MEMORANDUM

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Francesca Morano, Partner
FROM: Carlos Espinoza, Lead Associate
DATE: June 10, 2024
RE: discovery Plan — Redstone Gaming Corp. v. Grizzly Peak Research LLC, et al., Case No. 24STCV-01892, Superior Court of California, County of Los Angeles
CC: Samuel Eklund, Hannah Brinkley
I. Introduction and Purpose
This memorandum outlines the comprehensive discovery strategy for the above-captioned matter following the court's denial of defendants' anti-SLAPP motion on June 7, 2024. The Honorable Patricia Yamamoto issued a minute order that day denying the special motion to strike in its entirety, finding that our client, Redstone Gaming Corp. ("RGC" or the "Company"), demonstrated a probability of prevailing on all four causes of action asserted in the First Amended Complaint ("FAC"). This ruling is significant not only as a substantive milestone in the litigation but also because it clears the path for full merits discovery. The mandatory discovery stay imposed under California Code of Civil Procedure section 425.16(g) has now lifted, and we are in a position to pursue the discovery outlined in this memorandum without further delay.
As the Court is aware, the FAC was filed on March 18, 2024, and asserts four causes of action against three defendants — Grizzly Peak Research LLC ("GPR"), Grizzly Peak Capital Partners LP ("GPCP"), and Tobias "Toby" Fenchurch, individually. The four causes of action are as follows:
(1) Trade Libel (Cal. Civ. Code § 46(3));
(2) Intentional Interference with Prospective Economic Advantage;
(3) Unfair Business Practices (Cal. Bus. & Prof. Code § 17200); and
(4) Negligent Misrepresentation.
The overarching objectives of the discovery plan are fivefold. First, we must establish the falsity of the three research reports published by GPR in February 2024, each of which leveled serious and highly specific allegations of financial fraud, regulatory manipulation, and self-dealing against RGC and its executives. Second, we must prove that these reports were published with actual malice — that is, with knowledge of their falsity or with reckless disregard for the truth — a standard that applies with particular force to our trade libel and intentional interference claims. Third, we must document the financial motive that drove GPR's publication campaign, specifically GPR's massive short position in RGC common stock (ticker: RDGM), which stood at approximately 680,000 shares with a notional value of roughly $62.66 million at the time of the first report's publication. Fourth, we must quantify the damages RGC has suffered as a result of defendants' tortious conduct, including the precipitous decline in RDGM's stock price, RGC's substantial out-of-pocket expenditures for crisis communications, internal investigations, and regulatory response, and the disgorgement of GPR's short-sale profits. Fifth, we must build the evidentiary record necessary to support RGC's request for injunctive relief.
Defense counsel in this matter is Raymond Caldwell and Natalie Orenstein of Caldwell, Tseng & Barrow LLP ("CTB"), located at 555 California Street, Suite 3100, San Francisco, California 94104. We have had limited interactions with CTB to date given the discovery stay, but we anticipate vigorous opposition to many of the discovery requests outlined herein. Our plan accounts for anticipated discovery disputes and includes a framework for motion practice where necessary.
II. Overview of Key Factual Issues to Be Developed
The discovery plan is organized around four primary factual areas that correspond to the elements of our claims: (A) the falsity of the GPR reports; (B) actual malice and reckless disregard for the truth; (C) damages; and (D) GPR's financial profile and ability to satisfy a judgment. Each of these areas is discussed below, along with the specific factual issues that our discovery efforts will target.
A. Falsity of the Three GPR Reports
GPR published three separate research reports targeting RGC in rapid succession over a fourteen-day period in February 2024. Each report was posted on GPR's website, grizzlypeakresearch.com, and simultaneously amplified through GPR's social media presence on the @GrizzlyPeakRes account, which had approximately 142,000 followers at the time of publication. The reports were specifically designed to drive down the price of RDGM stock, and they succeeded in doing so. The core factual allegations in each report are summarized below, along with the evidence we intend to develop demonstrating their falsity.
Report 1: "House of Cards: Redstone Gaming's Manufactured Earnings" — This 48-page report was published on February 7, 2024, and alleged that RGC fabricated approximately $410 million in FY 2023 revenue through fictitious intercompany transactions. The report purported to identify specific entities involved in these supposed sham transactions and claimed to have uncovered documentary evidence of round-tripping. In fact, RGC reported total FY 2023 revenue of $3.42 billion and FY 2023 EBITDA of $812 million, reflecting a healthy 23.7% margin, all of which were audited and verified by Pinnacle Audit & Advisory LLP. The engagement partner, Walter Ng, CPA, issued clean, unqualified audit opinions for FY 2021, FY 2022, and FY 2023. Through discovery, we will develop the record showing that GPR either knew or should have known that these revenue-fabrication allegations were baseless, including by determining whether GPR made any effort to contact Pinnacle or RGC prior to publication.
Report 2: "Rigged Reels: How Redstone's Slot Software Cheats the Regulators" — Published on February 14, 2024, this 36-page report alleged that RGC manipulated its random number generator ("RNG") software to inflate payout statistics reported to the Nevada Gaming Control Board ("NGCB"). The report included purported technical analysis and anonymous source allegations suggesting that RGC's slot machines were rigged to report higher payout percentages to regulators than were actually delivered to players. This allegation was definitively rebutted when the NGCB completed an independent RNG audit on March 29, 2024, and cleared RGC of any wrongdoing. We will seek evidence that GPR failed to contact the NGCB before publishing these allegations and that GPR lacked any credible basis for its purported technical analysis.
Report 3: "Double Down on Fraud: Redstone's Related-Party Shell Game" — This 29-page report, published on February 21, 2024, alleged undisclosed related-party dealings between RGC's CEO, Marcus J. Calloway, and a purported shell entity called "Vermilion Holdings LLC." The report claimed that Calloway used Vermilion Holdings to siphon assets from RGC through a series of below-market transactions. An SEC informal inquiry was opened in March 2024 in response to these allegations but was closed with no action on August 16, 2024, further confirming that the allegations lacked merit. Discovery will focus on determining what, if any, factual basis GPR had for connecting Calloway to Vermilion Holdings and whether GPR contacted RGC, Calloway, or any relevant regulatory body before publishing these explosive claims.
