Sarieddine v. Connected Int'l Inc.

Opinion

8 UNITED STATES DISTRICT COURT

9 FOR THE EASTERN DISTRICT OF CALIFORNIA

11 No. 2:22-cv-02168-DJC-AC MIKE SARIEDDINE, 12 Plaintiff, 13 ORDER v. 14 CONNECTED INTERNATIONAL INC., et 15 al.,

16 Defendants.

17 CONNECTED INTERNATIONAL INC., et

18 al., Counterclaimants, 19 v. 20 MIKE SARIEDDINE, et al., 21 Counterdefendants. 22 23 24 Plaintiff, who sells nicotine-related products under the trademark ALIEN VAPE 25 and other related marks, has brought this trademark infringement action against 26 Defendants, who sell cannabis-related products under ALIENLABS and other related 27 marks, alleging there is a likelihood of confusion between the marks. Plaintiff 28 previously moved for a preliminary injunction to enjoin Defendants’ use of their marks, 1 which the Court denied. Plaintiff appealed that denial, and now seeks a stay in this

2 Court pending the Ninth Circuit’s review, arguing the Ninth Circuit’s decision will

3 provide helpful guidance for the Parties and this Court on central issues in this case

4 and that a short stay will not prejudice either Party. Defendants oppose, arguing a

5 stay will hinder their ability to obtain timely relief on their counterclaims which are

6 unrelated to the appeal and will provide limited guidance to the Parties and Court

7 moving forward.

8 Having considered the Parties’ briefings, the Court finds that imposing a stay

9 would unduly prejudice Defendants while providing Plaintiff and the Court with only

10 minor benefits. Accordingly, the Court will deny the request to stay.

11 BACKGROUND

12 Plaintiff brought this action on December 6, 2022, and subsequently filed a

13 Motion for Preliminary Injunction on July 3, 2024, seeking to enjoin Defendants from

14 “any and all use of the ALIENLABS and AREA 41 trademarks.” (ECF Nos. 1, 43.) The

15 Court denied Plaintiff’s Motion for Preliminary Injunction on September 19, 2024,

16 finding Plaintiff had not established a likelihood of confusion between his and

17 Defendants’ marks under AMF Incorporated v. Sleekcraft Boats (“Sleekcraft”), 599 F.2d

18 341 (9th Cir. 1979). (ECF No. 49.) Plaintiff appealed the Court’s denial of a

19 preliminary injunction on October 21, 2024. (ECF No. 53.) Plaintiff now moves to stay

20 this action pending that appeal. (Mot. Stay (ECF No. 77).) Plaintiff’s Motion to Stay is

21 fully briefed and was submitted on the papers under Local Rule 230(g). (ECF No. 85.)

22 LEGAL STANDARD

23 When a party files an interlocutory appeal from the denial of a motion for a

24 preliminary injunction, a stay is “not a matter of right . . . .” Nken v. Holder, 556 U.S.

25 418, 433 (2009). The decision to grant a stay “is instead ‘an exercise of judicial

26 discretion,’ and ‘[t]he propriety of its issue is dependent upon the circumstances of the

27 particular case.’” Id. “The moving party has the burden of persuading the court that

28 1 the circumstances of the case justify a stay.” Cesca Therapeutics Inc. v. SynGen Inc.,

2 No. 2:14-CV-2085-TLN (KJNx), 2017 WL 1174062, at *2 (E.D. Cal. Mar. 30, 2017).

3 District courts in this circuit follow one of two standards when evaluating a

4 motion to stay pending an interlocutory appeal: the Nken test or the Landis test. The

5 Ninth Circuit has not addressed which test applies for a motion to stay proceedings.

6 See Mobilize the Message LLC v. Bonta, No. 2:21-cv-05115-VAP-JPR(X), 2021 WL

7 6104312, at *1–2 (C.D. Cal. Sept. 17, 2021). However, in Flores v. Bennett, Judge

8 Thurston authored a published opinion considering the applicable test for a stay at

9 the district court level pending interlocutory appeal of a district court order. 675 F.

