Opinion
1:23-cv-01498-KES-CDB
07-22-2024
LPOD, INC., et al., Plaintiffs, v. KINDER MORGAN LIQUIDS TERMINALS LLC., Defendant.
ORDER DENYING PLAINTIFFS' EX PARTE APPLICATION TO STAY DISCOVERY (DOC. 44)
Pending before the Court is the ex parte application of Plaintiffs LPOD, Inc., M&W Properties, LLC, Bryan Porter, and Michael J. Porter (“Plaintiffs”) to stay discovery (Doc. 44) until their pending motion to remand this action has been resolved (Doc. 26). Defendant Kinder Morgan Liquids Terminals LLC (“Defendant”) opposes a stay. (Doc. 45). For the reasons explained herein, Plaintiffs' ex parte application shall be DENIED.
Background
On October 26, 2020, Plaintiffs LPOD, Inc. and Michael J. Porter initiated this action with the filing of a complaint in the Superior Court of the State of California, County of Kern, entitled LPOD, Inc., et al. v. Kinder Morgan Liquids Terminals LLC., Case No. BCV-20-102503 TSC. (Doc. 1 at 2). Plaintiffs filed the operative second amended complaint (“SAC”) on March 15, 2023. Id. at 3. As alleged in the SAC, Defendant discharged 181,349 gallons of hazardous waste onto LPOD's property. (Doc. 1-1 at 38). Plaintiffs raised the following claims against Defendant: (1) intentional misrepresentation, (2) negligent misrepresentation, (3) fraudulent concealment, (4) negligence, and (5) trespass. (Doc. 1-1 at 34, 39-49).
While the action remained pending in state court, on September 22, 2023, Plaintiffs served a notice of deposition on Defendants. (Doc. 1 at 2-3). Defendant asserts the notice of deposition made clear that Plaintiffs are claiming that Defendant's products containing methyl tertiary butyl ether (“MTBE”) “is not ‘Retrograde Material,' but rather ‘Hazardous Waste'” and “it has become evident that this case involves the ‘actual or threatened contamination' of MTBE.” Id. at 5.
On October 20, 2023, Defendant removed the action to this Court pursuant to Section 1503 of the Energy Policy Act. Id. at 2, 6. On October 26, 2023, Plaintiffs filed a motion to remand the action to state court and for attorneys' fees and costs. (Doc. 26). On November 9, 2023, Defendant filed an opposition to the motion to remand, and Plaintiff filed a reply on November 14, 2023. (Docs. 32-33).
Section 1503 of the Energy Policy Act of 2005 provides: “Claims and legal actions filed after the date of enactment of this Act related to allegations involving actual or threatened contamination of [MTBE] may be removed to the appropriate United States district court.” 119 Stat. 594, 1076 (2005) (reprinted in 42 U.S.C. 7545, 2005 Amendments, “Claims Filed After Enactment”).
On June 28, 2024, Counsel for Defendant noticed an in-person deposition for a non-party witness, Charles F. Corcoran, in Binghamton, New York, to occur on July 30, 2024. (Docs. 44-1 at 3, 11; 45 at 4). Counsel for Defendant attests that Mr. Corcoran's deposition date was based on his availability to voluntarily appear for his deposition and travel from the remote location where he lives. (Doc. 45-1 at ¶ 14). Counsel for Defendant further attests, “[o]ne of Plaintiffs' counsel, Ari Moss, was inadvertently left off the service emails of the deposition notices” and his co-counsels appeared to have shown those notices to him. (Docs. 45-1 at ¶ 14; 45-2 at 47-48).
On July 8, 2024, Counsel for Plaintiffs sent a demand letter to Defendants requesting that the deposition of Mr. Corcoran be taken “off calendar.” (Doc. 44-1 at 7). Counsel for Plaintiffs explained that if Defendants refused to reschedule the deposition, they intended “to file an ex parte motion to stay all discovery pending the decision of the Court on the motion to remand.” Id. Between July 9 and July 10, 2024, the parties communicated regarding the noticed deposition but did not agree upon rescheduling (Doc. 45-2 at 50-55) prompting Plaintiffs on July 11, 2024, to file the instant ex parte application to stay discovery. (Doc. 44).
Legal Standard
“[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); Lockyer v. Mirant Corp, 398 F.3d 1098, 1109 (9th Cir. 2005); see, e.g., Wenger v. Monroe, 282 F.3d 1068, 1077 (9th Cir. 2002) (affirming district court's grant of protective order staying discovery pending resolution of the motion to dismiss). Consistent with this, the Federal Rules of Civil Procedure enable a court for “good cause” to “issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed.R.Civ.P. 26(c)(1). The party seeking a protective order has the burden “to ‘show good cause' by demonstrating harm or prejudice that will result from the discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004).
