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Case 2:14-cv-00916-BSJ Document 68 Filed 04/10/15 Page 1 of 13

Ralph R. Mabey (2036)

Scott S. Morrisson, pro hac vice

rmabey@kmclaw.com

smorrisson@kdlegal.com

R. Willis Orton (2484)

Jeffrey C. McDermott, pro hac vice

worton@kmclaw.com

jmcdermott@kdlegal.com

Ryan B. Frazier (9007)

Krieg DeVault LLP


12800 North Meridian Street, Suite 300
Carmel, Indiana 46032
Telephone: 317-566-1110
Fax: 317-636-1507

rfrazier@kmclaw.com

Kirton McConkie
Kirton McConkie Building
50 East South Temple, Suite 400
Salt Lake City, Utah 84111
Telephone: 801-328-3600
Fax: 801-321-4893
Attorneys for Defendant Bankers Trust
Company of South Dakota

Jude Anne Carluccio, pro hac vice


jcarluccio@kdlegal.com

Krieg DeVault LLP


60 South 6th Street, Suite 2310
Minneapolis, Minnesota 55402
Telephone: 612-564-1924
Fax: 612-326-0996

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH


CENTRAL DIVISION

KELLEY JESSOP, an individual, on behalf of


himself and all others similarly situated,
Plaintiff,

BANKERS TRUST COMPANYS


RESPONSE TO SUPPLEMENTAL
MEMORANDUM IN SUPPORT OF
PRELIMINARY INJUNCTION

v.
DALLIN LARSEN, an individual, HENRY
MARSH, an individual, RANDY LARSEN, an
individual, MACHIEL KENNEDY, an
individual, DOES 1-10, and BANKERS TRUST
COMPANY, a Delaware corporation,

Civil No. 2:14-cv-00916


Honorable Bruce S. Jenkins

Defendants.

Defendant Bankers Trust Company of South Dakota, improperly named in the Complaint
as Bankers Trust Company, a Delaware Corporation, (BTC), by counsel, hereby submits this
Memorandum in Response to Plaintiffs Supplemental Memorandum in Support of Motion for

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Preliminary Injunction filed March 26, 2015 (Supplemental Memorandum) (Doc. 65), as
follows:
RELEVANT BACKGROUND AND SUMMARY OF ARGUMENT
The fundamental basis of plaintiff Kelley Jessops (Plaintiff) Supplemental
Memorandum is flawed. (Doc. 65). Plaintiff claims newly-discovered evidence supports his
request for preliminary injunction. (Doc. 65). Yet, most of Plaintiffs newly claimed facts are
simply incorrect.
Plaintiffs alleged new reason why he should be granted preliminary injunctive relief
concerns his claim that in March 2015 Jeunesse Global, LLC (Jeunesse) completed an
acquisition of Mona Vie and that BTC knew about it but did nothing to advise the ESOP
participants before it closed. (Doc. 58, 58-1, 65). In reality, however, the Jeunesse transaction
was not an acquisition, but rather was a promissory note sale. TSG-MV Financing, LLC
(TSG) sold the promissory notes it held with Mona Vie, Inc. 1 to Jeunesse (the Note Sale).
Neither Mona Vie nor TSG provided BTC with any notice of the Note Sale until after the sale
had been concluded, despite Mona Vies promise it would keep BTC apprised of any potential
transfer or sale.
Plaintiff also claims BTC failed to fulfill certain obligations regarding Mona Vies ESOP
(the ESOP) participants, overlooking that the responsibilities Plaintiff complains about are
those of Mona Vie or the ESOP Administrative Committee, not BTC. Plaintiff has hastily
filed his Supplemental Memorandum without any verified evidence and based on a
misunderstanding of the facts.

