Diminico v. GEICO Casualty Company

1 UNITED STATES D ISTRICT COURT 2 DISTRICT OF NEVADA 3 * * * 4 Jezabel Diminico, Case No. 2:22-cv-01041-RFB-BNW 5 Plaintiff, Order 6 v. 7 GEICO Casualty Company, 8 Defendant. [9] 10 Before the Court are two motions. First is Defendant Geico’s Motion to Stay Discovery. 11 ECF No. 30. Plaintiff opposed the motion (ECF No. 32), and Defendant replied (ECF No. 34). 12 Next is Defendant’s motion to strike. ECF No. 33. Plaintiff opposed the motion (ECF No. 36), 13 and Defendant replied (ECF No. 37). 14 I. Background 15 This matter arises out of a multi-vehicle automobile accident that occurred in February 16 2016 in Las Vegas, Nevada. Plaintiff, Jezabel Diminico, is the Special Administrator and heir to 17 the Estate of Francisco Vasquez, III (deceased). Plaintiff alleges that Defendant Geico has been 18 derelict in its handling and/or defense of the underlying complaint against Vasquez and, as such, 19 seeks damages for breach of contract and breach of the implied covenant of good faith and fair 20 dealing. 21 II. Motion to Stay Discovery 22 A. 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, 600-01 (C.D. Cal. 1995). A court may, however, stay discovery under 26 Federal Rule of Civil Procedure 26(c). Fed. R. Civ. P. 26(c)(1); Clardy v. Gilmore, 773 F. App’x 27 958, 959 (9th Cir. 2019) (affirming stay of discovery under Rule 26(c)). The standard for staying 1 cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or 2 undue burden or expense,” including forbidding discovery or specifying when it will occur). 3 The Ninth Circuit has not provided a rule or test that district courts must apply to 4 determine if good cause exists to stay discovery. Salazar v. Honest Tea, Inc., No. 5 213CV02318KJMEFB, 2015 WL 6537813 , at *1 (E.D. Cal. Oct. 28, 2015) (“The Ninth Circuit 6 has not provided guidance on evaluating a motion to stay discovery pending resolution of a 7 potentially dispositive motion, other than affirming that district courts may grant such a motion 8 for good cause.”); Mlejnecky v. Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 9 489743, at *6 (E.D. Cal. Feb. 7, 2011) (“The Ninth Circuit Court of Appeals has not announced a 10 clear standard against which to evaluate a request or motion to stay discovery in the face of a 11 pending, potentially dispositive motion.”). 12 The Ninth Circuit has, however, identified one scenario in which a district court may stay 13 discovery and one scenario in which a district court may not stay discovery. The Ninth Circuit has 14 held that a district court may stay discovery when it is convinced that the plaintiff will be unable 15 to state a claim upon which relief can be granted. See Wood v. McEwen, 644 F.2d 797, 801 (9th 16 Cir. 1981) (“A district court may limit discovery ‘for good cause’, Rule 26(c)(4), Federal Rules of 17 Civil Procedure, and may continue to stay discovery when it is convinced that the plaintiff will be 18 unable to state a claim for relief.”); B.R.S. Land Invs. v. United States, 596 F.2d 353 , 356 (9th Cir. 19 1979) (“A district court may properly exercise its discretion to deny discovery where, as here, it is 20 convinced that the plaintiff will be unable to state a claim upon which relief can be granted.”). 21 The Ninth Circuit has also held that a district court may not stay discovery when discovery is 22 needed to litigate the dispositive motion. Alaska Cargo Transp., Inc. v. Alaska R.R. Corp., 5 F.3d 23 378, 383 (9th Cir. 1993) (district court would have abused its discretion in staying discovery if 24 the discovery was necessary to decide the dispositive motion); Kamm v. Cal. City Dev. Co., 509 25 F.2d 205, 210 (9th Cir. 1975) (same). 26 Based on this Ninth Circuit law, district courts in the District of Nevada typically apply a 27 three-part test to determine when discovery may be stayed. See, e.g., Kor Media Group, LLC v. 1 test.” The preliminary peek test asks whether (1) the pending motion is potentially dispositive, (2) 2 the potentially dispositive motion can be decided without additional discovery, and (3) after the 3 court takes a “preliminary peek” at the merits of the potentially dispositive motion, it is 4 “convinced” that the plaintiff cannot state a claim for relief. Id. at 581. If all three questions are 5 answered affirmatively, the Court may stay discovery. Id. The point of the preliminary peek test 6 is to “evaluate the propriety of an order staying or limiting discovery with the goal of 7 accomplishing the objectives of Rule 1.” Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603 (D. 8 Nev. 2011 ). Rule 1 provides that the Federal Rules of Civil Procedure should be construed “to 9 secure the just, speedy, and inexpensive determination of every” case. Fed. R. Civ. P. 1. 10 This Court, however, has found the preliminary peek test to be problematic because it is 11 often inaccurate and inefficient. 12 First, applying the preliminary peek test does not always lead to “accurate results” in 13 which the cases that will ultimately be dismissed are stayed and vice versa. This is so for two 14 primary reasons. In the District of Nevada, a magistrate judge applies the preliminary peek test 15 and decides whether discovery should be stayed; however, a district judge decides the dispositive 16 motion. These judges sometimes have different views on the merits of the dispositive motion, 17 leading to discovery being stayed in some cases it should not have been stayed in and vice versa. 