Azenta, Inc. v. Andrews

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 AZENTA, INC., Case No.: 22-CV-1952 JLS (JLB)

12 Plaintiff, ORDER DENYING JOINT MOTION 13 v. TO STAY PENDING BANKRUPTCY WITHOUT PREJUDICE 14 STEPHANIE ANDREWS, an individual;

LVL TECHNOLOGIES USA, INC., 15 (ECF No. 68) a corporation; and DOES 1 through 10, 16 inclusive, 17 Defendants. 18 STEPHANIE ANDREWS, an individual,

19 Counterclaimant, 20 v. 21

22 AZENTA, INC., Counterdefendant. 23

24 25 Presently before the Court is a Joint Motion to Stay Pending Bankruptcy (“Joint 26 Mot.,” ECF No. 68) filed by Defendant/Counterclaimant Stephanie Andrews and 27 Plaintiff/Counterdefendant Azenta, Inc. (collectively, the “Moving Parties”). For the 28 below reasons, the Court DENIES the Joint Motion WITHOUT PREJUDICE. 1 BACKGROUND 2 This case involves a dispute between the life-sciences company Azenta, Inc. 3 (“Plaintiff” or “Azenta”), Azenta’s former employee Stephanie Andrews (“Andrews”), and 4 Andrews’ new employer LVL Technologies USA, Inc. (“LVL”). See Compl. ¶¶ 1–6, ECF 5 No. 1. Azenta alleges that Andrews, while acting as an agent of LVL, misappropriated 6 Azenta’s trade secrets. Id. Both Andrews and LVL have answered Azenta’s Complaint, 7 see ECF Nos. 9, 12, and Andrews has asserted a counterclaim against Azenta for unpaid 8 compensation, see ECF No. 12 at 29–36. 9 All Parties participated in an Early Neutral Evaluation Conference on March 6, 2023, 10 and a Case Management Conference on March 14, 2023. See ECF Nos. 17, 19. The Parties 11 then began discovery. See generally Docket. On October 18, 2023, LVL indicated that it 12 had filed a Chapter-11 petition in the United States Bankruptcy Court for the Middle 13 District of Florida. See ECF No. 58. Because LVL’s Chapter-11 petition triggered an 14 automatic stay pursuant to 11 U.S.C. § 362, Magistrate Judge Jill L. Burkhardt vacated the 15 case’s schedule as to LVL but left it in place as to Andrews. See ECF No. 59. 16 The Moving Parties now ask the Court to stay this action in its entirety for 180 days. 17 Joint Mot. at 2. The Moving Parties point out that Azenta continues to seek discovery 18 responses and production from LVL, including documents that Azenta contends will help 19 Azenta establish its damages. Id. at 2–3. Specifically, Azenta seeks “records related to 20 Andrews’ sales to Azenta customers on behalf of LVL (both prior to and after leaving 21 Azenta’s employ) and LVL’s profits.” Id. at 3. If those records exist, per the Moving 22 Parties, they are in LVL’s possession. Id. In addition, Azenta contends that it cannot 23 “determine the full scope of Andrews’ alleged misconduct” without conducting a forensic 24 review of LVL’s systems and databases. Id. Because it cannot access important evidence, 25 Azenta argues, the “bankruptcy stay does not just affect Azenta’s case against LVL, but 26 also its case against Andrews.” Id. Proceeding under these circumstances, per the Moving 27 Parties, would waste their and the Court’s resources. See id. 28 / / / 1 LEGAL STANDARD 2 District courts have “broad discretion to stay proceedings.” Clinton v. Jones, 3 520 U.S. 681, 706 (1997). The Court may stay an action pending resolution of independent 4 proceedings where “it is efficient for its own docket and the fairest course for the parties.” 5 Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). When 6 determining whether a stay is appropriate, the Court must consider (1) “the possible 7 damage which may result from the granting of a stay,” (2) “the hardship or inequity which 8 a party may suffer in being required to go forward,” and (3) “the simplifying or 9 complicating of issues, proof, and questions of law which could be expected to result from 10 a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). “A stay should not be 11 granted unless it appears likely the other proceedings will be concluded within a reasonable 12 time in relation to the urgency of the claims presented to the court.” 13 Leyva, 593 F.2d at 864. 14 ANALYSIS 15 The Moving Parties have not persuaded the Court that a stay is justified. First, 16 though the Moving Parties assert that they cannot access documents that may “help Azenta 17 establish its damages,” Joint Mot. at 3, the Joint Motion does not demonstrate that without 18 said documents, Azenta will suffer sufficient hardship or inequity to justify a stay of its 19 case against Andrews. Merely labeling certain document productions as “key” does not 20 make them so, particularly where it appears that Azenta could use alternate means to 21 acquire the information they seek. For example, though Azenta may not be able to access 22 LVL’s records of Andrews’ sales, see id., Azenta could seek additional information 23 regarding said sales from either Andrews or its own customers. Absent a stronger showing 24 of prejudice to Azenta’s ability to proceed against Andrews, the Court is disinclined to 25 grant a stay.1 Cf. United States v. Dos Cabezas Corp., 995 F.2d 1486, 1491 n.3 (9th Cir. 26

27 1 The Parties appear to rely solely on the “hardship” prong of the stay analysis, as they do not argue—and 28 the Court is not convinced—that a stay will “simplify issues, proof, and questions of law.” CMAX, Inc., 1 || 1993) (describing how some courts have refused to extend an automatic bankruptcy stay 2 nonbankrupt defendants absent a showing that the bankrupt defendant is an 3 ||indispensable party); Fed. Deposit Ins. Corp. v. Appraisal Pac., Inc., No. 14-CV-0079-H- 4 ||BLM, 2014 WL 12564365, at *1—2 (S.D. Cal. Sept. 17, 2014) (declining to stay an action 5 || with respect to nonbankrupt parties where it appeared that the case could “proceed against 6 || the [nonbankrupt defendant] without [the bankrupt defendants]’). 7 Second, it is not clear to the Court that it is “likely” that LVL’s bankruptcy 8 || proceedings “will be concluded within a reasonable time in relation to the urgency of the 9 || claims presented to the [CJourt.” See Leyva, 593 F.2d at 864. Though the Moving Parties 10 || ask for a 180-day stay, their request is “subject to the [Moving] Parties’ right to later seek 11 extension of the stay.” Joint Mot. at 4. In truth, the Moving Parties seek a stay “pending 12 || [the] outcome of [LVL’s] recently-filed bankruptcy petition.” Jd. at 2. The Court sees no 13 || reason to believe that LVL will complete its bankruptcy proceeding within 180 □□□□□□ The 14 uncertain, potentially lengthy character of the Moving Parties’ requested stay weighs 15 || against granting the Moving Parties’ request. See Levya, 593 F.2d at 864. 16 CONCLUSION 17 For the foregoing reasons, the Court DENIES the Moving Parties’ Joint Motion to 18 || Stay Pending Bankruptcy (ECF No. 68). The Court’s denial is WITHOUT PREJUDICE 19 || to a renewed motion that cures the above-noted deficiencies. 20 IT IS SO ORDERED. 21 Dated: December 15, 2023 tt 22 ja Janis L. Sammartino United States District Judge 23 24 25 26 2T YO 3g ||° For instance, neither Moving Party has indicated that they have instituted proceedings to lift the automatic bankruptcy stay. See generally Joint Motion.