1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 SVB FINANCIAL TRUST, Case No. 24-cv-01321-BLF (VKD)

9 Plaintiff,

ORDER RE AUGUST 11, 2025

10 v. DISCOVERY DISPUTE

11 FEDERAL DEPOSIT INSURANCE Re: Dkt. No. 239

CORPORATION, AS RECEIVER FOR

12 SILICON VALLEY BANK, et al., Defendants. 13 14 Plaintiff SVB Financial Trust (“SVBFT”) and defendant Federal Deposit Insurance 15 Corporation as Receiver (“FDIC-R”) ask the Court to resolve a dispute regarding FDIC-R’s 16 answer to SVBFT’s Interrogatory No. 1. Dkt. No. 239. The Court finds this matter suitable for 17 resolution without oral argument. Civil L.R. 7-1(b). 18 I. BACKGROUND 19 In this action, FDIC-R contends that SVB Financial Group (“SVBFG”) engaged in 20 misconduct that caused Silicon Valley Bank (“SVB”) to incur billions of dollars in losses. See 21 generally Dkt. No. 135, Affirmative Defenses ¶¶ 1-7. SVBFT, as SVBFG’s successor, served an 22 interrogatory seeking the factual bases for FDIC-R’s contention. SVBFT’s Interrogatory No. 1 23 asks: 24 Identify and describe with specificity any calculations and facts that You rely on to support Your contention that SVBFG caused “SVB [to] incur[] 25 damages in an amount . . . which substantially exceeds $1.93 billion,” as alleged in paragraphs 124, 128, and 133 of the Affirmative Defenses in the 26 FDIC-Rs’ Answer. 27 Dkt. No. 239-1 at ECF 5. The paragraphs of FDIC-R’s affirmative defenses to which the 124. SVBFG’s assistance, encouragement, and participation in the 1 breaches of fiduciary duty by SVB’s officers and directors was a 2 substantial factor in causing those breaches, and as a natural and foreseeable consequence of the breaches, as well SVBFG’s assistance, 3 encouragement, and participation in the breaches, SVB incurred damages in an amount to be proven, but which substantially exceeds $1.93 billion. 4 Had SVBFG not assisted, encouraged, and participated in these breaches, those losses would have been avoided. 5 128. Because SVBFG and SVB shared the same directors and the 6 same primary officers, SVBFG had control over and directed the improper 7 conduct of SVB’s directors and officers. SVB’s directors and officers, including those identified above in paragraphs 119 and 120, were acting as 8 authorized agents of SVBFG and for SVBFG’s benefit in negligently and grossly negligently discharging their obligations to SVB in breach of their 9 fiduciary duties to SVB. Accordingly, SVBFG is liable for their negligent and grossly negligent acts and omissions and their fiduciary breaches, 10 which actually and proximately caused damages in an amount to be 11 proven, but which substantially exceeds the $1.93 billion deposit claim of

SVBFG.

