Turner v. Harvard MedTech of Nevada LLC

Opinion

3 * * *

4 Marcus Turner, Case No. 2:22-cv-01264-JCM-BNW

5 Plaintiffs, ORDER 6 v.

7 Harvard MedTech of Nevada, LLC, et.al.,

8 Defendants.

9 10 Before the Court is Defendants’ motion to stay discovery. ECF No. 58. Plaintiff 11 responded (ECF No. 62), and Defendant BANA replied (ECF No. 63). 12 I. Background 13 Defendants move to stay discovery pending the resolution of its Motion to Dismiss by 14 relying on Fed. R. Civ. P. 1 and 26. Defendants argue that the motion is dispositive, that it can be 15 decided without additional discovery, and that it will be granted as Plaintiff has not alleged, as 16 required by NRS 613.010, that he was induced to move to Nevada. 17 Plaintiff argues the pending Motion to Dismiss simply seeks the dismissal of only one 18 claim and that Defendants have not shown good cause to stay discovery. In addition, Plaintiff 19 argues the pending Motion to Dismiss is barred by Fed.R.Civ.P. 12(g)(2) and, in any event, that 20 he has properly pled the case under NRS 613.010. 21 Defendants’ Reply expands upon its previous arguments. 22 II. Legal Standard 23 The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of 24 discovery because a potentially dispositive motion is pending. Skellerup Indus. Ltd. v. City of 25 L.A., 163 F.R.D. 598, 600-601 (C.D. Cal. 1995). 26 A court may, however, stay discovery under Federal Rule of Civil Procedure 26(c). Fed. R. 27 Civ. P. 26(c)(1); Clardy v. Gilmore, 773 F. App’x 958, 959 (9th Cir. 2019) (affirming stay of 1 Fed. R. Civ. P. 26(c)(1) (the court “may, for good cause, issue an order to protect a party or 2 person from annoyance, embarrassment, oppression, or undue burden or expense,” including 3 forbidding discovery or specifying when it will occur). 4 The Ninth Circuit has not provided a rule or test that district courts must apply to determine if 5 good cause exists to stay discovery. Salazar v. Honest Tea, Inc., No. 2:13-CV-02318-KJM-EFB, 6 2015 WL 6537813, at *1 (E.D. Cal. Oct. 28, 2015) (“The Ninth Circuit has not provided guidance 7 on evaluating a motion to stay discovery pending resolution of a potentially dispositive motion, 8 other than affirming that district courts may grant such a motion for good cause.”); Mlejnecky v. 9 Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 489743, at *6 (E.D. Cal. Feb. 7, 10 2011) (“The Ninth Circuit Court of Appeals has not announced a clear standard against which to 11 evaluate a request or motion to stay discovery in the face of a pending, potentially dispositive 12 motion.”). 13 The Ninth Circuit has, however, identified one scenario in which a district court may stay 14 discovery and one scenario in which a district court may not stay discovery. The Ninth Circuit has 15 held that a district court may stay discovery when it is convinced that the plaintiff will be unable 16 to state a claim upon which relief can be granted. See Wood v. McEwen, 644 F.2d 797, 801 (9th 17 Cir. 1981) (“A district court may limit discovery ‘for good cause’, Rule 26(c)(4), Federal Rules of 18 Civil Procedure, and may continue to stay discovery when it is convinced that the plaintiff will be 19 unable to state a claim for relief.”); B.R.S. Land Invs. v. United States, 596 F.2d 353, 356 (9th Cir. 20 1979) (“A district court may properly exercise its discretion to deny discovery where, as here, it is 21 convinced that the plaintiff will be unable to state a claim upon which relief can be granted.”).1 22 The Ninth Circuit has also held that a district court may not stay discovery when discovery is 23 needed to litigate the dispositive motion. Alaska Cargo Transp., Inc. v. Alaska R.R. Corp., 5 F.3d 24 378, 383 (9th Cir. 1993) (district court would have abused its discretion in staying discovery if 25

