RACKWISE, INC. v. ARCHBOLD

Civ. No. 2:17-797 WBS CKD.

RACKWISE, INC., a Nevada Corporation, Plaintiff, v. GUY ARCHBOLD, an individual, Defendant.

United States District Court, E.D. California.

Editors Note
Applicable Law: 28 U.S.C. § 1332
Cause: 28 U.S.C. § 1332 Diversity - Fraud
Nature of Suit: 370 Other Fraud
Source: PACER


Attorney(s) appearing for the Case

Rackwise, Inc., Plaintiff, represented by Harry Vincent McLaughlin , Gavrilov & Brooks.

Rackwise, Inc., Plaintiff, represented by Michael Coleman , Gavrilov & Brooks, Ognian Anguelov Gavrilov , Gavrilov & Brooks & John Edward Brooks , Gavrilov & Brooks.

Guy Archbold, Defendant, represented by Lawrence W. Miles, Jr. , The Miles Law Firm & Randall Jonathan Paulson , Law Offices of Randall J. Paulson.


ORDER TO SHOW CAUSE

WILLIAM B. SHUBB, District Judge.

Plaintiff Rackwise, Inc. requests that the court order certain non-parties to show cause as to why they are not in violation of the court's June 13, 2017 Order. Defendant Archbold served as the President, CEO, and Chairman of Rackwise's board from at least 2011 until the beginning of 2017. On March 23, 2017, shareholders allegedly possessing a majority of Rackwise's outstanding stock voted to terminate Archbold as President, CEO, and chairman of the board. After his alleged termination, Archbold continued to act as CEO, President, and Chairman of the Board of Rackwise, and plaintiff initiated this action against defendant, alleging various state law violations for his actions before and after his purported termination.

On June 13, 2017, the court issued an order stating that defendant Guy Archbold, his agents, and any party acting in concert with him or his agents are enjoined from:

(1) accessing or logging into, or attempting to access or log into, Rackwise, Inc.'s account in the U.S. SEC's online EDGAR filing system; (2) representing himself to anyone as being an officer, director, or employee of, or otherwise affiliated with Rackwise, Inc.; and (3) acting, attempting to act, or purporting to act on behalf of Rackwise, Inc.

(See June 13, 2017 Order 11:24-12:6 (Docket No. 13).)

On June 26, 2017, plaintiff filed a motion seeking to have defendant Archbold, as well as non-parties John Todd, Richard A. Ivers, Sherman Henderson, Jonathan A. Shechter, Craig Whited, John Kyees, and Jay Schiffman, allegedly acting in concert with him, in contempt for violating the court's June 13 Order. On June 30, 2017, the court set a briefing schedule on the motion and set the matter for hearing on July 24, 2017. Plaintiff has now submitted its proposed orders to show cause and related materials. (Docket No. 31.)

The court finds that plaintiff has made a sufficient showing to compel defendant Archbold to show cause why he should not be adjudged in contempt. According to the evidence presented, in connection with a lawsuit pending in the Southern District of Florida (No. 17-80136-CIV-MIDDLEBROOKS) Archbold signed a document dated June 14, 2017, in which he represented himself to be a member of the Board of Directors of Rackwise, Inc. If true, it appears that would have been in direct violation of this court's Order of June 13, 2017.

The court does not find, however, that plaintiff has made a sufficient showing to adjudge John Todd, Richard A. Ivers, Sherman Henderson, Jonathan A. Shechter, Craig Whited, John Kyees, or Jay Schiffman in contempt of this court's Order. First, they are not parties to this action, and plaintiff has not made a sufficient showing that they were on actual notice of this court's June 13, 2017 at the time of their alleged violations. Second, this court's Order only enjoined persons acting in concert with Archbold from representing him as being affiliated with Rackwise, Inc. It did not enjoin anyone else, even agents of Archbold or persons acting in concert with him, from representing themselves as being affiliated with or from acting on behalf of Rackwise, Inc.

IT IS THEREFORE ORDERED that defendant Guy Archbold appear personally before this court on July 24, 2017 at 1:30 p.m. in Courtroom No. 5 at the above-entitled court, located at 501 I Street, Sacramento, CA, 95814, to show cause why he should not be adjudged in contempt of this court's Order of June 13, 2017, and subjected to sanctions, which may include a fine, imprisonment, or both.


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