B. Actual Malice / Reckless Disregard
To prevail on our trade libel claim, we must demonstrate that GPR published its reports with knowledge of their falsity or with reckless disregard for the truth. This is the most fact-intensive element of our case, and discovery is the essential vehicle for proving it.
The most powerful evidence of actual malice will come from GPR's financial motive. At the time of the first report's publication, GPR — through its affiliated hedge fund, GPCP — held a short position of approximately 680,000 shares of RDGM. At the pre-publication closing price of $92.14 per share, this position had a notional value of approximately $62.66 million. The magnitude of this position, and the timing of its establishment relative to the reports' publication, creates a powerful inference that the reports were published not to inform the market but to drive down the stock price and generate trading profits. While GPR included standard disclaimers in each report disclosing the existence of a short position, the scale and timing of the position establishment remain undisclosed and are critical to our actual-malice theory.
We need to obtain GPR's internal communications — including emails, Meridian Solutions messages, Signal messages, text messages, and research notes — to establish that GPR's principals and analysts either knew or recklessly disregarded the fact that the allegations in the reports were false or unverified. Particular attention will be paid to any communications reflecting internal doubt about the accuracy of the reports' claims, any instructions from Fenchurch or others to publish notwithstanding known deficiencies, and any discussions linking the publication schedule to the management of the short position.
The role of Ava Lin, GPR's Senior Analyst and co-author of all three reports, is of particular significance. We need to explore her research methodology, the sources she relied upon, and any internal doubts or reservations she may have expressed during the drafting process. If Lin raised concerns about the veracity of the reports' claims and was overridden by Fenchurch, that evidence would be highly probative of actual malice.
C. Damages
RGC has suffered significant and quantifiable damages as a result of GPR's tortious publication campaign. The discovery plan is designed to develop the factual record necessary to support our damages theories at trial.
Stock-Price Decline. The most dramatic measure of harm is the decline in RDGM's stock price. On February 6, 2024 — the day before the first report was published — RDGM closed at $92.14 per share. By February 21, 2024, the date of the third report's publication, the stock had fallen to a trough of $72.80 per share, representing a cumulative decline of $19.34 per share, or approximately 21.0%. With 73.8 million shares outstanding, the aggregate market-capitalization loss at the trough was approximately $1.427 billion. While the stock has since partially recovered — RGC's current market capitalization is approximately $6.1 billion — the interim losses were substantial and caused real harm to RGC's shareholders, financing capacity, and strategic positioning.
Expert Retention. We have retained Dr. Elena Vostrikova of Meridian Forensic Economics LLC to conduct an event-study analysis quantifying the damages attributable to GPR's publications. Dr. Vostrikova's analysis will isolate the stock-price impact of the reports by controlling for market-wide and sector-specific movements, thereby establishing the damages figures that are directly attributable to GPR's tortious conduct. Her expert report is due on September 9, 2024, and her analysis will depend in significant part on the trading records and other financial data obtained through discovery.
Out-of-Pocket Costs. RGC has incurred substantial out-of-pocket costs in responding to GPR's reports. These costs are independently recoverable and include the following:
•  Crisis communications and public relations services provided by Crestline Equity Partners Group Inc. (contact: Simone Arecchi): $2.18 million;
•  Internal investigation and supplemental forensic audit conducted by Pinnacle Audit & Advisory LLP (engagement partner: Walter Ng, CPA): $1.46 million;
•  Regulatory-response costs incurred through RGC's Nevada gaming counsel, Hargrove & Sato LLP: $987,000;
•  Total out-of-pocket costs: $4.627 million.
Each of these cost categories will be documented through discovery, including subpoenas to the relevant third-party service providers and production of RGC's own records.
Short-Sale Profit Disgorgement. We also intend to pursue disgorgement of GPR's short-sale profits as a remedy under our unfair business practices claim. Based on our preliminary calculations, GPR closed its short position by mid-March 2024 at an average price of approximately $72.80 per share, yielding estimated short-sale profits of approximately $13.15 million (calculated as ($92.14 − $72.80) × 680,000 shares). Precise calculation of these profits will require the brokerage records and trading data that we are seeking through both party and third-party discovery.
D. GPR's Financial Profile and Ability to Pay
In connection with our damages analysis and any potential settlement discussions, we must also develop a clear picture of GPR's financial profile and ability to satisfy a judgment. Based on our preliminary investigation, the relevant financial data includes the following:
•  GPR, the operating LLC, is estimated to hold approximately $22 million in cash and receivables as of year-end 2024.
•  GPCP, the affiliated hedge fund through which the short position was managed, has estimated assets under management of approximately $185 million. GPCP's general partner is Grizzly Peak Capital GP LLC, whose sole managing member is Tobias Fenchurch.
•  GPR maintains a directors and officers / media-liability insurance policy with Ironclad Surety & Insurance Co. under Policy No. ML-2023-07714. The terms, limits, and coverage scope of this policy are a critical discovery target.
The financial relationship between GPR and GPCP, including any revenue-sharing, management-fee, or profit-allocation arrangements, is a key area of inquiry that will inform both our damages calculations and our assessment of collectability.
III. Written discovery
We plan to serve initial sets of written discovery on all three defendants — GPR, GPCP, and Tobias Fenchurch — no later than June 15, 2024. The written discovery is organized into three categories: interrogatories, requests for production of documents, and requests for admissions. The key requests within each category are described below.
A. Interrogatories (to GPR, GPCP, and Fenchurch)
We will serve an initial set of 35 special interrogatories on each defendant, consistent with the limitations set forth in California Code of Civil Procedure section 2030.030. The interrogatories are designed to identify the key individuals and documents involved in the preparation and publication of the three reports, to establish the factual basis (or lack thereof) for GPR's specific allegations, and to trace the timeline of the short-position establishment. The principal interrogatory topics are as follows:
1.  Identification of all persons involved in researching, drafting, editing, fact-checking, and approving each of the three GPR reports, including the specific role played by each person.