10 Supp. 3d 1052 (E.D. Cal. 2023). Flores noted a split in authority regarding the

11 applicable test but ultimately concluded, persuasively, that the Landis test is

12 appropriate for a district court considering a stay of proceedings, whereas the Nken

13 test was applicable to stay an injunction or judgment pending appeal. Id. at 1056–57

14 (“Because the district courts that have addressed both tests have consistently applied

15 Nken only to stays of judgments and Landis to stays of proceedings, the Court uses

16 the Nken factors to evaluate Defendants’ request to stay enforcement of the

17 preliminary injunction and relies on the Landis test to evaluate the request to stay the

18 proceedings pending the interlocutory appeal.”); see also Hart v. Charter Commc’ns,

19 Inc., No. SA CV 17-0556-DOC (RAOx), 2019 WL 7940684, at *4 (C.D. Cal. Aug. 1,

20 2019) (although some district courts continue to apply the Nken test, “Landis was

21 decided specifically to guide courts deciding on whether to stay proceedings,” and it

22 is the “growing consensus of the district courts in this Circuit” to apply Landis when

23 evaluating a motion to stay proceedings).

24 Here, Plaintiff seeks a stay of the proceedings, not the effect of a judgment or

25 injunction. Thus, the Court will apply the Landis test, which counsels courts to

26 consider “the competing interests which will be affected by the granting or refusal to

27 grant a stay,” including “the possible damage which may result from the granting of a

28 stay, the hardship or inequity which a party may suffer in being required to go 1 forward, and the orderly course of justice measured in terms of the simplifying or

2 complicating of issues, proof, and questions of law which could be expected to result

3 from a stay.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005).

4 DISCUSSION

5 “[T]he power to stay proceedings is incidental to the power inherent in every

6 court to control the disposition of the causes on its docket with economy of time and

7 effort for itself, for counsel, and for litigants.” Landis v. North American Co., 299 U.S.

8 248, 254 (1936). A court may issue a stay of proceedings in the interests of efficiency

9 and fairness when a “pending resolution of independent proceedings [] bear[s] upon

10 the case.” Leyva v. Certified Grocers of Cal. Ltd., 593 F.2d 857, 863 (9th Cir. 1979). “A

11 stay should not be granted unless it appears likely the other proceedings will be

12 concluded within a reasonable time in relation to the urgency of the claims presented

13 to the court.” Id. at 864. The Landis factors guide the analysis of when a stay is

14 appropriate and include: (1) the possible damage of granting the stay; (2) the

15 hardship or inequity on the movant by not granting the stay; (3) the orderly course of

16 justice. Lockyer, 398 F.3d at 1110.

17 I. Possible Damage from Granting a Stay and Hardship or Inequity

18 from Denial of a Stay

19 Plaintiff argues no damage will result from granting the requested stay because

20 (1) given that the preliminary injunction was denied, Defendants have not been

21 required to discontinue use of their ALIENLABS and AREA 41 marks; (2) this case is

22 still at its infancy and the pleadings have not yet been set; and (3) the stay will be

23 relatively short as the Ninth Circuit has set oral argument for May 16, 2025, which

24 indicates a decision should issue sometime in the summer of 2025. (Mot. Stay at 3–4;

25 Reply Mot. Stay (ECF No. 84) at 1–2.) Plaintiff also argues that, if no stay is imposed, he

26 will be required to engage in possibly unnecessary discovery and motion practice

27 based on this Court’s purportedly incorrect analysis and evaluation of the Sleekcraft

28 factors. (Mot. Stay at 4.) 1 The Court is unpersuaded by Plaintiff’s position. Defendants argue in

2 opposition that a stay will hinder their ability to obtain timely relief for their trademark

3 counterfeiting, copyright infringement, and unfair competition counterclaims, which

4 are unrelated to the issues raised by Plaintiff on appeal. (Opp’n Mot. Stay (ECF No.