26 1 The Court interprets both these Ninth Circuit cases as providing one scenario in which it is appropriate to stay discovery but not the only scenario. See also Jarvis v. Regan, 833 F.2d 149, 155 (9th Cir. 1987) 27 (affirming stay of discovery without discussing whether court was convinced plaintiff could not state a claim before entering stay); Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984) (same); Clardy v. 1 the discovery was necessary to decide the dispositive motion); Kamm v. Cal. City Dev. Co., 509 2 F.2d 205, 210 (9th Cir. 1975) (same). 3 Based on this Ninth Circuit law, district courts in the District of Nevada typically apply a 4 three-part test to determine when discovery may be stayed.2 See, e.g., Kor Media Group, LLC v. 5 Green, 294 F.R.D. 579 (D. Nev. 2013). This Court will refer to this test as the “preliminary peek 6 test.” The preliminary peek test asks whether (1) the pending motion is potentially dispositive, (2) 7 the potentially dispositive motion can be decided without additional discovery, and (3) after the 8 court takes a “preliminary peek” at the merits of the potentially dispositive motion, it is 9 “convinced” that the plaintiff cannot state a claim for relief. Id. at 581. If all three questions are 10 answered affirmatively, the Court may stay discovery. Id. The point of the preliminary peek test 11 is to “evaluate the propriety of an order staying or limiting discovery with the goal of 12 accomplishing the objectives of Rule 1.” Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603 (D. 13 Nev. 2011). Rule 1 provides that the Federal Rules of Civil Procedure should be construed “to 14 secure the just, speedy, and inexpensive determination of every” case. Fed. R. Civ. P. 1. 15 This Court, however, has found the preliminary peek test to be problematic because it is often 16 inaccurate and inefficient. 17 First, applying the preliminary peek test does not always lead to “accurate results” in which 18 the cases that will ultimately be dismissed are stayed and vice versa. This is so for two primary 19 reasons. In the District of Nevada, a magistrate judge applies the preliminary peek test and 20 decides whether discovery should be stayed; however, a district judge decides the dispositive 21 motion. These judges sometimes have different views on the merits of the dispositive motion, 22 leading to discovery being stayed in some cases it should not have been stayed in and vice versa. 23 See also Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay 24 Discovery When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71, 97 (2012) 25 (identifying same issue). Additionally, the test requires the magistrate judge to take a 26 “preliminary peek” (i.e., a superficial look) at the dispositive motion and be convinced that the 27 2 The Court notes that these District of Nevada cases are persuasive authority, and the Court is not bound 1 plaintiff cannot state a claim for relief before staying discovery. Kor Media, 294 F.R.D. at 583-84 2 (discovery stay inappropriate when there is only “a possibility” defendant will succeed on its 3 dispositive motion; “[g]enerally, there must be no question in the court’s mind that the dispositive 4 motion will prevail[.]”). When the preliminary peek test is applied as written, it leads to discovery 5 being stayed in only the simplest, legally baseless cases. For most cases, and certainly complex 6 cases, it is impossible for the Court to do a “preliminary peek” and be convinced that the plaintiff 7 cannot state a claim. This is problematic because complex cases, in which discovery will be 8 extremely costly, are the types of cases where discovery stays may be particularly appropriate 9 while a dispositive motion is pending (to accomplish the goals of Rule 1). Nevertheless, the 10 preliminary peek test, applied as written, leads to most motions to stay discovery being denied. 11 Accordingly, the preliminary peek test is not well-suited for sorting which cases will be dismissed 12 (and thus should have discovery stayed) from those cases that will proceed (and thus should not 13 have discovery stayed). 14 Second, the preliminary peek test is inefficient. As just explained, if the preliminary peek test 15 is applied as written (i.e., the Court must be convinced after a superficial look at the dispositive 16 motion that the plaintiff cannot state a claim), it often fails to accurately sort those cases that will 17 be dismissed (and should have discovery stayed) from those cases that will proceed (and should 18 not have discovery stayed). To improve the accuracy of the preliminary peek test (and allow 19 discovery stays in cases in which this Court believes the dispositive motion will be granted), this 20 Court has in the past engaged in a full analysis of the dispositive motion. This takes considerable 21 time and delays providing the parties with a decision on the motion to stay discovery.3 It is also 22 an inefficient use of judicial resources because both the magistrate judge and the district judge 23 fully analyze the same dispositive motion. And, even after all this effort, the magistrate judge and 24 district judge may still have different views on the merits of the dispositive motion. See also 25 Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay Discovery 26 When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71, 101 (2012) (noting that 27 having two different judges decide the dispositive motion and the motion to stay discovery 1 introduces burden and error into the preliminary peek test). In short, doing a full analysis of the 2 dispositive motion may improve the accuracy of the preliminary peek test but it takes significant 3 time, duplicates effort, delays providing the parties a decision on whether discovery is stayed, and 4 may still lead to discovery being inappropriate stayed or allowed to proceed. 