2.  The complete factual basis for each specific allegation in each report, including (a) the revenue-fabrication allegation in Report 1, (b) the RNG-manipulation allegation in Report 2, and (c) the Vermilion Holdings related-party allegation in Report 3.
3.  Identification of all sources — whether documentary, testimonial, or otherwise — relied upon in preparing each report, including the identity of any anonymous sources referenced in the reports.
4.  Identification of all communications with third parties concerning RGC, RDGM, or any of the reports' subject matter prior to publication, including any communications with journalists, analysts, regulators, or short-selling colleagues.
5.  A detailed chronology of the establishment and management of the short position in RDGM, including the date on which shares were first borrowed, the dates of all subsequent short sales, the dates and prices of all cover purchases, and the identity of the prime broker(s) and executing broker(s) involved.
6.  Identification of all bank accounts, brokerage accounts, and other financial accounts through which RDGM securities (including shares, options, swaps, and other derivatives) were traded by GPR, GPCP, Fenchurch, or any related entity or person.
7.  A description of all fact-checking, verification, or quality-assurance steps taken before publication of each report, including whether GPR contacted RGC, Pinnacle Audit & Advisory LLP, the Nevada Gaming Control Board, or any other relevant party for comment or confirmation.
8.  A complete description of the financial relationship between GPR and GPCP, including all revenue-sharing arrangements, management-fee structures, performance allocations, carried interest, and any other financial flows between the two entities.
9.  Identification and description of the role of every GPR employee, contractor, or consultant who worked on the RDGM research at any time, including job title, dates of involvement, and specific tasks performed.
10.  Identification and quantification of all revenue generated by GPR or any affiliated entity from the RDGM reports, including subscription revenue, trading profits, performance fees, and any other economic benefit derived from the publication of the reports or the resulting decline in RDGM's stock price.
Additional interrogatories will address topics such as GPR's publication and editorial policies, its history of prior short-selling campaigns, and any prior litigation or regulatory actions involving GPR or its principals.
B. Requests for Production of Documents (to GPR, GPCP, and Fenchurch)
The initial set of requests for production will be comprehensive and will seek the full range of documents necessary to establish our claims. The key document categories are as follows:
1.  All drafts of each of the three GPR reports, including all interim versions, tracked-changes documents, and editorial comments, together with all associated metadata reflecting creation dates, modification dates, and authorship information.
2.  All internal communications — including emails, Meridian Solutions messages, text messages, Signal messages, chat logs, and any other electronic or written communications — relating in any way to RGC, RDGM, or any of the allegations contained in the three reports, from January 1, 2023 through the present. This request encompasses communications among GPR and GPCP personnel as well as communications with any third parties.
3.  All documents reflecting or relating to GPR's research methodology for the RDGM reports, including research plans, source lists, interview notes, data analyses, financial models, and any written or electronic records of the investigative process.
4.  All brokerage statements, trade confirmations, account statements, and other account records for any trading in RDGM securities — including common stock, put options, call options, total return swaps, contracts for difference, and any other derivative instruments — from January 1, 2023 through the present, for all accounts held by or on behalf of GPR, GPCP, Fenchurch, or any related entity or person.
5.  All documents relating to GPR's and GPCP's revenue, expenses, financial condition, and financial performance, including income statements, balance sheets, bank statements, tax returns, and financial projections, for the fiscal years 2022 through the present.
6.  All documents relating to the directors and officers / media-liability insurance policy issued by Ironclad Surety & Insurance Co. under Policy No. ML-2023-07714, including the policy itself, all endorsements, amendments, and riders, all applications and underwriting materials, all premium payment records, and all correspondence between GPR and Ironclad Surety relating to any claims or potential claims arising from the RDGM reports.
7.  All communications with any regulatory body — including the SEC, the Nevada Gaming Control Board, any state gaming commission, and any financial industry self-regulatory organization — concerning RGC, RDGM, or any of the subjects addressed in the three reports.
8.  All documents relating to Vermilion Holdings LLC, including formation documents, operating agreements, ownership records, financial statements, and any communications referencing Vermilion Holdings.
9.  All social media analytics, platform data, and engagement metrics for the @GrizzlyPeakRes account, including impression counts, engagement rates, share/repost data, click-through rates, and follower counts, for the period from January 1, 2024 through March 31, 2024. The @GrizzlyPeakRes account had approximately 142,000 followers at the time of publication and was a primary vector for disseminating the reports' allegations.
10.  All subscriber lists, distribution records, email lists, and mailing records for grizzlypeakresearch.com relating to the dissemination of the RDGM reports, including records of all downloads of or access to each of the three reports.
11.  Personnel files for Tobias Fenchurch and Ava Lin, including compensation records, bonus structures, incentive arrangements, and any performance metrics or evaluation criteria tied to trading profits, report impact, or stock-price movement.
We anticipate that the scope of these requests will generate significant pushback from CTB, and we are prepared to meet and confer on reasonable narrowing where appropriate while maintaining the integrity of our discovery objectives.
C. Requests for Admissions (to GPR, GPCP, and Fenchurch)
Our initial set of requests for admissions is designed to streamline the proof of certain foundational facts and to pin down defendants' positions on key issues early in the discovery process. The principal requests for admissions include the following:
1.  Admit that Pinnacle Audit & Advisory LLP issued clean, unqualified audit opinions for RGC's financial statements for fiscal years 2021, 2022, and 2023.
2.  Admit that the Nevada Gaming Control Board completed an independent audit of RGC's random number generator systems on March 29, 2024, and cleared RGC of any violations.
3.  Admit that GPR, GPCP, or an affiliated entity held a short position of approximately 680,000 shares of RDGM common stock at the time of publication of Report 1 on February 7, 2024.
4.  Admit that GPR, GPCP, or an affiliated entity closed its short position in RDGM by mid-March 2024.
5.  Admit that neither GPR nor any person acting on its behalf contacted the Nevada Gaming Control Board prior to publishing Report 2 on February 14, 2024.
