Regal West Corporation v. Nguyen

• Court: District Court, W.D. Washington
• Decided: July 20, 2023
• Docket: 3:19-cv-05374
• Status: Unknown

Opinion

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5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 9 AT TACOMA 10 11 REGAL WEST CORPORATION, CASE NO. 3:19-cv-05374-TL 12 Plaintiff, ORDER DENYING REGAL’S v. SECOND MOTION TO LIFT STAY 13 MINH KHAI NGUYEN, 14 Defendant. 15

16 17 This matter is before the Court on Plaintiff Regal West Corp.’s (“Regal’s”) motion to lift 18 the stay previously ordered by this Court. Dkt. No. 120. Having considered the relevant record 19 and finding oral argument unnecessary, see LCR 7(b)(4), the Court DENIES Regal’s motion and 20 ORDERS this case stayed until all post-judgment motions and potential appeals of the judgment in 21 the related parallel litigation brought in the U.S. District Court for the Central District of 22 California, Softketeers, Inc. v Regal West Corporation et al., No. C19-519 (“the Softketeers 23 case”), are fully resolved. 24 1 I. BACKGROUND 2 The relevant background and procedural history of this case has been recounted multiple 3 times on the docket, so the Court will not restate all of the facts. See, e.g., Dkt. No. 116 at 2–4. 4 Of particular relevance are that (1) both cases involve the same software, (2) central issues in

5 both cases include the ownership rights and alleged misappropriation of trade secrets related to 6 the software, and (3) this case has been stayed for most of its pendency, primarily by agreement 7 of the Parties. Id. 8 In March 2022, Regal filed an opposed motion to lift the stay and for leave to amend its 9 Complaint to add new parties and additional claims. See Dkt. Nos. 102, 109, 112. Regal’s motion 10 was denied. Dkt. No. 116. At that time, the Court extended the stay “until (i) final judgement is 11 entered in the Softketeers case, (ii) it is lifted by stipulated request of the Parties, or (iii) it is 12 otherwise ordered by this Court.” Id. at 13. The Parties were ordered to file a joint status report 13 after final judgment was entered in the Softketeers case (id.), which they did on March 3, 2023 14 (Dkt. No. 118). There, the Parties disagreed as to whether the Softketeers case was sufficiently

15 resolved, despite the entry of final judgment, to warrant lifting the stay. Id. at 3–4. To resolve 16 this dispute, the Court ordered Regal to file a renewed motion to lift the stay, and for Mr. 17 Nguyen to respond accordingly, to specifically brief “(1) whether the judgment in the California 18 action is final; and (2) how resolution of the California action will (or will not) impact issues in 19 this litigation.”1 Dkt. No. 119. The Parties timely filed their respective briefs as ordered. Dkt. 20 Nos. 120, 122. 21 22

23 1 The Court also ordered Regal to address its intent to renew its motion to add RICO claims that the Court had previously reserved deciding on in its order denying Regal’s prior motion to lift the stay and amend the complaint. 24 Dkt. No. 119; see also Dkt. No. 116 at 13. Regal has elected not to pursue the RICO claims. Dkt. No. 120 at 7. 1 II. DISCUSSION 2 The Court finds that extending the stay until all remaining post-judgment activity in the 3 Softketeers case is fully resolved is warranted. Of paramount concern to this Court is the 4 possibility of conflicting legal or factual determinations of overlapping issues between these two

