Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 Case No.: 26-cv-02113-DMS-DEB 9 ETHAN MEVI et al., 10 Plaintiffs, ORDER GRANTING 11 v. PLAINTIFFS’ MOTION TO STAY PROCEEDINGS HENRY JI et al., 12 13 Defendants. 14 15 16 17 Before the Court is Plaintiffs’ Motion to Stay Proceedings Pending Resolution of 18 Proceedings Pending in Bankruptcy Court for the Southern District of Texas (“Motion”). 19 (Mot., ECF No. 3). For the following reasons, Plaintiffs’ Motion to Stay is granted to the 20 extent set forth herein. 21 On April 3, 2026, Plaintiffs Ethan Mevi, Enrique Curbello, Bruce Bradley, Michael 22 Broome, Cynthia Broome, Aladdin Asfour, Kyle Hodes, Jennifer Hodes, Alexander 23 Espalin, Moayad Altahhan, Shawn Franz, Leo Kishko, and AC Choudhury (collectively 24 “Plaintiffs”) filed this action against Henry Ji, M3 Advisory Partners, L.P., MIII Partners, 25 L.P., Mohsin Meghji, Jackson Walker LLP, Dorman Followwill, Kim D. Janda, David 26 Lemus, Tammy Reilly, Jaisim Shah, Yue Alexander Wu, Stephen Ma, Vivasor Holding 27 Company, Scilex Holding Company, and Semnur Pharmaceuticals (collectively 28 “Defendants”). (Compl., ECF No. 1). Plaintiffs allege Violation of the Racketeer 1 Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c); Conspiracy to 2 Violate RICO, 18 U.S.C. § 1962(d); Breach of Fiduciary Duty; Aiding and Abetting Breach 3 of Fiduciary Duty; and Violation of California Penal Code § 496. (Compl. ¶¶ 147–210). 4 Plaintiffs’ claims arise from Defendants’ alleged conduct in connection with the Chapter 5 11 bankruptcy of Sorrento Therapeutics, Inc., currently pending in the U.S. Bankruptcy 6 Court, Southern District of Texas (“Bankruptcy Court”). (Compl. 2, ¶ 31). In that action, 7 on April 14, 2026, Defendants M3 Advisory Partners, L.P., MIII Partners, L.P., and Mohsin 8 Meghji filed an Emergency Motion to Enforce the Plan of Reorganization. (Mot. 4; Boyer 9 Decl. Ex. A, ECF No. 3-1 at 6). On April 17, 2026, the Liquidating Trustee filed a Joinder 10 in the Emergency Motion and a Supplemental Request for Relief. (Mot. 4; Boyer Decl. 11 Ex. A at 6). On April 20, 2026, the Bankruptcy Court held a hearing and inquired whether 12 Plaintiffs would agree to seek a stay in the present action while the Bankruptcy Court set a 13 briefing schedule and future hearing date. (Mot. 4). The hearing was continued until April 14 22, 2026, at which the parties agreed to the entry of an order to preserve the status quo and 15 the parties’ rights. (Id.). On April 24, 2026, the Bankruptcy Court entered an Order 16 Temporarily Enjoining the Sorrento Shareholders’ Prosecution of Their California 17 Lawsuit, which prohibited Plaintiffs from taking any action to prosecute, advance, or 18 otherwise pursue this action until the Bankruptcy Court had ruled on the emergency 19 motions. (Id.; Boyer Decl. Ex. A). On April 28, 2026, Plaintiffs filed the present Motion 20 to Stay Proceedings, “including without limitation all deadlines for service of the 21 Complaint and all response deadlines, pending resolution of [the emergency motions].” 22 (Mot. 2). On June 2, 2026, the Court vacated oral argument on the Motion to Stay. (ECF 23 No. 4). To date, no Defendant has been served or appeared in this action and no opposition 24 to the Motion was filed. On June 21, 2026, the Bankruptcy Court granted the emergency 25 motions in a memorandum opinion, concluding that Plaintiffs lack standing to pursue the 26 claims asserted in the Complaint and were required to seek authorization under the 27 Gatekeeping Provision of the Debtors’ Plan before filing suit. In re Sorrento Therapeutics, 28 1 Inc., No. 23-90085 (Bankr. S.D. Tex. June 21, 2026). The Bankruptcy Court directed the 2 parties to “meet and confer regarding a proposed form of order consistent with this Opinion 3 and submit the same within 14 days.” Id. 4 “A district court has inherent power to control the disposition of the causes on its 5 docket in a manner which will promote economy of time and effort for itself, for counsel, 6 and for litigants,” including by issuing stays of pending proceedings. CMAX, Inc. v. Hall, 7 300 F.2d 265, 268 (9th Cir. 1962). In doing so, courts must weigh the competing interests 8 such as “the possible damage which may result from the granting of a stay, the hardship or 9 inequity which a party may suffer in being required to go forward, and the orderly course 10 of justice measured in terms of the simplifying or complicating of issues, proof, and 11 questions of law which could be expected to result from a stay.” Id. (citing Landis v. N. 12 Am. Co., 299 U.S. 248, 254–55 (1936)). Here, although the Bankruptcy Court has resolved 13 the emergency motions, it has directed the parties to submit a proposed form of order within 14 fourteen days. Each of the competing interests favors a brief stay pending resolution of 15 this matter. As Plaintiffs request the stay and no Defendant has been served or appeared 16 in this action, the Court discerns no damage that would be caused by a stay. Furthermore, 17 because final resolution of the emergency motion matter might narrow or eliminate the 18 issues in this action, a stay would spare all parties expense and serve the orderly course of 19 justice. Accordingly, the Court GRANTS Plaintiffs’ Motion to Stay. All deadlines in this 20 action, including the deadline to serve the Complaint, are tolled for the duration of the stay. 21 Plaintiffs shall file a status report on or before August 1, 2026, addressing the effect of the 22 Bankruptcy Court’s ruling, any subsequent events, and how they intend to proceed. The 23 24 25 1 The Court takes sua sponte judicial notice of the recently issued opinion. See Fed. R. Evid. 201(c); United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 26 1992) (noting that courts “may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue” (citation modified)); 27 Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 999 (9th Cir. 2018) (explaining that although a court may take judicial notice of matters of public record, it does not “take judicial notice of disputed facts 28 1 |} Court will then determine whether to lift, continue, or modify the stay. 2 IT IS SO ORDERED. 3 || Dated: June 25, 2026 2» 4 rn Yn « LA4\ 5 Hon. Dana M. Sabraw 6 United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28