1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 ASIF MEHEDI, et al., Case No. 21-cv-06374-BLF
8 Plaintiffs, ORDER GRANTING MOTION FOR 9 v. CERTIFICATION OF INTERLOCUTORY APPEAL AND 10 VIEW, INC., et al., STAY OF CASE 11 Defendants. [Re: ECF No. 219]
12 13 Before the Court is Defendants’ motion for certification of an interlocutory appeal of the 14 Court’s order granting Plaintiffs’ motion to alter or amend the judgment and for relief from a final 15 judgment. ECF No. 219 (“Mot.”); ECF No. 212 (“Order”). Defendants also move for a stay 16 pending appeal. Plaintiffs oppose the motion. ECF No. 223 (“Opp.”). Defendants filed a reply. 17 ECF No. 226 (“Reply”). The Court finds the motion suitable for submission without oral 18 argument and VACATES the hearing scheduled for December 19, 2024. See Civ. L.R. 7-1(b). 19 For the reasons stated below, the Court GRANTS the motion, CERTIFIES an interlocutory 20 appeal to the Ninth Circuit, and STAYS the case. 21 I. LEGAL STANDARD 22 Generally, the United States Courts of Appeals have jurisdiction over appeals from “final 23 decisions of the district courts.” 28 U.S.C. § 1291. However, a district court may certify an order 24 for interlocutory review where (1) there is a controlling question of law upon which (2) there is a 25 substantial ground for difference of opinion, and (3) the immediate appeal of which will materially 26 advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b); In re Cement Antitrust 27 Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). The purpose of § 1292(b) is to provide “immediate 1 514 U.S. 35, 46 (1995). Section 1292(b) certifications should be “applied sparingly and only in 2 exceptional cases.” United States v. Woodbury, 263 F.2d 784, 788 n.11 (9th Cir. 1959). 3 II. DISCUSSION 4 Defendants request that the Court certify its Order for interlocutory review by the Ninth 5 Circuit under 28 U.S.C. § 1292(b) based on the following question: Whether a lead plaintiff who 6 lacks a viable loss causation theory can still have Article III standing to bring securities fraud 7 claims. 8 A. Controlling Question of Law 9 Defendants argue that Article III standing is a controlling question of law that will 10 determine whether this case should proceed or be dismissed. Mot. at 4–5. Plaintiffs argue that the 11 Article III standing issue is not a pure question of law, but rather the application of settled law to 12 the facts of this case. Opp. at 2–5. Plaintiffs also argue that any question of law is not controlling 13 because Stadium Capital would still have Article III standing to pursue its claim under Section 14 14(a). Id. at 5–6. 15 The Court agrees with Defendants. Whether a plaintiff that cannot plead loss causation 16 might still have Article III standing is a pure question of law that does not depend on a material 17 dispute of fact. Standing is a constitutional gateway issue, and as such it is a question of law. See 18 City of San Juan Capistrano v. California Pub. Utilities Comm’n, 937 F.3d 1278, 1280 (9th Cir. 19 2019). The Court also finds that this issue is controlling. A reversal on appeal would mean that 20 Stadium Capital does not have standing to pursue any of its claims, which this Court already 21 determined would require dismissal of the entire action under Lierboe v. State Farm Mut. Auto. 22 Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003). See ECF No. 200 at 16–19. Therefore, this action 23 would be materially affected by the Ninth Circuit’s resolution of the standing issue. In re Cement 24 Antitrust, 673 F.2d at 1026 (“[A]ll that must be shown in order for a question [of law] to be 25 ‘controlling’ is that resolution of the issue on appeal could materially affect the outcome of 26 litigation in the district court.”). The Court thus finds that the first requirement for § 1292(b) is 27 satisfied. B. Substantial Ground for Difference of Opinion 1 Defendants argue that a substantial ground for difference of opinion exists because other 2 courts have reached different conclusions on whether a plaintiff that fails to allege loss causation 3 has Article III standing and that this Court has issued two different rulings on the issue. Mot. at 6– 4 8. Plaintiffs argue that the controlling law is clear and that other courts reached different 5 outcomes than this Court were presented with different facts. Opp. at 6–8. 6 The Court finds a substantial ground for difference of opinion. “To determine if a 7 ‘substantial ground for difference of opinion’ exists under § 1292(b), courts must examine to what 8 extent the controlling law is unclear.” Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). 9 The Ninth Circuit has not addressed whether a plaintiff that fails to plead loss causation has 10 Article III standing, and this Court clearly struggled in analyzing the question, issuing two orders 11 that reached opposition conclusions. To the extent that Plaintiffs argue that the controlling law is 12 clear, and the Court’s Order granting the motion to alter or amend the judgment merely applied 13 settled law to existing facts, Plaintiffs oversimplify the legal issue. The Court’s analysis relied on 14 cases that stand for the general proposition that the “fairly traceable” element of Article III 15 standing is distinct from a showing of proximate cause, but these authorities did not address the 16 interplay between loss causation and Article III standing. See Order at 7. The Court thus finds 17 that the second requirement for § 1292(b) is satisfied. 