5 related cases. Regal argues that the stay is no longer necessary because the judgment in the 6 Softketeers case is “final” and would otherwise have “minimal” impact on the issues in this case. 7 Dkt. No. 120 at 4. At the same time, though, 8 Regal acknowledges that, to the extent the court in the [Softketeers case] vacates the final judgment that has been entered and enters a 9 new judgment deeming Regal the exclusive owner of the software at issue in that case, there will be lesser need for Regal to identify 10 with particularity which portions of the source code comprise Regal’s trade secret information. 11 Id. at 6, n.3. This acknowledgment appears to comport with Mr. Nguyen’s claim that “[a] key 12 issue in [this] litigation . . . will be the preclusive effect of the [Softketeers case] Judgment . . . . 13 [and if] Regal’s challenges to that Judgment succeed, that will have been wasted effort.” Dkt. 14 No. 122 at 8. 15 The Court agrees and is justifiably concerned with possible claim as well as issue 16 preclusion here. Claim preclusion “provides that ‘a final judgment forecloses successive 17 litigation of the very same claim, whether or not relitigation of the claim raises the same issues as 18 the earlier suit.’” Mull v. Motion Picture Indus. Health Plan, 41 F.4th 1120, 1139 (9th Cir. 2022) 19 (quoting Taylor v. Sturgell, 553 U.S. 880. 892 (2008)). Issue preclusion “bars successive 20 litigation of an issue of fact or law actually litigated and resolved in a valid court determination 21 essential to the prior judgment, even if the issue recurs in the context of a different claim.” Id. 22 Regal previously represented to the Court that litigation in the Softketeers case “may impact 23 certain issues in this litigation.” Dkt. No. 87 at 2; see also Dkt. No. 91 at 2 (same), Dkt. No. 98 24 1 at 1–2 (same). So long as the possibility exists that any of the overlapping issues resolved by the 2 judgment in the Softketeers case may be reversed, amended, or overturned, this Court cannot 3 proceed with confidence in its inevitable determinations regarding the potentially preclusive 4 effects of that litigation on issues material to the case at bar. And this uncertainty, in turn, raises

5 concerns of judicial economy. 6 The Court is not swayed by Regal’s argument that it would be prejudiced by further delay 7 in this case. Dkt. No. 120 at 7. Primarily, Regal complains of the already lengthy delays and 8 possibility of “further aging and deterioration of witness memories, relevant evidence, and 9 necessary discovery.” Id. The Court reminds Regal that it stipulated to all of the stays in this case 10 through April 2022, including agreeing to stay the case pending entry of judgment in the 11 Softketeers case because it “will impact certain issues in this litigation.” Dkt. No. 98 at 1–2. 12 Further, some relevant memories and evidence appears to have been preserved not only through 13 depositions but also through trial testimony in the Softketeers case. See, e.g., Dkt. No. 121-4. 14 Regal’s position regarding the stay appears to have changed only after the jury in the

15 Softketeers case returned its verdict against Regal. See Dkt. Nos. 102, 109, 112–13. Regal now 16 expresses concern regarding the impact the long stay has had on its ability to present its case 17 (Dkt. No. 120 at 7), but as recently as last year, Regal attempted to add new claims and parties in 18 this case (Dkt. No. 102). The Court noted Regal’s own lack of diligence pursuing its alleged 19 related claims in the order denying Regal’s belated motion to amend its complaint. Dkt. No. 116 20 at 5–9. After being denied leave to amend, Regal then initiated an entirely new case in South 21 Carolina involving similar claims arising out of the same general timeframes as the claims in this 22 23

24 1 case and the Softketeers case.2 See Dkt. No. 122-1; see also Regal West Corp. v. Neeves, No. 2 C22-1653, Dkt. No. 1 (D.S.C. May 25, 2022). The Court is therefore unconvinced by Regal’s 3 claims of prejudice from the delay. 4 III. CONCLUSION

5 Accordingly, the Court ORDERS this case to remain STAYED until post-judgment motions 6 and any potential appeals in the Softketeers case are fully resolved, or until the Parties jointly 7 move to lift the stay with sufficient stipulations regarding any potentially overlapping issues 8 between the two cases, which will become law of the case for purposes of all further proceedings 9 in this Court. 10 Dated this 20th day of July 2023. 11 A 12 Tana Lin United States District Judge 13 14 15 16 17 18 19 20 21 22

23 2 The Court notes that the South Carolina case has also been stayed since October 2022 for similar reasons, see Regal West Corp. v. Neeves, No. C22-1653, Dkt. No. 22 (D.S.C. Oct. 14, 2022), and the stay was recently extended 24 until the exhaustion of appeals in the Softketeers case, id. at Dkt. No. 37 (D.S.C. July 14, 2023).