Opponents in ‘Consipio v Private’ Battle Over Control of Private

LAS VEGAS—Despite the fact that en banc oral argument in the three remaining Consioio v Private-­related cases before the Nevada Supreme Court have been scheduled for March 5, the parties have filed dueling motions with the higher court regarding a Jan. 5 Supreme Court Order that granted a permanent stay in one of the cases (No. 58526).

Judge Elizabeth Gonzalez, who is presiding over the underlying district court case, interpreted the Jan. 5 Order to apply to all Consipio-related matters before her and put an immediate halt to any proceedings related to the case. That decision prompted attorneys representing Consipio and its co-litigants to file an Emergency Motion for Clarification with the Supreme Court on Tuesday. Today, the attorney for former Private CEO Berth Milton filed a response to the emergency motion with the same court.

Contained within the flurry of competing motions is a disagreement over who should be in charge of the current day-to-day management of Private.

“Since August 25, 2011, the receiver has been running the business of Private Media Group, Inc. under the direction of the district court,” states the emergency motion. “Since the district court has construed the January 5, 2012 Order Granting Stay to stay the entire underlying action, there is no current mechanism for the district court to oversee and monitor the receiver. It is imperative that this Court either (1) clarify its Order Granting Stay issued in Case No. 58526 to limit its application solely to further proceedings in the district court against petitioner Berth H. Milton, Jr. in Case No. 58526 until this Court decides his writ petition or (2) provide some mechanism by which either this Court or the district court can oversee and monitor the receiver's actions.”

In his response, Milton attorney John S. Delikanakis opposes the motion for expedited clarification on the grounds that the district court’s interpretation of the January 5 permanent stay order was correct, and adds, “Respondents fail to state the most obvious effect of this Court's permanent stay order of January 5, 2012—that control of Private Media Group, Inc. is vested in that company's board of directors, as constituted on January 5, 2012.

“This effect is simply the most logical and correct result of the Court's permanent stay order of January 5, 2012,” continues Delikanakis. “If the proceedings are stayed, the receivership is stayed. If the receivership is stayed, the receiver no longer has any authority to act. If the receiver has no authority to act, the board of directors of the company in place on January 5, 2012, most logically, has the authority to run the affairs [of the] company until this Court rules on the two pending writ applications and the related appeal. Private Media Group, Inc. is a publically traded, going concern and not in the process of winding up its business.”

In other words, Delikanakis is saying that because Gonzalez correctly comprehended the “logical effect” of the Jan. 5 stay, she also “correctly imposed a stay on all proceedings and correctly declined to rule on adequacy of the receiver's first (and untimely) report.” As a result, in his filed response, Delikanakis requests that “the Court deny respondents' motion, reject the two illogical options offered, and issue an order that the permanent stay of January 5, 2012 vests control of Private Media Group, Inc. in the board of directors as constituted on January 5, 2012.”

The January 5 date is significant in that it precedes the January 11, 2012 shareholders meeting, during which a new board of directors comprised of the so-called Consipio slate of nominees was provisionally elected in lieu of the "Milton" slate of nominees, contingent upon the approval of the district court.

In the absence of clarification from the Nevada Supreme Court, it would appear that Judge Gonzalez' interpretation of the Jan. 5 stay Order stands. Considering the receiver has been running Private since August of last year and that oral arguments are a month away, the Supremes may very well decide they need to rule on these dueling motions sooner rather than later, but then again, maybe they won't. It's anybody's guess, and as anyone who has watched this case from the beginning has come to expect, anything is possible.

The Emergency Motion for Expedited Clarification can be accessed here.

The Response to the Emergency Motion for Expedited Clarification can be accessed here.