18 C. Material Advance of the Ultimate Termination of the Litigation 19 Defendants argue that an interlocutory appeal would materially advance the termination of 20 the litigation because the Article III standing issue could resolve the entire case. Mot. at 8–9. 21 Plaintiffs argue that an interlocutory appeal would not advance the litigation but would instead 22 delay termination of the litigation given the time it will take to resolve the appeal. Opp. at 9. 23 The Court finds that a successful interlocutory appeal would materially advance the 24 termination of the litigation because, as the Court noted above, a successful appeal regarding this 25 constitutional gateway issue would require dismissal of the entire case. Under these 26 circumstances, the Court finds that the third § 1292(b) requirement is satisfied. See Core Optical 27 Techs., LLC v. Juniper Networks Inc., No. 21-CV-02428-VC, 2021 WL 5978761, at *1 (N.D. Cal. 1 Dec. 17, 2021) (noting that the third § 1292(b) requirement is met where a reversal on appeal 2 would likely terminate the litigation). 3 D. Request for a Stay 4 Defendants request that the Court stay this case while Defendants pursue an appeal 5 because a stay would preserve judicial and party resources and that the equities favor a stay. Mot. 6 at 9–10. Plaintiffs argue that Stadium Capital was not responsible for any delay in this case, and 7 any further delay of this case would prejudice Plaintiffs and the putative class. Opp. at 9–10. 8 The Court agrees with Defendants that this case should be stayed pending resolution by the 9 Ninth Circuit.
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 ASIF MEHEDI, et al., Case No. 21-cv-06374-BLF
8 Plaintiffs, ORDER GRANTING MOTION FOR 9 v. CERTIFICATION OF INTERLOCUTORY APPEAL AND 10 VIEW, INC., et al., STAY OF CASE 11 Defendants. [Re: ECF No. 219]
12 13 Before the Court is Defendants’ motion for certification of an interlocutory appeal of the 14 Court’s order granting Plaintiffs’ motion to alter or amend the judgment and for relief from a final 15 judgment. ECF No. 219 (“Mot.”); ECF No. 212 (“Order”). Defendants also move for a stay 16 pending appeal. Plaintiffs oppose the motion. ECF No. 223 (“Opp.”). Defendants filed a reply. 17 ECF No. 226 (“Reply”). The Court finds the motion suitable for submission without oral 18 argument and VACATES the hearing scheduled for December 19, 2024. See Civ. L.R. 7-1(b). 19 For the reasons stated below, the Court GRANTS the motion, CERTIFIES an interlocutory 20 appeal to the Ninth Circuit, and STAYS the case. 21 I. LEGAL STANDARD 22 Generally, the United States Courts of Appeals have jurisdiction over appeals from “final 23 decisions of the district courts.” 28 U.S.C. § 1291. However, a district court may certify an order 24 for interlocutory review where (1) there is a controlling question of law upon which (2) there is a 25 substantial ground for difference of opinion, and (3) the immediate appeal of which will materially 26 advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b); In re Cement Antitrust 27 Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). The purpose of § 1292(b) is to provide “immediate 1 514 U.S. 35, 46 (1995). Section 1292(b) certifications should be “applied sparingly and only in 2 exceptional cases.” United States v. Woodbury, 263 F.2d 784, 788 n.11 (9th Cir. 1959). 3 II. DISCUSSION 4 Defendants request that the Court certify its Order for interlocutory review by the Ninth 5 Circuit under 28 U.S.C. § 1292(b) based on the following question: Whether a lead plaintiff who 6 lacks a viable loss causation theory can still have Article III standing to bring securities fraud 7 claims. 8 A. Controlling Question of Law 9 Defendants argue that Article III standing is a controlling question of law that will 10 determine whether this case should proceed or be dismissed. Mot. at 4–5. Plaintiffs argue that the 11 Article III standing issue is not a pure question of law, but rather the application of settled law to 12 the facts of this case. Opp. at 2–5. Plaintiffs also argue that any question of law is not controlling 13 because Stadium Capital would still have Article III standing to pursue its claim under Section 14 14(a). Id. at 5–6. 15 The Court agrees with Defendants. Whether a plaintiff that cannot plead loss causation 16 might still have Article III standing is a pure question of law that does not depend on a material 17 dispute of fact. Standing is a constitutional gateway issue, and as such it is a question of law. See 18 City of San Juan Capistrano v. California Pub. Utilities Comm’n, 937 F.3d 1278, 1280 (9th Cir. 19 2019). The Court also finds that this issue is controlling. A reversal on appeal would mean that 20 Stadium Capital does not have standing to pursue any of its claims, which this Court already 21 determined would require dismissal of the entire action under Lierboe v. State Farm Mut. Auto. 22 Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003). See ECF No. 200 at 16–19. Therefore, this action 23 would be materially affected by the Ninth Circuit’s resolution of the standing issue. In re Cement 24 Antitrust, 673 F.2d at 1026 (“[A]ll that must be shown in order for a question [of law] to be 25 ‘controlling’ is that resolution of the issue on appeal could materially affect the outcome of 26 litigation in the district court.”). The Court thus finds that the first requirement for § 1292(b) is 27 satisfied. B. Substantial Ground for Difference of Opinion 1 Defendants argue that a substantial ground for difference of opinion exists because other 2 courts have reached different conclusions on whether a plaintiff that fails to allege loss causation 3 has Article III standing and that this Court has issued two different rulings on the issue. Mot. at 6– 4 8. Plaintiffs argue that the controlling law is clear and that other courts reached different 5 outcomes than this Court were presented with different facts. Opp. at 6–8. 6 The Court finds a substantial ground for difference of opinion. “To determine if a 7 ‘substantial ground for difference of opinion’ exists under § 1292(b), courts must examine to what 8 extent the controlling law is unclear.” Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). 9 The Ninth Circuit has not addressed whether a plaintiff that fails to plead loss causation has 10 Article III standing, and this Court clearly struggled in analyzing the question, issuing two orders 11 that reached opposition conclusions. To the extent that Plaintiffs argue that the controlling law is 12 clear, and the Court’s Order granting the motion to alter or amend the judgment merely applied 13 settled law to existing facts, Plaintiffs oversimplify the legal issue. The Court’s analysis relied on 14 cases that stand for the general proposition that the “fairly traceable” element of Article III 15 standing is distinct from a showing of proximate cause, but these authorities did not address the 16 interplay between loss causation and Article III standing. See Order at 7. The Court thus finds 17 that the second requirement for § 1292(b) is satisfied. 18 C. Material Advance of the Ultimate Termination of the Litigation 19 Defendants argue that an interlocutory appeal would materially advance the termination of 20 the litigation because the Article III standing issue could resolve the entire case. Mot. at 8–9. 21 Plaintiffs argue that an interlocutory appeal would not advance the litigation but would instead 22 delay termination of the litigation given the time it will take to resolve the appeal. Opp. at 9. 23 The Court finds that a successful interlocutory appeal would materially advance the 24 termination of the litigation because, as the Court noted above, a successful appeal regarding this 25 constitutional gateway issue would require dismissal of the entire case. Under these 26 circumstances, the Court finds that the third § 1292(b) requirement is satisfied. See Core Optical 27 Techs., LLC v. Juniper Networks Inc., No. 21-CV-02428-VC, 2021 WL 5978761, at *1 (N.D. Cal. 1 Dec. 17, 2021) (noting that the third § 1292(b) requirement is met where a reversal on appeal 2 would likely terminate the litigation). 3 D. Request for a Stay 4 Defendants request that the Court stay this case while Defendants pursue an appeal 5 because a stay would preserve judicial and party resources and that the equities favor a stay. Mot. 6 at 9–10. Plaintiffs argue that Stadium Capital was not responsible for any delay in this case, and 7 any further delay of this case would prejudice Plaintiffs and the putative class. Opp. at 9–10. 8 The Court agrees with Defendants that this case should be stayed pending resolution by the 9 Ninth Circuit. Although the Court acknowledges that a stay would briefly delay the resolution of 10 this case, if the parties were required to continue litigating this case, much of the efficiency and 11 benefit of an interlocutory appeal would be lost. Accordingly, the Court STAYS this case pending 12 a decision by the Ninth Circuit. 13 III. ORDER 14 For the foregoing reasons, IT IS HEREBY ORDERED that: 15 1. Defendants’ motion for certification of interlocutory appeal (ECF No. 219) of the 16 Court’s order granting Plaintiffs’ motion to alter or amend the judgment and for relief from a final 17 judgment is GRANTED. 18 a. The Court certifies the following issue of controlling law, as to which there are 19 substantial grounds for difference of opinion, the immediate appeal of which 20 will materially advance the ultimate determination of the litigation, thus 21 satisfying the statutory requirements of 28 U.S.C. § 1292(b): Whether a lead 22 plaintiff who lacks a viable loss causation theory can still have Article III 23 standing to bring securities fraud claims. 24 b. The Court’s order granting Plaintiff’s motion to alter or amend the judgment 25 and for relief from a final judgment (ECF No. 211) is hereby amended to 26 include this Order. 27 c. Defendants SHALL petition the Ninth Circuit for leave to proceed with the 1 2. Defendants’ request for a stay pending appeal is hereby GRANTED. This case is 2 || hereby STAYED. The parties SHALL file a joint status report within 14 days of the earlier of a 3 || Ninth Circuit decision denying leave to proceed with the interlocutory appeal or a Ninth Circuit 4 || decision ruling on the certified question. 5 6 || Dated: August 8, 2024 ’ BETH LABSON FREEMAN 8 United States District Judge 9 10 11 a 12
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