12 133. As a direct and proximate result of SVBFG’s breaches, SVB 13 incurred damages in an amount to be proven, but which substantially exceeds the $1.93 billion deposit claim of SVBFG. SVBFG’s conduct was 14 a substantial factor in causing these damages, and had SVBFG not 15 breached its duties to SVB, those losses would have been avoided. 16 Dkt. No. 135, Affirmative Defenses ¶¶ 124, 128, 133. 17 II. DISCUSSION 18 SVBFT argues that FDIC-R’s response to Interrogatory No. 1 is deficient in three respects: 19 (1) FDIC-R improperly relies on its affirmative defenses as pled in the answer instead of 20 answering the interrogatory directly; (2) FDIC-R does not disclose the factual bases for its 21 contention that SVBFG caused SVB’s losses; and (3) FDIC-R fails to describe the salient features 22 of the “but-for world” where SVB had not imprudently purchased certain securities. The Court 23 addresses each argument. 24 First, the Court finds no basis to conclude that FDIC-R has merely referred back to the 25 pleadings in responding to Interrogatory No. 1. While there is some overlap between the text of 26 FDIC-R’s affirmative defenses and its interrogatory answer, the affirmative defenses already 27 include factual allegations regarding the bases for FDIC-R’s causation and damages contentions, 1 well. Moreover, the interrogatory answer discloses facts that are not found in the text of the 2 affirmative defenses, including attachments identifying the specific securities that FDIC-R 3 contends were imprudently purchased and the interest rate hedges that FDIC-R contends were 4 imprudently monetized. 5 Second, SVBFT has not shown that FDIC-R failed to disclose the factual bases for its 6 contention that SVBFG caused SVB to incur damages in excess of $1.93 billion. Interrogatory 7 No. 1 asks FDIC-R to “identify and describe” the “calculations and facts” that FDIC-R relies on 8 for its contention the SVBFG caused SVB’s losses, “as alleged in paragraphs 124, 128, and 133.” 9 These paragraphs, excerpted above, concern FDIC-R’s allegations that SVBFG exercised control 10 over SVB’s officers and directors, and using that control, assisted, encouraged, and participated in 11 those officers’ and directors’ breaches of the fiduciary duties to SVB. In its answer, FDIC-R 12 describes imprudent securities purchases in SVB’s HTM and AFS portfolios, describes SVB’s 13 imprudent monetization of interest rate swaps linked to AFS securities, identifies SVB’s payment 14 of an improper bank-to-parent dividend, identifies documents on which it expects to rely for its 15 damages calculations, and discloses the methodology it anticipates its expert will use to compute 16 the damages caused by these actions. See Dkt. No. 239-1 at ECF 5-11. As noted above, FDIC-R 17 also refers to attachments, Exhibits A and B, to its interrogatory answer that identify [t]he specific 18 securities that were imprudently purchased” and “the specific interest rate swaps and the AFS 19 securities linked to those swaps.” Id. at ECF 9, 11.1 Finally, FDIC-R has explained that the “in 20 excess of $1.93 billion” figure reflects the “combined impact” of the improper actions described in 21 its answer. While SVBFT suggests that FDIC-R’s theory of damages is not supported by the law, 22 and/or that FDIC-R has an obligation to explain how its theory of “unrealized” damages reflects 23 an actual loss, see Dkt. No. 239 at 3, the Court is not persuaded that Interrogatory No. 1 requires 24 such an exposition. Rather, the interrogatory asks FDIC-R to disclose the “facts and calculations” 25 that FDIC-R relies on to support its contention. It is not entirely clear whether FDIC-R still relies 26 on exemplary transactions and documents, or whether, it has now disclosed all such transactions 27 1 and documents. Compare, e.g., Dkt. 239-1 at ECF 7 (“By way of example . . .”), with id. at ECF 9 2 (“The specific securities . . . are identified in Exhibit A hereto.”). So long as FDIC-R fully 3 discloses all factual information on which it relies to support its contention, it need not also 4 respond to SVBFT’s argument questioning the viability of the contention itself. 5 Third, SVBFT argues that FDIC-R should be required to identify the salient features of the 6 “but-for” world that bear on FDIC-R’s damages theory—i.e. what SVB should have done in the 7 circumstances presented had it not engaged in the imprudent transactions or other improper 8 conduct FDIC-R identifies in its answer. Dkt. No. 239 at 4. SVBFT points out the FDIC-R 9 “affirmatively states that a ‘but for world’ will be a measure of damages,” and for this reason, 10 SVBFT argues that FDIC-R should explain what that means. Id. FDIC-R responds that 11 Interrogatory No. 1 does not call for this information, and, in any event, defining the “but-for” 12 world is a matter for expert discovery, not fact discovery. Id. at 6-7. 13 The Court agrees with FDIC-R that Interrogatory No. 1 does not ask FDIC-R to disclose 14 what SVB should have done instead of engaging in the alleged imprudent transactions or how 15 SVB could have avoided the losses FDIC-R claims SVBFG caused SVB to incur. Moreover, the 16 fact that FDIC-R has disclosed a damages theory or methodology in its interrogatory answer does 17 not mean that FDIC-R must also fully disclose its expert’s opinions regarding that damages 18 theory, or anticipate and counter SVBFT’s likely rebuttal. To the extent SVBFT argues that its 19 demand for supplemental information regarding FDIC-R’s “but-for” world necessarily asks FDIC- 20 R to disclose only facts within its possession, the authority on which SVBFT relies is not 21 particularly helpful, as neither Grain Processing2 nor Sony3 comments on the fact/expert 22 distinction. On the other hand, while the line between fact discovery and expert discovery is not 23 always clear, FDIC-R must disclose the factual basis for its contention that SVBFG caused SVB 24 to incur damages. This includes facts, known to FDIC-R, on which its expert will ultimately rely 25 for his or her opinions regarding the nature and amount of damages that FDIC-R contends SVBFG 26 2 Grain Processing Corp. v. American Maize-Products Co., 185 F.3d 1341 (Fed. Cir. 1999). 27 1 caused. See, e.g., MLC Intell. Prop., LLC v. Micron Tech., Inc., No. 14-cv-03657-SI, 2019 WL 2 |} 2863585, at *15 (N.D. Cal. July 2, 2019), affd, 10 F.4th 1358 (Fed. Cir. 2021) (“[W]hile MLC 3 was not required to disclose its expert opinions during fact discovery, MLC was still required to 4 || disclose the factual basis for its reasonable royalty claim.”); Jones v. Travelers Cas. Ins. Co. of 5 || Am., 304 F.R.D. 677, 682 (N.D. Cal. 2015) (observing that “even though ‘expert discovery has not 6 || yet concluded, the experts [are] in effect locked-in to the factual record as of the time fact 7 discovery closed.’’’) (citation omitted); see also Fed. R. Civ. P. 26(a)(1)(A) (requiring disclosure 8 || of aparty’s computation of damages and the evidentiary materials on which the computation is 9 based). 10 If FDIC-R has already disclosed the facts in its possession, custody, or control on which it 11 will rely to support its damages contentions (as alleged in paragraphs 124, 128, and 133), then that 12 || is all Interrogatory No. 1 requires. However, if FDIC-R will rely on facts that it has not yet 13 disclosed to support its contention that SVBFG caused SVB to incur damages, then it must 14 || promptly supplement its interrogatory answer. 15 This order also terminates Dkt. No. 199 in Case No. 23-cv-06543-BLF. a 16 IT IS SO ORDERED. 17 || Dated: August 25, 2025 18

Virgitfa K. DeMarchi 20 United States Magistrate Judge 21 22 23 24 25 26 27 28