18 See also Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay 19 Discovery When a Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71 , 97 (2012) 20 (identifying same issue). 21 Additionally, the test requires the magistrate judge to take a “preliminary peek” (i.e., a 22 superficial look) at the dispositive motion and be convinced that the plaintiff cannot state a claim 23 for relief before staying discovery. Kor Media, 294 F.R.D. at 583-84 (discovery stay 24 inappropriate when there is only “a possibility” defendant will succeed on its dispositive motion; 25 “[g]enerally, there must be no question in the court’s mind that the dispositive motion will prevail 26 . . . .”). When the preliminary peek test is applied as written, it leads to discovery being stayed in 27 only the simplest, legally baseless cases. For most cases, and certainly complex cases, it is 1 state a claim. This is problematic because complex cases, in which discovery will be extremely 2 costly, are the types of cases where discovery stays may be particularly appropriate while a 3 dispositive motion is pending (to accomplish the goals of Rule 1). Nevertheless, the preliminary 4 peek test, applied as written, leads to most motions to stay discovery being denied. Accordingly, 5 the preliminary peek test is not well-suited for sorting which cases will be dismissed (and thus 6 should have discovery stayed) from those cases that will proceed (and thus should not have 7 discovery stayed). 8 Second, the preliminary peek test is inefficient. As just explained, if the preliminary peek 9 test is applied as written (i.e., the Court must be convinced after a superficial look at the 10 dispositive motion that the plaintiff cannot state a claim), it often fails to accurately sort those 11 cases that will be dismissed (and should have discovery stayed) from those cases that will proceed 12 (and should not have discovery stayed). To improve the accuracy of the preliminary peek test 13 (and allow discovery stays in cases in which this Court believes the dispositive motion will be 14 granted), this Court has in the past engaged in a full analysis of the dispositive motion. This takes 15 considerable time and delays providing the parties with a decision on the motion to stay 16 discovery. It is also an inefficient use of judicial resources because both the magistrate judge and 17 the district judge fully analyze the same dispositive motion. 18 And, even after all this effort, the magistrate judge and district judge may still have 19 different views on the merits of the dispositive motion. See also Kevin J. Lynch, When Staying 20 Discovery Stays Justice: Analyzing Motions to Stay Discovery When a Motion to Dismiss Is 21 Pending, 47 Wake Forest L. Rev. 71 , 101 (2012) (noting that having two different judges decide 22 the dispositive motion and the motion to stay discovery introduces burden and error into the 23 preliminary peek test). In short, doing a full analysis of the dispositive motion may improve the 24 accuracy of the preliminary peek test but it takes significant time, duplicates effort, delays 25 providing the parties a decision on whether discovery is stayed, and may still lead to discovery 26 being inappropriate stayed or allowed to proceed. 27 This Court believes a better analytical framework exists for determining when motions to 1 discovery when a dispositive motion is pending if (1) the dispositive motion can be decided 2 without further discovery; and (2) good cause exists to stay discovery. See Alaska Cargo Transp., [3] 5 F.3d at 383 (district court would have abused its discretion in staying discovery if the discovery 4 was necessary to decide the dispositive motion); Kamm, 509 F.2d at 210 (same); Fed. R. Civ. P. 5 26(c)(1) (the Court “may, for good cause, issue an order to protect a party or person from 6 annoyance, embarrassment, oppression, or undue burden or expense,” including forbidding 7 discovery or specifying when it will occur). “The burden is upon the party seeking the order to 8 ‘show good cause’ by demonstrating harm or prejudice that will result from the discovery.” 9 Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). As the Court will discuss in more 10 detail below, good cause may be established using the preliminary peek test, but it may also be 11 established by other factors, not related to the merits of the dispositive motion. 12 The Ninth Circuit has held that good cause to stay discovery may exist when the movant 13 can convince the Court that plaintiff cannot state a claim. See Wood, 644 F.2d at 801 (district 14 court may stay discovery when it is convinced that plaintiff will be unable to state a claim); B.R.S. 15 Land Invs., 596 F.2d at 356 (same). These cases remain valid authority, and litigants may still 16 move for a discovery stay under the preliminary peek test. However, as previously discussed, this 17 will only result in discovery stays in the simplest, legally baseless cases. 18 That said, good cause may exist based on other factors unrelated to the merits of the 19 dispositive motion. In many cases, the movant seeks a stay of discovery to prevent “undue burden 20 or expense.” See Fed. R. Civ. P. 26(c)(1). Accordingly, the movant must establish what undue 21 burden or expense will result from discovery proceeding when a dispositive motion is pending. 22 Movants are encouraged to be specific about the realistically anticipated costs of discovery (based 23 on factors such as the complexity of the claim(s) at issue, the number of claims asserted, the 24 number of parties involved in the litigation, the number of witnesses including experts, the 25 volume of documents at issue, etc.). 