The notes were held with Mona Vie, Inc., but Plaintiff references Mona Vie, LLC in his
Complaint.
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STATEMENT OF FACTS
In detail, the facts are as follows. TSG has held certain senior secured promissory notes
from Mona Vie, Inc. since 2010. These notes had been issued pursuant to a November 17, 2010
Note Purchase Agreement (the Agreement) between Mona Vie, Inc., Mona Vie LLC, TSG,
and certain investors (the 2010 Note Holders). The original aggregate principal amount of the
Notes was $182,000,000 (the Notes) and the 2010 Note Holders contributed the Notes to TSG
on November 17, 2010 pursuant to the Agreement. On March 13, 2015, TSG sold these Notes to
Jeunesse. TSG also assigned its first priority perfected security interest in the assets of Mona Vie
to Jeunesse in connection with the Note Sale. In effect, the 2010 Note Holders have simply been
replaced by Jeunesse as the holder of the Notes. (Storjohann Supp. Decl., 6). 2
TSG did not advise BTC of the Note Sale. Mona Vie did not advise BTC of the Note
Sale until after the Note Sale had occurred. BTC first learned of the Note Sale on the evening of
Monday, March 16, 2015, by an e-mail from Mona Vies President/CEO to Mona Vies
shareholders. (Storjohann Supp. Decl., 7). In this e-mail Mona Vies president Mauricio
Bellara forwarded to BTC an attachment with an announcement to Dear Shareholder stating
On March 13, 2015 TSG-MV Financing, LLC (TSG) informed the officers and directors of
Mona Vie, Inc. (the Company) that it has sold the Promissory Note dated November 17, 2010
to Jeunesse. (Storjohann Supp. Decl., 8, Ex. A). The next day, on March 17, 2015, BTC
received another e-mail from Mona Vie, this time from Daren Haws, Mona Vies corporate
controller, providing a Mona Vie press release discussing the Note Sale. (Storjohann Supp.
Decl., 9, Ex. B).

The Supplemental Declaration of Scot Storjohann is attached hereto as Exhibit 1.


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All communications to BTC concerning the Notes has been from Mona Vies
management (MV Management). BTC has never had any contact with TSG or its advisors
since before the ESOP was formed. (Storjohann Supp. Decl., 10). BTC has maintained
periodic communication with MV Management concerning the status of the Notes. BTCs most
recent discussion regarding the Notes was on January 21, 2015, during BTCs on-site due
diligence meeting at Mona Vie with Chartwell, Inc., the ESOPs valuation company
(Chartwell). BTC asked MV Management for an update on the Notes. MV Management
advised their understanding was that TSG was in the process of seeking to sell the Notes for less
than full value, that TSG hoped for several offers, but that a requirement of the transaction would
be a cash infusion into Mona Vie. (Storjohann Supp. Decl. 11). BTC and Chartwell questioned
MV Management further but were told Mona Vie did not have further information. BTC briefed
MV Management at this meeting on the ESOPs requirements for pass-through voting in the
event that the TSG transaction gave rise to the need for shareholder approval. BTC specifically
asked MV Management (Jim Marsh (CFO/COO) and Daren Haws (Controller)) to keep BTC
advised on TSGs potential sale of the Notes. MV Management promised to do so. (Storjohann
Supp. Decl. 11).
Following the January 21, 2015 meeting with Mona Vie, BTC had additional
communications with MV Management, but Mona Vie never mentioned anything further
regarding TSGs potential sale of the Notes. Likewise, BTCs attorneys had been in direct
communication with Mona Vies attorneys before the Note Sale, but who never made any
reference to the sale. (Storjohann Supp. Decl., 11). Mona Vies general counsel, Graden
Jackson, verbally indicated to BTCs counsel after the sale that the Note Sale did not require
notice to or approval by Mona Vies shareholders. (Storjohann Supp. Decl., 12). BTC

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understands the Notes were sold by TSG to Jeunesse at less than full face value. (Storjohann
Supp. Decl., 13).
Sections 2.48 and 13.01 of the MV ESOP plan document requires that the ESOP
Administrative Committee manage and administer [the] Plan in accordance with [its]
provisions. It is the ESOP Administrative Committee, not BTC, who is responsible for
issuing MV ESOP participant statements and overseeing participant access to their online MV
ESOP services. (Storjohann Supp. Decl., 14). Preparation and filing of Mona Vies 2013 Plan
Year Form 5500 is the responsibility of Mona Vie, Inc. in its capacity as Plan Sponsor of the
MV ESOP, not BTC. Mona Vie advised BTC on February 2, 2015 that Mona Vie was still in the
process of completing the 2013 Plan Year Form 5500. (Storjohann Supp. Decl., 14).
ARGUMENT AND RESPONSE
A.

Plaintiff has still not provided this Court with any actual evidence supporting his
Motion.

Plaintiff has still not provided any evidence to support his request for preliminary
injunction. Plaintiff has not verified any allegations or submitted any declarations. Rather than
submitting evidence, Plaintiff resorts to asking rhetorical questions wondering what BTC may
have or may not have done regarding the circumstances Plaintiff now raises. (Doc. 65, p. 5).
BTC noted this defect in its initial Memorandum in Opposition to Motion for Preliminary
Injunction (Doc. 38, p. 4). E.g., Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356
F. 3d 1256, 1261 (10th Cir. 2005) (holding that the lack of admissible evidence precludes the
issuance of a preliminary injunction). Plaintiff has done nothing to remedy this inadequacy.
And now, as support for Plaintiffs new supplemental reason for injunctive relief, Plaintiff still
does not provide a declaration, affidavit or any other verified or admissible evidence supporting
a claim that the ESOP has been damaged. Instead, Plaintiff cites only a YouTube video. See

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Wastach Equality v. Alta Ski Lifts Co., 2014 WL 4743837 *14 (D. Utah 2014) (stating in dicta
that YouTube is hearsay); Randazza v. Cox, 2014 WL 1407378 *4 (D. Nev. 2014) (holding that a
YouTube video was not admissible without proper authentication).
B.