District courts in the Ninth Circuit often apply a two-pronged test to decide whether to stay discovery in the face of a pending, potentially dispositive motion. Mlejnecky v. Olympus Imaging Am., Inc., No. 2:10-cv-02630 JAM KJN, 2011 WL 489743, at *6 (E.D. Cal. Feb. 7, 2011); Seven Springs Ltd. P'ship v. Fox Capital Mgmt. Corp., No. S-07-00142 LKK GGH, 2007 WL 1146607, at *1 (E.D. Cal. 2007). The first prong requires that the pending motion “be potentially dispositive of the entire case, or at least dispositive on the issue at which discovery is aimed.” Mlejnecky, 2011 WL 489743, at *6. Under the first prong, even if the motion is not completely dispositive, courts will stay discovery where “resolution of the motions will impact the number of defendants and legal theories at issue which will in turn impact the scope of discovery.” Pacific Surf Designs, Inc. v. Whitewater West Indus., Inc., 2021 WL 3080061, at *2 (S.D. Cal. July 21, 2021). Accord Penn v. Lucas, No. 1:18-cv-01482-AWI-BAK (PC), 2022 WL 16702913, at *2 (E.D. Cal. Oct. 28, 2022) (granting discovery stay where “Defendants' motion is potentially dispositive of the entire action as to at least two defendants.”). Under the second prong, the court determines “whether the pending, potentially dispositive motion can be decided absent additional discovery.” Mlejnecky, 2011 WL 489743, at *6. If either prong is not met, discovery should proceed. Id.
When deciding whether to issue a stay under the first prong, a court must engage in a “preliminary peek” at the merits of the underlying dispositive motion in the case. Tradebay LLC v. eBay, Inc., 278 F.R.D. 597, 602 (D. Nev. 2011); see Qwest Commc'ns Corp v. Herakles, LLC., No. 2:07-cv-00393-MCE-KJM, 2007 WL 2288299, at *2 (E.D. Cal. 2007). The Court's review is not intended to prejudge the outcome of the motion. Zurich Am. Ins. Co. v. Wm. Bolthouse Farms, Inc., No. 21-cv-00783-NONE-JLT, 2021 WL 4493532, at *5 (E.D. Cal. Oct. 1, 2021) (acknowledging that “taking a ‘preliminary peek' and evaluating a pending dispositive motion puts a magistrate judge in an awkward position,” because the district judge “may have a different view of the merits of the underlying motion”) (citing Tradebay, 278 F.R.D. at 604).
Analysis
Plaintiffs argue that “the pending motion for remand is dispositive and should be resolved before the commencement of discovery.” (Doc. 44 at 6). Cf. id. at 6 (“there is an immediate and clear possibility of a ruling []which may be dispositive of some important aspect of the case”) (citing Azalea Outdoor, LLC v. Columbia Cnty., No. CV 123-049, 2023 U.S. Dist. LEXIS 93828, at *2 (S.D. Ga. May 30, 2023). In opposition, Defendant argues the motion to remand will not dispose of any of Plaintiff's claims and Mr. Corcoran's deposition will need to occur regardless of whether this action is remanded to state court. (Doc. 45 at 7).
Plaintiff's citation to Azalea Outdoor is unavailing because, first, the motion to stay was unopposed, and second, the court stayed the action because the party opposing remand had filed a motion to dismiss.
The Court finds Plaintiffs have failed to meet the first prong for a motion to stay discovery. Although a motion to remand is “dispositive” insofar as a remand disposes of all federal proceedings in a case (Flam v. Flam, 788 F.3d 1043, 1047 (9th Cir. 2015)), the relevant standard here is whether the pending motion is “potentially dispositive of the entire case, or at least dispositive on the issue at which discovery is aimed.” Mlejnecky, 2011 WL 489743, at *6. Plaintiffs' motion to remand is not dispositive of the entire case - it is at most only dispositive as to this Court's jurisdiction. If the motion to remand is granted, the action will simply return to the state court for further proceedings.
While the parties disagree as to the timing of Mr. Corcoran's deposition, both parties acknowledge the necessity of Mr. Corcoran's deposition. (Docs. 44 at 4-5; 45 at 7). Thus, a potential remand to state court does not warrant a complete stay of discovery because any discovery completed in federal court would still be useful in the state court proceedings. See Anoruo v. Valley Health Sys., LLC, No. 2:18-cv-00105-MMD-NJK, 2018 WL 1785866, at *3 (D. Nev. Apr. 13, 2018) (“a motion to remand is not sufficient grounds to grant a stay of discovery.. .discovery will proceed regardless of the outcome of the District Court's remand decision”); Grammer v. Colo. Hosp. Assn Shared Servs. Inc., No. 2:14-cv-01701-RFB-VCF, 2015 WL 3938406, at *2 (D. Nev. June 26, 2015) (holding that a stay of discovery was unwarranted pending resolution of a motion to remand to state court because “[t]his action will either continue in federal court or in state court. Unless the case settles, discovery will proceed regardless of the outcome of the District Court's remand decision”).
The Court finds Plaintiff's broad request to stay all discovery through their ex parte application should be denied. See Oertell v. Six Flags Ent. Corp., No. 2:17-cv-00267-TLN-DB, 2018 WL 489154, at *3 (E.D. Cal. Jan. 19, 2018) (denying a motion to stay when defendants had not met “their burden as to the first prong-to show their pending dispositive motion will dispose of the entire case or be dispositive of all issues at which discovery is aimed.”).
Conclusion and Order
Accordingly, it is HEREBY ORDERED, Plaintiffs' ex parte application for a stay of discovery until the question of remand has been resolved (Doc. 44) is DENIED.
IT IS SO ORDERED.