6.  Admit that neither GPR nor any person acting on its behalf contacted Pinnacle Audit & Advisory LLP prior to publishing Report 1 on February 7, 2024.
7.  Admit that neither GPR nor any person acting on its behalf contacted RGC or any of its officers, directors, or authorized representatives for comment prior to publishing any of the three reports.
8.  Admit that GPR, GPCP, or an affiliated entity earned revenue and/or trading profits in connection with the publication of the RDGM reports.
9.  Admit that specific enumerated statements in each report are false. (We will identify and enumerate the key false statements in the formal requests, drawn from each of the three reports, including the claim that RGC fabricated approximately $410 million in FY 2023 revenue, the claim that RGC manipulated its RNG software, and the claim that CEO Marcus J. Calloway had undisclosed dealings with Vermilion Holdings LLC.)
Any denials of these requests will create additional opportunities for proof at trial and will inform the scope of deposition questioning.
IV. Deposition Plan
A. Overview
We plan to take a total of 14 depositions during the discovery phase of this litigation. The depositions will be conducted during the period from July through September 2024, with the objective of completing all fact depositions — or at least all priority depositions — before the expert report exchange deadline of September 9, 2024. This sequencing is critical because Dr. Vostrikova's expert report will incorporate testimony from certain key depositions, particularly those of Tobias Fenchurch and Ava Lin, in her analysis of causation and intent.
The depositions are organized into four categories: (B) priority depositions of the individual defendants and key defendant witnesses; (C) depositions of GPR and GPCP personnel and affiliates; (D) depositions of plaintiff's witnesses, who will require defensive preparation; and (E) depositions of third-party witnesses.
B. Priority Depositions — Defendants
1. Tobias "Toby" Fenchurch — Managing Member of Grizzly Peak Research LLC, sole managing member of Grizzly Peak Capital GP LLC, and individual defendant.
Fenchurch is the central figure in this case. He is the driving force behind GPR's research operations and the person with ultimate decision-making authority over the publication of the three reports. He is also the sole managing member of the general partner of GPCP, the entity through which the short position was managed. His deposition is the most critical in the case.
Key topics for examination include, but are not limited to:
•  The decision to target RGC and the genesis of the RDGM research campaign;
•  Fenchurch's personal involvement in researching, drafting, editing, and approving each of the three reports;
•  His knowledge of the falsity of the reports' allegations or his reckless disregard for their truth;
•  The research methodology employed for each report and his satisfaction with the adequacy of that methodology;
•  The timing and management of the RDGM short position, including when the decision to short RDGM was made, who made it, and whether the short position was established before or after the decision to publish was made;
•  Instructions or directions given to Ava Lin and other GPR personnel regarding the content, tone, and publication schedule of the reports;
•  All communications with Ironclad Surety & Insurance Co. regarding the RDGM reports and any claims or potential claims;
•  The financial relationship and arrangements between GPR and GPCP, including revenue sharing, management fees, and profit allocation;
•  Fenchurch's awareness of the Pinnacle Audit & Advisory clean audit opinions for RGC's FY 2021–2023 financial statements;
•  The specific factual basis for the Vermilion Holdings allegations, including the sources relied upon and any verification steps taken;
•  Prior short-selling campaigns by GPR and their outcomes;
•  GPR's compliance procedures and editorial standards.
Estimated duration: Two full days (14 hours). Given the breadth and complexity of the topics, and Fenchurch's central role, we should not expect to complete his examination in a single day.
2. Ava Lin — Senior Analyst, Grizzly Peak Research LLC; co-author of all three reports.
Lin is the only other individual identified as an author of the three reports. Her testimony is critical to establishing what research was actually conducted, what sources were relied upon, what verification steps were taken (or not taken), and whether she harbored any doubts or reservations about the accuracy of the reports' claims.
Key topics for examination include:
•  Her specific research activities for each of the three reports, including the sources she consulted, the data she analyzed, and the conclusions she reached;
•  What verification or fact-checking steps she took for each report;
•  Whether she was aware of the RDGM short position held by GPCP at the time of publication and, if so, whether that knowledge influenced her work;
•  Any doubts, reservations, or concerns she expressed internally about the accuracy or fairness of the reports' allegations, including any written or oral communications reflecting such concerns;
•  Her communications with Fenchurch about report content, editorial direction, and publication timing;
•  The specific basis for the RNG-manipulation allegations in Report 2, including whether she had any technical expertise in random number generation or gaming software;
•  Whether she or anyone at GPR contacted the Nevada Gaming Control Board before publishing Report 2;
•  Her compensation structure, including any performance metrics tied to trading profits, report impact, or stock-price movement.
Estimated duration: One full day (7 hours).
C. GPR / GPCP Personnel and Affiliates
3. GPR Person Most Qualified ("PMQ") — Deposition notice pursuant to California Code of Civil Procedure section 2025.230.
This deposition will be noticed to GPR with a detailed list of topics for which the entity must designate a witness or witnesses prepared to testify on its behalf. The topics will include:
•  Organizational structure, ownership, and governance of GPR;
•  The relationship between GPR and GPCP, including all contractual, financial, and operational connections;
•  GPR's publication process, including editorial review, fact-checking, and approval workflows;
•  GPR's compliance procedures and any written policies governing research and publication;
•  GPR's revenue model, including subscription revenue, consulting income, and any economic benefit derived from trading activity;
•  GPR's subscriber base, including the number of subscribers, the pricing model, and the demographics of the subscriber audience.
Estimated duration: One full day (7 hours).
4. GPCP Person Most Qualified ("PMQ") — Deposition notice pursuant to California Code of Civil Procedure section 2025.230.
This deposition will address the fund's structure, operations, and trading activity in RDGM securities. Topics will include:
•  GPCP's fund structure, including its limited partnership agreement, investment strategy, and investor base;
•  Trading authority and decision-making regarding the RDGM short position;
•  The complete history of GPCP's RDGM position, including dates and sizes of short sales and cover purchases;
•  Profit and loss calculations on the RDGM trades;
•  The relationship between GPCP's trading activities and GPR's research and publication activities.