5 82) at 8–9.) In particular, Defendants argue they recently amended their

6 counterclaims to assert these claims based on a website, www.alienvapestore.com,

7 discovered during their ongoing investigation of Plaintiff’s claims. (Id. at 3.)

8 Defendants allege the website purports to offer Defendants’ ALIENLABS products for

9 sale without authorization in connection with Plaintiff’s ALIEN VAPE mark. (Id.)

10 Defendants further allege the website was registered on September 28, 2024, just

11 nine days after this Court’s order denying Plaintiff’s request for injunctive relief for

12 failing to demonstrate a likelihood of confusion of the Parties’ marks. (Id. at 3–4.)

13 Defendants argue that, “[o]n information and belief Plaintiff, Alien Vape LLC or

14 someone associated with them created and/or controls the Infringing Website in a

15 bad faith attempt to manufacture evidence of confusion.” (Id. at 4.) Plaintiff does not

16 address or rebut this alleged harm in his Reply. (See Reply at 1–4.) Thus, the Court

17 finds that imposing a stay may risk prolonging any harm Defendants will suffer from

18 the unlawful use of their marks.

19 Further, the Court must weigh the possibility of damage to Defendants against

20 Plaintiff’s claim of undue hardship. See CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir.

21 1962) (“Where it is proposed that a pending proceeding be stayed, the competing

22 interests which will be affected by the granting or refusal to grant a stay must be

23 weighed.”). Given that Defendants have argued they will suffer damage from the

24 imposition of a stay, Plaintiff has a more difficult road to establishing undue hardship.

25 Lockyer, 398 F.3d at 1112 (“’[I]f there is even a fair possibility that the stay . . . will work

26 damage to someone else,’ the party seeking the stay ‘must make out a clear case of

27 hardship or inequity.’” (quoting Landis, 299 U.S. at 255)). The Ninth Circuit has

28 determined that simply “being required to defend a suit does not constitute a ‘clear 1 case of hardship or inequity’ within the meaning of Landis.” Id.; Fed. Trade Comm'n v.

2 Cardiff, No. EDCV 18-2104-DMG (PLAx), 2020 WL 5417125, at *4 (C.D. Cal. Sept. 9,

3 2020). Plaintiff therefore cannot point to the ordinary burdens of the litigation

4 process, which he has undertaken himself, as evidence of hardship or inequity.

5 Conducting “’substantial, unrecoverable, and wasteful’ discovery and pretrial motions

6 practice on matters that could be mooted by a pending appeal may amount to

7 hardship or inequity sufficient to justify a stay.” Finder v. Leprino Foods Co., No. 1:13-

8 CV-02059-AWI-BAM, 2017 WL 1355104, at *4 (E.D. Cal. Jan. 20, 2017) (quoting Pena

9 v. Taylor Farms Pac., Inc., No. 2:13-cv-01282-KJM-AC, 2015 WL 5103157, at *4 (E.D.

10 Cal. Aug. 31, 2015)). However, Plaintiff has not shown that the Ninth Circuit’s ruling

11 could possibly moot any key issues in the underlying litigation. Rather, Plaintiff argues

12 the Ninth Circuit’s ruling will provide helpful guidance the litigation moving forward,

13 as it will clarify the interpretation and determination of the Sleekcraft likelihood of

14 confusion factors that are at the heart of this case. (See Mot. Stay at 4; Reply Mot. Stay

15 at 1.) While this may be true, it is insufficient to outweigh the possible harm facing

16 Defendants from a stay.

17 Thus, the Court finds the first two Landis factors weigh against imposing a stay.

18 II. Orderly Course of Justice

19 The third Landis factor considers the “orderly course of justice measured in

20 terms of the simplifying or complicating of issues, proof, and questions of law which

21 could be expected to result from a stay.” CMAX, 300 F.2d at 268. “[W]hile it is the

22 prerogative of the district court to manage its workload, case management standing

23 alone is not necessarily a sufficient ground to stay proceedings.” Dependable

24 Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007). A

25 Landis stay is inappropriate if another proceeding is “unlikely to decide, or to

26 contribute to the decision of, the factual and legal issues before the district court.”

