixson rejected the defendants’ arguments. Judge Hixson noted that the majority of federal courts allow discovery of financial information relevant to punitive damages claims. He also found that waiting until later in the case or until trial to provide the information would be inconsistent with the scheduling order, which set a deadline of June 7, 2024, for motions to compel regarding fact discovery.

Judge Hixson also did not find the alleged violation of the protective order to be a valid reason to deny the discovery request. He ordered Johnson and Bayston to provide the requested discovery regarding their current net worth within the timeframe set out in the federal and local rules. The ruling helps Blockchain Innovation obtain information relevant to their pursuit of punitive damages against the individual defendants.

Please contact BlockTribune for access to a copy of this filing.