Estimated duration: One full day (7 hours).
5–6. GPR Research Analysts / Employees — Up to two additional depositions of supporting staff members whose involvement in the RDGM research is identified through written discovery responses. Topics will include their specific tasks, any fact-checking responsibilities, and any observations regarding the research process or internal discussions about the reports. Estimated duration: One day each (7 hours each).
D. Plaintiff / RGC Witnesses (Preparation Required)
We anticipate that defendants will seek to depose several RGC executives and officers. We must prepare these witnesses for defensive depositions while also considering their potential use as affirmative witnesses at trial. The following individuals are likely targets:
7. Marcus J. Calloway — Chief Executive Officer of RGC.
Calloway will be defendants' primary deposition target, particularly with respect to the Vermilion Holdings allegations in Report 3. We must prepare him thoroughly to testify regarding his relationship (or lack thereof) to Vermilion Holdings LLC, RGC's response to the GPR reports, and the market impact of the publications. Calloway's demeanor and credibility under examination will be critical, and we should schedule multiple preparation sessions beginning in July 2024.
8. Priya Ramaswaran — Chief Financial Officer of RGC.
Ramaswaran will testify regarding RGC's FY 2023 financial results, revenue-recognition practices, and the rebuttal of GPR's revenue-fabrication allegations. She will also address RGC's interaction with Pinnacle Audit & Advisory during the supplemental forensic audit and the costs incurred in that process.
9. Janelle Hu — Vice President, Investor Relations.
Hu is the Company's primary point of contact with the investment community and is well positioned to testify about the stock-price impact of the GPR reports, the volume and nature of investor inquiries received in the wake of the publications, market reaction, and RGC's communications with equity analysts during the crisis period.
10. Derek Olafson — General Counsel of RGC.
Olafson will testify regarding the Company's regulatory response, the coordination of the internal investigation, and the implementation of the litigation hold. Care must be taken to protect privileged communications; we will work closely with Olafson to ensure that privilege boundaries are clearly defined and that he is prepared to assert privilege where appropriate during his deposition.
E. Third-Party Depositions
11. Walter Ng, CPA — Engagement Partner, Pinnacle Audit & Advisory LLP.
Ng's testimony will establish the rigor of Pinnacle's audit methodology, the basis for its clean, unqualified opinions on RGC's FY 2021–2023 financial statements, and the findings of the supplemental forensic audit, which confirmed that GPR's allegation of $410 million in fabricated revenue was unfounded. Ng's deposition will be critical to our falsity showing and will carry substantial weight with the trier of fact. We will coordinate with Pinnacle's counsel to schedule this deposition and to address any confidentiality concerns regarding audit work papers.
12. Simone Arecchi — Lead Contact, Crestline Equity Partners Group Inc.
Arecchi will testify regarding the scope and cost of the crisis-communications engagement ($2.18 million), the public response strategy developed for RGC, and her assessment of the reputational damage caused by the GPR reports. Her testimony will support both our out-of-pocket damages claim and the broader narrative of harm caused by defendants' conduct.
13. Daniel Royce — Claims Adjuster, Ironclad Surety & Insurance Co.
Royce will testify regarding the scope of coverage under GPR's D&O / media-liability policy (Policy No. ML-2023-07714), the claims history under that policy, and Ironclad's coverage position with respect to the claims in this case. This deposition may be deferred depending on the settlement posture of the case and whether insurance coverage becomes a contested issue. We will make a judgment call on timing closer to the deposition period.
14. GPR's Prime Broker / Brokerage Firm Representative — The identity of this witness will be confirmed through document discovery (specifically, through GPR's and GPCP's responses to our interrogatories and document requests regarding brokerage accounts and trading activity). This witness will testify regarding the short-position records, trade execution dates, share-borrowing arrangements, position sizes over time, and the mechanics of the short-position management. This testimony is essential to our damages calculations, particularly the disgorgement claim, and to establishing the timeline of position establishment relative to report publication.
V. Third-Party Subpoenas
In addition to party discovery, we will issue a series of third-party subpoenas to obtain records that are independently maintained by entities outside the litigation. These subpoenas fall into four categories.
A. Brokerage and Trading Records
We will issue subpoenas duces tecum to GPR's and GPCP's prime broker(s) and any executing broker-dealers for all records of trading in RDGM securities — including common stock, put options, call options, total return swaps, contracts for difference, and any other derivative instruments — from January 1, 2023 through the present. These records are critical to establishing the exact dates on which the short position was established, the size of the position over time, the dates and prices at which the position was covered, and the total profit realized by GPR and GPCP on the RDGM trades.
We will need to confirm the identity of GPR's and GPCP's prime broker through written discovery responses before issuing these subpoenas. Once the prime broker is identified, the subpoena will seek all account opening documents, monthly statements, trade confirmations, margin records, share-borrowing records, and any correspondence between the broker and GPR or GPCP regarding the RDGM position. If the prime broker resists compliance, we are prepared to file a motion to compel.
B. Social Media Platform Records
We will issue a subpoena to the operator of the social media platform hosting the @GrizzlyPeakRes account. The subpoena will seek the following categories of records:
•  Account creation and ownership records, including the name, email address, and phone number associated with the account;
•  All posting records and timestamps for posts referencing RGC, RDGM, Redstone, or any of the three report titles, from January 1, 2024 through March 31, 2024;
•  Analytics data for each post relating to the three reports, including impression counts, engagement metrics (likes, reposts, replies, bookmarks), share data, and reach data;
•  All direct messages sent from or received by the @GrizzlyPeakRes account, to the extent available under the platform's policies and applicable law;
•  Follower count data over time, with particular attention to the growth in followers during the February 2024 publication period (the account had approximately 142,000 followers at the time of publication).
These records will help establish the breadth of dissemination of the false allegations and will support our damages analysis by quantifying the audience that was exposed to the reports.
C. Regulatory Records
We will pursue records from relevant regulatory bodies through both subpoenas and public records requests, as appropriate.