5 This Court believes a better analytical framework exists for determining when motions to stay 6 should be granted. As the Court previously discussed, the Court may grant motions to stay 7 discovery when a dispositive motion is pending if (1) the dispositive motion can be decided 8 without further discovery; and (2) good cause exists to stay discovery. See Alaska Cargo Transp., 9 5 F.3d at 383 (district court would have abused its discretion in staying discovery if 10 the discovery was necessary to decide the dispositive motion); Kamm, 509 F.2d at 210 (same); 11 Fed. R. Civ. P. 26(c)(1) (the Court “may, for good cause, issue an order to protect a party or 12 person from annoyance, embarrassment, oppression, or undue burden or expense,” including 13 forbidding discovery or specifying when it will occur). “The burden is upon the party seeking the 14 order to ‘show good cause’ by demonstrating harm or prejudice that will result from the 15 discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). As the Court will 16 discuss in more detail below, good cause may be established using the preliminary peek test, but 17 it may also be established by other factors, not related to the merits of the dispositive motion. 18 The Ninth Circuit has held that good cause to stay discovery may exist when the movant can 19 convince the Court that plaintiff cannot state a claim. See Wood, 644 F.2d at 801 (district court 20 may stay discovery when it is convinced that plaintiff will be unable to state a claim); B.R.S. Land 21 Invs., 596 F.2d at 356 (same). These cases remain valid authority, and litigants may still move for 22 a discovery stay under the preliminary peek test. However, as previously discussed, this will only 23 result in discovery stays in the simplest, legally baseless cases. 24 That said, good cause may exist based on other factors unrelated to the merits of the 25 dispositive motion. In many cases, the movant seeks a stay of discovery to prevent “undue burden 26 or expense.” See Fed. R. Civ. P. 26(c)(1). Accordingly, the movant must establish what undue 27 burden or expense will result from discovery proceeding when a dispositive motion is pending. 1 on factors such as the complexity of the claim(s) at issue, the number of claims asserted, the 2 number of parties involved in the litigation, the number of witnesses including experts, the 3 volume of documents at issue, etc.). Non-movants opposing a stay of discovery should discuss 4 their position on these same factors. Additionally, though parties opposing a motion to stay 5 discovery carry no burden to show harm or prejudice if discovery is stayed, they are encouraged 6 to discuss any specific reasons why a discovery stay would be harmful (e.g., the case is old and 7 evidence is getting stale, a witness is sick and may die before discovery begins, the public has an 8 interest in the speedy resolution of the issues presented, the claimant’s resources and ability to 9 wait for a judgment, etc.). Ultimately, guided by Rule 1 of the Federal Rules of Civil Procedure, 10 the Court is trying to determine “whether it is more just to speed the parties along in discovery 11 and other proceedings while a dispositive motion is pending, or whether it is more just to delay or 12 limit discovery and other proceedings to accomplish the inexpensive determination of the case.” 13 Tradebay, 278 F.R.D. at 603. 14 III. Analysis 15 First, discovery is not needed to resolve the pending Motion to Dismiss. Whether Plaintiff 16 must allege that he was induced to move to Nevada is a question of law, which does not require 17 additional discovery. 18 Next, the Court evaluates whether good cause exists to stay discovery. First, the Court 19 takes note of Judge Mahan’s order in Latcheran v. Primecare Nevada, Inc., No. 2:11-CV-1590- 20 JCM-PAL, 2012 WL 984075 (D. Nev. Mar. 22, 2012), indicating that the complaint in that case 21 failed as it did not plead facts showing that defendants’ false or deceptive representations induced 22 plaintiff to move to Nevada. Judge Mahan will be the one ultimately deciding Defendants’ Motion 23 to Dismiss. Given this, the Court is persuaded Defendants stand a great chance of having Claim 24 No. 2 dismissed. Moreover, Plaintiff has admitted he did not physically relocate to Nevada. ECF 25 No. 54 at 8. As such, there is additional evidence that Plaintiff will not be able to amend this 26 claim to bring it within NRS 613.010. 27 Nevertheless, the pending Motion to Dismiss is not dispositive of the entire case. Instead, 1 || remaining claims. Thus, it would not be appropriate to stay discovery as to all claims. In addition, 2 || Defendants do not provide any specifics regarding the costs and time that will be incurred by 3 || participating in the discovery process as to this specific claim vis-a-vis the remaining claims. In 4 || this vein, the Court notes the claim at issue overlaps with the claim for breach of contract and 5 || unjust enrichment claims. As a result, the Court does not find good cause to stay discovery. 6 || Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 601 (D. Nev. 2011) (“A showing that discovery 7 || may involve some inconvenience and expense does not suffice to establish good cause...”). 8 || IV. Conclusion 9 IT IS THEREFORE ORDERED that Defendant’s Motion to Stay Discovery (ECF No. 10 |} 58) is DENIED. 11 IT IS FURTHER ORDERED that the hearing scheduled for June 21, 2023 is 12 || VACATED. 13 DATED: May 22, 2023 14 iret Ske BRENDA WEKSLER 15 UNITED STATES MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28