26 Non-movants opposing a stay of discovery should discuss their position on these same 27 factors. Additionally, though parties opposing a motion to stay discovery carry no burden to show 1 a discovery stay would be harmful (e.g., the case is old and evidence is getting stale, a witness is 2 sick and may die before discovery begins, the public has an interest in the speedy resolution of 3 the issues presented, the claimant’s resources and ability to wait for a judgment, etc.). 4 Ultimately, guided by Rule 1 of the Federal Rules of Civil Procedure, the Court is trying 5 to determine “whether it is more just to speed the parties along in discovery and other 6 proceedings while a dispositive motion is pending, or whether it is more just to delay or limit 7 discovery and other proceedings to accomplish the inexpensive determination of the case.” 8 Tradebay, 278 F.R.D. at 603 . 9 B. Analysis 10 As explained above, this Court looks at the following two factors to determine whether a 11 stay is appropriate: (1) whether the dispositive motion can be decided without further discovery; 12 and (2) whether good cause exists to stay discovery. 13 Here, the pending motion (whether construed as a motion to dismiss or a motion for 14 summary judgment) is potentially dispositive. It does not appear that additional discovery is 15 needed before the court can resolve the pending motion. The most compelling fact supporting this 16 proposition is that Plaintiff never requested the ability to pursue additional discovery (not before 17 filing her opposition to the motion to dismiss or during the opposition itself). 18 Next, this Court turns to good cause. The Court reviewed the parties’ briefs on the motion 19 to stay discovery and took a preliminary peek at Defendant’s dispositive motion. Having 20 conducted this preliminary peek, the Court is not convinced that Plaintiff will be unable to 21 proceed with the claims Defendant seeks to dismiss. (As discussed above, it is virtually 22 impossible for the Court to be convinced that defendants will succeed on their motions based on a 23 preliminary peek.) The Court will not, however, provide an in-depth analysis of its evaluation of 24 the motions to dismiss. 25 The district judge will decide the dispositive motion and may have a different view of the merits of the underlying motion. Thus, this court’s “preliminary peek” at the merits of the [26] underlying motion is not intended to prejudge its outcome. Rather, this court’s role is to 27 evaluate the propriety of an order staying or limiting discovery . . . . 1 Tradebay, 278 F.R.D. at 603 . 2 However, the Court finds that Defendant has met the good cause requirement by 3 demonstrating harm or prejudice will result if discovery proceeds now. Defendant alleges, among 4 other things, that the discovery sought will be expensive and burdensome. It explains that the 5 discovery sought will delve into claims-handling for this case and for other, unrelated cases. 6 Plaintiff does not contest this allegation (but does contest the notion that the discovery sought is 7 confidential). 8 Conversely, Plaintiff will not suffer any harm if discovery is stayed. Although Plaintiff 9 carries no burden to show harm or prejudice if discovery is stayed, he has not discussed at any 10 length why a discovery stay would be harmful (e.g., the case is old and evidence is getting stale, a 11 witness is sick and may die before discovery begins, the public has an interest in the speedy 12 resolution of the issues presented, the claimant’s resources and ability to wait for a judgment, 13 etc.). 14 Ultimately, consistent with Rule 1, this Court finds it would be more just to delay 15 discovery to accomplish the inexpensive determination of the case. 16 III. Motion to Strike 17 Defendant seeks to strike Exhibit 7 to Plaintiff’s opposition to Defendant’s 18 motion to stay discovery pursuant to Fed. R. Civ. P. 12(f) and 32(a) and Fed. R. Evid. 901. It 19 states that the excerpts of the deposition testimony contained in that exhibit should not be 20 considered for several reasons (e.g., that the excerpts are incomplete). 21 As a preliminary matter, the Court notes that Rule 12(f) applies to pleadings—not to 22 motions to stay discovery. Similarly, it is not clear whether Rule 32(a) applies in the context of a 23 motion to stay discovery, and Defendant has not provided any points and authorities on this issue. 24 The same goes for Fed. R. Evid. 901. [27] 1 Nevertheless, this request is, by all measures, moot. The Court granted the motion to stay 2 discovery despite the information contained in that exhibit (that is, the analysis does not turn on 3 whether the discovery sought is confidential or not).1 4 IV. Conclusion 5 IT IS THEREFORE ORDERED that Defendant’s motion to stay discovery (ECF No. 6 30) is GRANTED. 7 IT IS FURTHER ORDERED that the parties are to file a joint, proposed discovery plan 8 and scheduling order within 14-days after Defendant’s motion to dismiss is decided. 9 IT IS FURTHER ORDERED that Defendant’s motion to strike is DENIED as moot. 10 IT IS FURTHER ORDERED that the hearing set for November 21, 2022 is 11 VACATED. [12] 13 DATED: November 16, 2022 [14] BRENDA WEKSLER 15 UNITED STATES MAGISTRATE JUDGE [26] 1 The Court is not taking a position on whether the discovery that may be sought in this case is confidential [27] or not. Should the confidentiality of certain discovery become an issue in this case, Defendant is free to file an appropriate motion for a protective order or to seal certain information.