Nevada Gaming Control Board. We will issue a subpoena or, if more appropriate under applicable Nevada law, a public records request to the NGCB for all records of any communications from or regarding GPR, Tobias Fenchurch, Ava Lin, or any other GPR principal or employee concerning RGC or RDGM. We note that the NGCB's March 29, 2024 RNG audit clearing RGC is a matter of regulatory record, and we will obtain formal certified copies of the audit findings for use as evidence. These certified records will be powerful evidence of the falsity of Report 2.
SEC Informal Inquiry. The SEC opened an informal inquiry into RGC in March 2024 in response to the GPR reports. That inquiry was closed with no action on August 16, 2024. We will coordinate with Hargrove & Sato LLP, RGC's Nevada regulatory counsel, and RGC's in-house legal team to obtain any relevant correspondence or records from the SEC inquiry. While SEC records may be subject to certain confidentiality restrictions, the closure of the inquiry with no action is itself a significant fact that supports our case.
D. Website and Distribution Records
We will issue a subpoena to the web hosting provider and/or content delivery network for grizzlypeakresearch.com seeking traffic data, download counts, unique visitor data, and server access logs for Report 1, Report 2, and Report 3 during the publication period of February 7 through February 28, 2024. These records will help quantify the dissemination of the reports and will support our damages analysis by documenting the number of individuals who accessed and downloaded each report.
We will also seek subscriber records for grizzlypeakresearch.com through this subpoena, although such records may also be obtainable through party discovery. Redundancy in this area is appropriate given the critical importance of dissemination data to our case.
VI. E-discovery Management
A. E-discovery Vendor Engagement
Given the volume and complexity of the electronically stored information ("ESI") that will be produced and reviewed in this case, we recommend engaging a qualified e-discovery vendor to handle collection, processing, hosting, and review of ESI. The anticipated document universe is substantial: defendants' production alone is estimated to encompass tens of thousands of documents, including electronic communications from multiple platforms (email, Meridian Solutions, Signal, text messages), trading records, financial documents, and research files. When combined with RGC's own documents that may be subject to production in response to defendants' discovery requests, and third-party productions from brokerage firms, the social media platform, and regulatory bodies, the total number of documents ultimately produced in discovery is estimated at approximately 87,000.
The vendor will be responsible for forensic collection of ESI from GPR's email servers, Meridian Solutions workspaces, and any cloud storage platforms used by GPR or GPCP. Forensic collection is important to ensure that metadata is preserved and that no relevant documents are inadvertently altered or destroyed during the collection process. The vendor will also host the review platform that our team will use to review defendants' productions, code documents for relevance and privilege, and prepare documents for use in depositions and at trial.
We will negotiate technology-assisted review ("TAR") protocols with CTB to the extent that the parties can agree on a framework for the use of predictive coding or other machine-learning tools to prioritize document review. TAR can significantly reduce the cost and time associated with reviewing large document sets, but it requires agreement between the parties on validation protocols and quality-control measures.
B. ESI Protocol
We propose to negotiate a formal ESI protocol with CTB that addresses the following topics:
•  Search terms and custodians: Agreement on the key custodians whose files will be searched and the search terms that will be applied to identify responsive documents. On the defendant side, the key custodians will include at a minimum Tobias Fenchurch, Ava Lin, and any additional GPR or GPCP personnel identified through written discovery.
•  Format of production: We will propose that spreadsheets, electronic communications, and other natively electronic documents be produced in native format to preserve metadata and functionality, while other documents (such as PDFs, scanned paper documents, and presentations) be produced in TIFF or PDF format with accompanying load files containing extracted text and metadata fields.
•  Metadata preservation requirements: The protocol will specify the minimum metadata fields that must be preserved and produced, including date created, date modified, author, recipients, subject line, and file path.
•  Privilege log format and timing: The protocol will specify the format for privilege logs (including minimum information required for each entry) and the deadline for production of privilege logs.
•  Clawback provisions: We will include a clawback provision modeled on California Evidence Code section 912 and the principles of Federal Rule of Evidence 502(d), providing that inadvertent production of privileged documents does not constitute a waiver of privilege.
C. Key Custodians (Defendant Side)
Based on our current understanding of GPR's and GPCP's organizational structure, the key custodians whose files should be subject to collection and search are:
•  Tobias Fenchurch — All personal and professional email accounts, Meridian Solutions accounts, mobile phone communications (including text messages and Signal messages), and any cloud storage accounts used for GPR or GPCP business.
•  Ava Lin — GPR email and Meridian Solutions accounts, as well as any personal devices (including personal email, personal mobile phone, and personal cloud storage) used for GPR-related work. If Lin used personal devices for work communications — a common practice at smaller research firms — those devices must be included in the collection scope.
•  GPR research team members — To be identified through written discovery. Any additional analysts, researchers, or support staff who participated in the RDGM research will be added as custodians.
•  GPCP trading desk personnel — To be identified through written discovery. Any personnel involved in executing or managing the RDGM short position will be added as custodians.
We will seek early agreement with CTB on the custodian list to avoid delays in the collection process.
VII. Anticipated discovery Disputes and Motions
A. Expected Areas of Contention
Based on our assessment of CTB's likely defense strategy and the nature of the documents and information we are seeking, we anticipate that three significant discovery disputes will arise, each of which may require motion practice. The anticipated disputes are as follows:
1. Motion to Compel Production of Internal GPR Communications (Meridian Solutions / Messaging Platforms)
We anticipate that defendants will resist production of informal internal communications conducted through Meridian Solutions, Signal, text messages, and other messaging platforms. CTB is likely to argue that these requests are overbroad, unduly burdensome, and seek information that is not reasonably calculated to lead to the discovery of admissible evidence. Defendants may also raise privacy objections or argue that the collection of messaging data from personal devices is disproportionate to the needs of the case.