27 Lockyer, 398 F.3d at 1113. “[C]ourts typically stay cases when the outcome of another

28 proceeding will have preclusive effect on the pending issues.” Flores, 675 F. Supp. 3d 1 at 1063; see also, e.g., Safari Club Int’l v. Bonta, No. 2:22-cv-01395-DAD-JDP, 2023 WL

2 3505373, at *1 (E.D. Cal. May 17, 2023) (granting stay where the interlocutory appeal

3 of the court’s denial of the preliminary injunction “contained all of the substantive

4 legal issues in dispute in this litigation”); Andrade Rico, No. 2:17-cv-1402-KJM-DB,

5 2019 WL 4127206, at *5, 8 (E.D. Cal. Aug. 30, 2019) (staying proceedings pending

6 interlocutory appeal where the merits of plaintiffs’ claims were intertwined with the

7 questions of qualified immunity on appeal because a grant of qualified immunity

8 would result in dismissal of the claims).

9 Here, Plaintiff argues the Court should stay these proceedings as “the Ninth

10 Circuit’s decision on Plaintiff’s interlocutory appeal will facilitate the orderly course of

11 justice by simplifying the issues, proof, and questions of law,” namely application of

12 the Sleekcraft likelihood of confusion factors. (Mot. Stay at 5.) Plaintiff argues that the

13 “Ninth Circuit’s view on these factual and legal issues will be important in informing

14 the case moving forward,” in particular when the Parties reach the summary judgment

15 stage. (Id.) Plaintiff also argues the Ninth Circuit’s decision may motivate the Parties

16 to settle. (Id. at 5–6.)

17 While the Ninth Circuit’s guidance will certainly be helpful, Plaintiff has not

18 demonstrated it will have preclusive effect on the issues in dispute here. As

19 Defendants argue, “Plaintiff’s appeal does not involve a certified or unsettled question

20 of law, but rather addresses denial of injunctive relief in a trademark matter analyzed

21 under the abuse of discretion standard.” (Opp’n Mot. Stay at 10.) This is insufficient to

22 justify a stay here. Cf. Safari Club Int’l, 2023 WL 3505373, at *1 (“Because this case

23 primarily involves questions of law that are pending on appeal, a stay of the

24 proceedings until those questions are resolved will conserve judicial and party

25 resources.”); Wilhoite v. Xiaodi Hou, No.: 3:23-cv-02333-BEN-MSB, 2024 WL 2869986,

26 at *4 (S.D. Cal. June 6, 2024) (staying case under Landis where “where the Ninth

27 Circuit’s decision regarding either the forum selection clause issue or the derivative

28 standing issue would effectively dismiss the case from this Court”). In particular, the 1 | Court is mindful of the Ninth Circuit's repeated admonition in the context of a stay 2 | pending appeal of a preliminary injunction “not to delay trial preparation to await an 3 | interim ruling ona preliminary injunction” because preliminary injunctions often 4 | involve a limited review of the factual record and “may provide little guidance as to 5 | the appropriate disposition on the merits.” California v. Azar, 911 F.3d 558, 583-84 6 | (9th Cir. 2018). 7 Thus, the third Landis factor also weighs counter to granting a stay. 8 CONCLUSION 9 In accordance with the above, it is hereby ORDERED that Plaintiff's Motion to 10 | Stay (ECF No. 77) is DENIED. 11 12 IT 1S SO ORDERED. 13 | Dated: _March 28, 2025 “Daal J CoO □□□□ Hon. Daniel alabretta 14 UNITED STATES DISTRICT JUDGE 15 16 | DJC4 - Sarieddine22cv2168.MotStay 17 18 19 20 21 22 23 24 25 26 27 28