Securities and Exchange Commission v. SHE Beverage Company, Inc.
2:21-cv-07339
| C.D. Cal. | Apr 28, 2025Background
- The SEC filed a civil enforcement action in September 2021 against SHE Beverage Company and individuals Rose, Shelby, and Dirden, alleging securities fraud and registration violations.
- The complaint alleged defendants raised $15.4 million through a fraudulent offering between 2017–2019.
- The Court granted default judgment against the company and entered final judgments (including disgorgement, penalties, and injunctive relief) against all defendants in January 2024.
- Rose, now facing a parallel criminal indictment, proceeded pro se and filed several motions in March 2025 to set aside judgments and dismiss the case, primarily under Rule 60(b), claiming misconduct, suppression of evidence, and constitutional violations.
- The SEC opposed on procedural (untimeliness, violations of local rules) and substantive grounds (no new arguments/evidence, no merit to fraud allegations).
- The Court held a hearing in April 2025 and ruled on the motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of Rule 60(b) Motion | Rose: Extraordinary circumstances excuse delay | SEC: Motions untimely under Rule 60(c) | Motions untimely; not filed within 1 year |
| Mistake/Excusable Neglect (60(b)(1)) | Caregiving, finances, lack of counsel led to non-response | Prior consent and deliberate acts bar relief | Relief not available for deliberate consent |
| Newly Discovered Evidence (60(b)(2)) | SEC ignored/subverted key business documents | Arguments/evidence previously considered and rejected | No new evidence; relief not warranted |
| Fraud/Misrepresentation (60(b)(3)) | SEC suppressed exonerating financial evidence, expert bias | No clear & convincing fraud evidence; allegations are frivolous | No evidence of fraud or misconduct shown |
| Change in Law (Jarkesy) | SCOTUS’s Jarkesy case voids underlying process | Jarkesy only affects administrative proceedings, not this case | Jarkesy inapplicable; waiver of jury trial/appeal |
Key Cases Cited
- Lal v. California, 610 F.3d 518 (9th Cir. 2010) (Rule 60(b)(6) relief only for extraordinary circumstances)
- Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097 (9th Cir. 2006) (Rule 60(b)(1) does not excuse deliberate acts)
- Casey v. Albertson's Inc., 362 F.3d 1254 (9th Cir. 2004) (Rule 60(b)(3) fraud must be proven by clear and convincing evidence)
- Gonzales v. Crosby, 545 U.S. 524 (2005) (Rule 60(b)(6) is a catch-all, not for reasons covered by other subsections)
- Hazel-Atlas Glass Co. v. Hartford-Empire Co., 332 U.S. 238 (1944) (relief for fraud on the court granted only to prevent grave injustice)