These communications are, however, critical to our actual-malice proof. Informal messaging platforms are precisely where analysts and principals at firms like GPR are most likely to express candid doubts about the veracity of their allegations, to discuss the relationship between publication timing and trading strategy, and to reveal instructions from management to publish despite known deficiencies or unresolved questions. Any expressions of doubt about the accuracy of the reports' claims, any instructions to proceed with publication notwithstanding known weaknesses in the underlying research, and any discussions linking the publication schedule to the management of the short position will be among the most powerful evidence in the case.
Our strategy is to serve targeted and well-defined requests for production in the first instance, then engage in a thorough meet-and-confer process to narrow any legitimate scope concerns. If defendants continue to withhold or underproduce these categories of communications, we will file a motion to compel supported by a declaration establishing the relevance and importance of the withheld materials.
2. Motion to Compel Brokerage / Trading Records from GPCP
Defendants may assert that GPCP's trading records are proprietary, constitute trade secrets, and that the short position was adequately disclosed through the standard disclaimers included in the GPR reports. CTB may argue that further inquiry into the trading records is unnecessary because GPR publicly acknowledged holding a short position and that the details of the position management are irrelevant to the merits of the claims.
This argument is without merit. The mere disclosure that a short position exists is fundamentally different from disclosure of the details of that position — including the exact timing of its establishment, the buildup in position size over time, the relationship between position changes and publication dates, and the precise profit realized upon liquidation. These details are essential to proving financial motive, establishing the timeline of the scheme, and calculating disgorgement. The exact dates on which the short position was established relative to the preparation and publication of the reports will be among the most probative evidence of actual malice. If the position was built up in the days immediately preceding the first report's publication, that fact alone would powerfully support our claim that the reports were published to drive down the stock price for GPR's financial benefit.
If defendants refuse to produce complete trading records, we will file a motion to compel. We may also need to file a motion to compel compliance with our third-party subpoena to GPR's prime broker if the broker raises objections to production.
3. Motion re Privilege Disputes
We anticipate that defendants will assert attorney-client privilege over certain communications with CTB or with prior counsel. While legitimate privilege claims must be respected, we expect that defendants will attempt to use privilege assertions to shield communications that relate to the substance of the reports rather than to the provision of legal advice. In particular, if GPR sought legal review of the reports prior to publication, the scope of any privilege that attaches to those communications may be limited.
Moreover, if the evidence shows that GPR sought legal advice in furtherance of the tortious publication scheme — for example, consulting counsel about how to structure the reports to minimize legal exposure while knowingly publishing false allegations — the crime-fraud exception may apply to defeat the privilege. We should be prepared to challenge overbroad privilege log entries and, if necessary, to seek an in camera review of disputed documents.
B. Timeline for Motions
The anticipated timeline for discovery motion practice is as follows:
•  Late June 2024: Serve initial written discovery on all defendants.
•  Late July / Early August 2024: Defendant responses to written discovery due (approximately 30 days after service).
•  August 2024: Review responses, identify deficiencies, and initiate meet-and-confer process.
•  August–September 2024: File discovery motions as needed. We anticipate that up to three motions may be required, as described above.
Our goal is to complete all discovery — or at least all priority fact discovery — before the expert report exchange deadline of September 9, 2024. To the extent that discovery disputes threaten this timeline, we will seek expedited briefing schedules and, if necessary, request the court's intervention on a shortened timeline. Fact depositions should be substantially complete by early September to ensure that Dr. Vostrikova has access to the deposition testimony she needs for her expert report.
VIII. Expert discovery
A. Plaintiff's Expert — Dr. Elena Vostrikova
We have retained Dr. Elena Vostrikova of Meridian Forensic Economics LLC to serve as RGC's damages expert. The engagement letter was executed on July 1, 2024. Dr. Vostrikova's office is located at 1901 Avenue of the Stars, Suite 900, Los Angeles, California 90067.
Dr. Vostrikova's scope of work includes the following:
•  Event-study analysis: Dr. Vostrikova will conduct a rigorous event-study analysis of the impact of each of the three GPR reports on RDGM's stock price. The event-study methodology is the standard approach used in securities-related damages cases and involves isolating the stock-price movement attributable to the publication of the reports by controlling for market-wide movements (measured by a broad market index) and sector-specific movements (measured by a gaming-industry index). The result will be an event-study-adjusted damages figure that reflects only the stock-price decline caused by GPR's publications, net of any movements attributable to extraneous market or sector factors.
•  Quantification of trade-libel damages: Based on the event-study results, Dr. Vostrikova will quantify the total damages suffered by RGC and its shareholders as a result of the false publications.
•  Short-sale profit analysis: Dr. Vostrikova will analyze GPR's and GPCP's trading records to calculate the total short-sale profits realized by GPR on the RDGM position, supporting our disgorgement theory under the unfair business practices claim.
•  Out-of-pocket cost assessment: Dr. Vostrikova will assess the reasonableness and causation of RGC's out-of-pocket costs ($4.627 million) and incorporate these costs into her overall damages analysis.
Dr. Vostrikova's expert report is due on September 9, 2024, pursuant to the court's scheduling order. Her analysis will depend critically on data obtained through discovery, including GPR's and GPCP's trading records, RDGM daily trading volume and price data, sector and market index data, analyst reports covering RDGM, and contemporaneous news articles. Additionally, Dr. Vostrikova will need the deposition transcripts of Fenchurch and Lin to incorporate into her report regarding causation and intent. This is a key reason why the Fenchurch and Lin depositions must be prioritized and completed by late August 2024 at the latest.
B. Defendants' Experts
We anticipate that defendants will retain at least one, and possibly two, experts in response to Dr. Vostrikova's report. Specifically:
•  Competing financial economist: Defendants will almost certainly retain their own financial economist to challenge Dr. Vostrikova's damages methodology, her event-study specifications, and her causation conclusions. Common defense strategies include arguing that the stock-price decline was attributable to other market factors, that the market overreacted to accurate information, or that certain of the report's allegations were substantially true and thus did not contribute to compensable damages.