Plaintiffs Newly Discovered Evidence does not support the granting of a


Preliminary Injunction.

The parties have previously briefed why a preliminary injunction should or should not be
granted focusing on Plaintiffs arguments made in its December 18, 2014 filing (Doc. 3, 38, 44).
Now, Plaintiff submits an additional claimed reason why a preliminary injunction should be
granted, -- pointing to the TSG-Jeunesse Note Sale. But, a preliminary injunction can only be
granted upon a clear and unequivocal showing that all four prerequisites to injunctive relief
have been established. Dominion Video, 356 F. 3d at 1260-61. Preliminary injunctive relief is
an extraordinary remedy that should not be granted lightly. General Motors Corp. v. Urban
Gorilla, LLC, 500 F. 3d 1222, 1226 (10th Cir. 2007). Similarly stated, as a preliminary
injunction is an extraordinary remedy, the right to relief must be clear and unequivocal. SCFC
ILC, Inc. v. Visa USA, Inc., 936 F. 2d 1096, 1098 (10th Cir. 1991).
1.

Plaintiff does not demonstrate a substantial likelihood of success on the


merits that BTC breached its fiduciary duty.

Nothing about Plaintiffs supplemental new evidence demonstrates a substantial


likelihood of success on the merits. Plaintiff argues its understanding of claimed new facts.
(See Doc. 65, p. 4-5). Yet, as detailed above, Plaintiff misunderstands what actually occurred.
This was not a stock acquisition as Plaintiff contends. It was a Note Sale. TSG, who held the
Notes with Mona Vie, sold the Notes to Jeunesse. In effect, TSG has simply been replaced by
Jeunesse as a holder of the Notes.
Plaintiff complains that BTC did not consider or notify the ESOP participants before the
sale occurred, incorrectly assuming that BTC was advised of the Note Sale before it occurred. In
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reality, Mona Vie did not advise BTC of the Note Sale until after the Note Sale concluded. BTC
provides documentation and sworn testimony showing that BTC first learned of the Note Sale on
the evening of Monday, March 16, 2015 by an e-mail from Mona Vies President/CEO to all
Mona Vie shareholders, and then from a follow-up e-mail from Mona Vies Corporate Controller
on March 17, 2015.
Still operating from the same misunderstanding that BTC received prior notice, Plaintiff
continues his argument by claiming the ESOP requires pass-through voting, implying BTC failed
to allow the ESOP participants to vote. But, again, BTC did not oversee ESOP participant
voting because neither TSG or Mona Vie advised BTC that Mona Vie was entering into a
transaction with TSG that required Mona Vie shareholder approval or of the Note Sale before it
occurred. In Mona Vies case, Mona Vie actually hid from BTC that the Note Sale was
occurring. Despite BTCs request and Mona Vies promise to do so, Mona Vie did not keep
BTC apprised of any potential Note sale. 3
Alternatively, Plaintiff argues that BTC breached its fiduciary duty to Plaintiff and the
ESOP participants because it must have been completely oblivious or asleep at the wheel to
not know the Note Sale was about to occur. But, as shown above, BTC sought and had periodic
communications with MV Management concerning the status of the Notes and Mona Vies
business in general. On January 21, 2015, BTC traveled on-site to Mona Vie with Chartwell.
MV Management advised BTC at that time that TSG was in the process of seeking to sell the
Notes, but said they had little further information concerning TSGs activities on this issue, other
than that Mona Vie expected a cash infusion as a result of any sale. BTC asked MV
3