•  Gaming-industry expert: Defendants may also retain a gaming-industry expert to support the substance of the RNG-manipulation allegations in Report 2. Such an expert might opine on alleged vulnerabilities in RGC's RNG systems or on the adequacy of regulatory oversight, although the NGCB's March 29, 2024 clearance of RGC will be a significant obstacle to this defense.
Rebuttal expert reports will follow the initial exchange per the court's scheduling order. We should begin identifying potential rebuttal experts now so that we are prepared to respond quickly once defendants' expert reports are served.
IX. Discovery Budget Estimate
A. Attorney Time
The following estimates reflect the anticipated attorney time commitment for the discovery phase of this litigation, running from June through November 2024. All time will be billed at 85% of standard rates, consistent with the engagement letter.
These estimates assume that all 14 depositions proceed as planned, that three discovery motions are filed and briefed, and that the document review universe remains in the range of approximately 87,000 documents. If the scope of discovery expands significantly — for example, if additional custodians are identified or if third-party productions are larger than anticipated — the hour estimates may need to be revised upward.
B. Costs
The following cost estimates cover the principal categories of discovery-related expenditures:
We note that the total costs advanced by the firm across the entire engagement — inclusive of all phases through trial — are currently estimated at $187,450. The discovery-phase costs outlined above represent the most significant component of that estimate, and we will monitor actual expenditures closely against these projections and report to the client on a regular basis.
X. Discovery Schedule and Key Deadlines
The following table summarizes the critical action items and target dates for the discovery phase:
This schedule is aggressive but achievable, provided that we serve written discovery promptly, maintain pressure on defendants to respond timely and completely, and escalate disputes to the court without delay when meet-and-confer efforts are unsuccessful. The September 9, 2024 expert report deadline is the critical backstop — all priority fact discovery must be completed before that date.
XI. Coordination with Co-Counsel and Advisors
The discovery effort will require close coordination with several outside advisors and service providers who are involved in the case or who have relevant information. The key coordination points are as follows:
Hargrove & Sato LLP (300 South 4th Street, Suite 1800, Las Vegas, NV 89101) — Hargrove & Sato serves as RGC's Nevada gaming regulatory counsel and has handled the Company's regulatory response to the GPR reports, including its interactions with the Nevada Gaming Control Board. To date, RGC has incurred $987,000 in costs through Hargrove & Sato. We will coordinate with Hargrove & Sato regarding the procurement of NGCB records, including certified copies of the March 29, 2024 RNG audit clearance, and regarding any regulatory-response documentation that may need to be produced or used as evidence. We will also coordinate on the timing of any public records requests directed to Nevada gaming authorities.
Pinnacle Audit & Advisory LLP (Walter Ng, CPA, engagement partner) — Pinnacle is RGC's external auditor and conducted the supplemental forensic audit in response to the GPR reports at a cost of $1.46 million. We will coordinate with Pinnacle regarding the preparation of Walter Ng for his deposition, the production of audit work papers and supplemental forensic audit materials (subject to any applicable professional standards governing the release of audit documentation), and the procurement of certified copies of the clean audit opinions issued for FY 2021, FY 2022, and FY 2023. Ng's testimony will be a cornerstone of our falsity showing, and thorough preparation is essential.
Crestline Equity Partners Group Inc. (Simone Arecchi, lead contact) — Ashgrove Equity Partners provided crisis communications and public relations services to RGC in the wake of the GPR reports, at a cost of $2.18 million. We will coordinate with Arecchi regarding documentation of the scope and costs of the engagement, preparation for her potential deposition, and the compilation of any reputational damage assessments or reports prepared by Ashgrove Equity Partners during the engagement.
Dr. Elena Vostrikova / Meridian Forensic Economics LLC — We will maintain ongoing coordination with Dr. Vostrikova to ensure that she receives all discovery materials needed for her expert analysis on a rolling basis as they are produced. In particular, we will prioritize the delivery of trading records, deposition transcripts, and market data as these materials become available.
Atlas National Insurance Group (777 South Figueroa Street, Suite 2800, Los Angeles, CA 90017) — Atlas National is RGC's own D&O insurer. While no claim has been triggered on the plaintiff side, we must ensure compliance with RGC's notice obligations under its D&O policy. We will provide Atlas National with periodic updates on discovery developments as required under the applicable policy provisions.
XII. Recommendations and Next Steps
Based on the analysis set forth in this memorandum, I recommend the following immediate next steps:
1.  Serve initial written discovery no later than June 15, 2024. The initial sets of interrogatories, requests for production of documents, and requests for admissions should be served on all three defendants — GPR, GPCP, and Tobias Fenchurch — within five days of the date of this memorandum. Draft discovery requests are currently in preparation and will be circulated to the team for review by June 12, 2024.
2.  Finalize and issue third-party subpoenas by end of June 2024. Subpoenas duces tecum to GPR's and GPCP's prime broker(s), the social media platform operator, and the web hosting provider for grizzlypeakresearch.com should be issued as soon as practicable after the identity of the prime broker is confirmed through written discovery responses. If the prime broker's identity cannot be confirmed in time, we should issue subpoenas to the most likely candidates based on our current intelligence and refine as needed.
3.  Engage e-discovery vendor and negotiate ESI protocol with CTB. We should engage a qualified e-discovery vendor this week and transmit a proposed ESI protocol to CTB by June 20, 2024. Early agreement on ESI protocols will facilitate the efficient processing and review of what is expected to be a substantial document production.
4.  Schedule priority depositions of Tobias Fenchurch and Ava Lin for late July / August 2024. Deposition notices should be served as soon as practicable, targeting dates in the last week of July or the first two weeks of August 2024. These depositions must be completed well in advance of the September 9, 2024 expert report deadline.
5.  Begin preparing RGC witnesses for defense depositions. We should begin scheduling preparation sessions with Marcus J. Calloway, Priya Ramaswaran, Janelle Hu, and Derek Olafson for their likely depositions by defendants. Calloway in particular will require extensive preparation given his centrality to the Vermilion Holdings allegations.
6.  Ensure all fact discovery supports the September 9, 2024 expert report deadline. All fact discovery should be managed with the expert report deadline as the govern