Ironically, had Plaintiff named Mona Vie as a necessary party as BTC has urged, there is less
likelihood the Note Sale would have occurred without prior notice. However, Plaintiff resisted
and argued against adding Mona Vie as a party and failed to name Mona Vie as a party from the
beginning.
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Management, both the CFO/COO, and the Controller, to keep BTC advised on anything to do
with TSGs potential Note sale, who promised to do so. But as it turns out, MV Management did
not, failing to advise BTC what was really going on. Similarly, BTCs attorneys had been in
communication with both Mona Vies inside and outside counsel before the announcement of the
Note Sale, who gave no warning of the Note Sale at all. BTC even advised MV Management at
their January 21, 2015 meeting of the requirements for ESOP pass-through share voting in a true
acquisition setting (if that were to occur).
Plaintiff lastly claims a preliminary injunction should be granted because BTC is not
providing Plaintiff and other participants with access to their ESOP accounts. Yet, Plaintiff
ignores the fact that this is Mona Vies responsibility, not BTCs. Pursuant to the ESOP Plan
document, Mona Vies ESOP Administrative Committee is the party responsible for managing
and administering the ESOP, for issuing the ESOP participant statements, and for overseeing
participant access to their online ESOP accounts. Likewise, Plaintiff is critical of BTC, claiming
that the 2013 Plan Form 5500 has not been filed, but the Form 5500 filing is Mona Vies
responsibility in its capacity as Plan Sponsor, not BTCs.
Plaintiff must establish that he is likely to succeed on the merits in order to obtain a
preliminary injunction. The Village of Logan v. U.S. Dept. of Interior, 577 F. Appx 760, 766
(10th Cir. 2014). Not only does Plaintiff fail to clearly enunciate what relief he seeks by way of
his motion for preliminary injunction, but he does not satisfy this burden based on his claimed
new supplemental evidence. Plaintiff cites no new case law to support his arguments, and
much of Plaintiffs claimed evidence is simply wrong.

Case 2:14-cv-00916-BSJ Document 68 Filed 04/10/15 Page 9 of 13

2.

Plaintiff and the other ESOP participants will not suffer irreparable harm
in the absence of preliminary injunctive relief.

Plaintiff points to the Note Sale as an additional reason to require preliminary injunctive
relief, without explaining how that constitutes irreparable harm now requiring an injunction. The
Note Sale has already occurred. The fact that the circumstance that forms the basis for a request
for preliminary injunctive relief has already occurred means that the issue is largely moot. The
purpose of a preliminary injunction is not to remedy past harm but to protect plaintiffs from
irreparable injury that would surely result without their issuance. Schrier v. University of
Colorado, 427 F. 3d 1253, 1267 (10th Cir. 2005) (declining to issue an injunction to reinstate a
terminated professor). One cannot say it any better than Plaintiff himself, who states, There is
no longer a potential harm because now the harm has already occurred . . . . (Doc. 65, p. 3).
As previously noted by BTC, Mona Vie has recently unilaterally terminated the ESOP.
(See Doc. 40, p. 8, n. 6). The ESOP is therefore frozen pending its termination liquidation. (Id.)
Plaintiffs request for a preliminary injunction is thus largely moot for that reason as well. (Id).
Plaintiff ignores this and continues to press for injunctive relief. Even if injunctive relief were
merited, which it is not, there is no need for injunctive relief at this point in time because there is
no pending irreparable harm. BTC, one of the most well respected ESOP fiduciaries in the
country, continues to actively oversee the ESOP notwithstanding Mona Vies unforeseen
economic downturn and is in the best position to oversee the ESOP termination liquidation.
BTC should continue to oversee the termination liquidation, as it seeks to achieve maximum
ESOP termination benefits for the ESOP participants in its negotiations with Mona Vie
concerning the liquidation of the ESOP trust.

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Plaintiff does not explain what irreparable harm will occur in the future, what transaction
BTC needs to be barred from conducting, or what the status quo should be given the ESOPs
termination. Nothing about the present circumstances suggests Plaintiff will suffer any
irreparable harm absent an injunction.
3.

The balance of equities and harms does not weigh in favor of granting
Plaintiff a preliminary injunction.

There is also nothing about Plaintiffs new supplemental evidence that has significance to
the balance of harm consideration. Plaintiff baldly argues that the balance of harms supports an
injunction. (Doc. 65, p. 3). In support, Plaintiff states only that the Jeunesse transaction means
there is no assurance of future contributions to the ESOP. This argument confuses the Notes
held by Jeunesse in Mona Vie in general with amounts and notes owed the ESOP by Mona Vie,
Inc. The Jeunesse Note Sale has little or nothing to do with future contributions to the ESOP and
liquidation of the ESOP. It has nothing to do with the balance of harms.
There is harm, however, to removing BTC and preserving Plaintiffs claimed status
quo. BTC has been actively engaged with Mona Vie on behalf of the ESOP for five years and
is in the best position to handle the remaining ESOP termination issues. It should not be
precluded from overseeing the ESOP termination.
4.

There is no public policy consideration that favors granting a preliminary


injunction in these circumstances.

Public policy does not support the granting of the preliminary injunction. Plaintiff claims
the reason public policy favors a preliminary injunction is because the ESOP participants were
locked out of receiving information on their accounts for the better part of the last year, and
continue to be locked out today. (Doc. 65, p. 5). How that supports a preliminary injunction is
not explained and illogical. More importantly, Plaintiff incorrectly asserts it was BTCs
responsibility to see that the participants have access to their accounts. Plaintiff is incorrect. It is

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the Mona Vies ESOP Administrative Committee that is required to oversee participant
statements and participant access to their online ESOP accounts. This responsibility is expressly
stated in the ESOP plan document. Plaintiff should name the Mona Vie Administrative
Committee, an ERISA fiduciary, as a defendant in this case to obtain the relief he seeks. There
simply is no public policy argument that favors a preliminary injunction in Plaintiffs favor.
C.

Plaintiff is inconsistent and unclear what he actually wants in terms of a


Preliminary Injunction.

Plaintiffs request for a preliminary injunction is a moving target. Plaintiff first states the
requested preliminary injunction is to maintain the status quo and preserve whatever limited
value may still exist in the ESOP. (Doc. 3, p. 2). 4 Plaintiff next states he requests an Order
freezing the ESOP funds, which will temporarily prevent Bankers Trust from making loan
payments to the founders and original shareholders of Mona Vie . . . or from paying itself
professional fees for acting as a trustee, . . . 5/6 (Doc. 3, p. 2-3). Plaintiff concludes by
requesting that the Court issue a preliminary injunction holding the ESOP assets in temporary
stasis and barring Bankers Trust from engaging in any transaction impacting the ESOPs assets
or liabilities. 7 (Doc. 3, p. 13).
In Plaintiffs Supplemental Motion Plaintiff claims a need for injunctive relief so that
Plaintiff and his counsel may assess the current financial state of the ESOP and what impact the
Jeunesse buy-out may have on the ESOP. (Doc. 65, p. 2-3). Plaintiff next requests an
injunction so that the ESOP participants can finally get some answers. (Doc. 65, p. 5).
4

Plaintiff does not explain what the status quo is. In any event, termination of the ESOP by
Mona Vie largely maintains the status quo.
5
As stated previously, no payment has ever been made to the founders and original shareholders
of Mona Vie by BTC.
6
BTC receives no professional fees from the ESOP for acting as trustee. Rather, the fees are
paid by Mona Vie.
7
Plaintiff fails to explain what temporary stasis means with respect to the ESOP.
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Plaintiff concludes his Supplemental Memorandum by claiming a preliminary injunction should


be granted to preserve the status quo, maintain whatever value may be left in the ESOP, and
obtain a current accounting. (Doc. 65, p. 6).
In the present circumstances, however, there is no need to issue a preliminary injunction
under any of these stated reasons given by Plaintiff. Maintaining whatever value may be left in
the ESOP and the status quo has now largely occurred given the termination of the Plan.
Plaintiff has no consistency with what he wants the preliminary injunction to provide, but there is
no need for a preliminary injunction to be entered. Plaintiffs inconsistent, conflicting requests
support denial of a preliminary injunction.
CONCLUSION
For all the foregoing reasons, Plaintiffs Motion for Preliminary Injunction should be
denied.
Respectfully submitted,
By /s/ R. Willis Orton
Ralph R. Mabey
R. Willis Orton
Ryan B. Frazier
KIRTON McCONKIE
Kirton McConkie Building
50 East South Temple, Suite 400
Salt Lake City, Utah 84111
Scott S. Morrisson
Jeffrey C. McDermott
KRIEG DeVAULT LLP
12800 North Meridian Street, Suite 300
Carmel, Indiana 46032
Jude Anne Carluccio
KRIEG DEVAULT LLP
60 South 6th Street, Suite 2310
Minneapolis, Minnesota 55402

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CERTIFICATE OF SERVICE
I hereby certify that on the 10th day of April, 2015, a copy of the foregoing was filed
electronically. Notice of this filing will be sent to all parties by operation of the Courts
electronic filing system. Parties may access this filing through the Courts system.
Gregory Y. Porter
gporter@baileyglasser.com

James L. Kauffman
jkauffman@baileyglasser.com

James E. Magleby

Martin R. Denney

Jennifer Fraser Parrish

Evan A. Schmutz

parrish@mgpclaw.com

eschmutz@djplaw.com

magleby@mgpclaw.com

mrdenney@cnmlaw.com

/s/ Teena Sanders


KD_7175665_1.docx

4838-6337-2323.v1

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