BLOOM v. Zuffa, LLC

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 * * * 4 Everett Bloom, et al., Case No. 2:22-cv-412-RFB-BNW 5 Plaintiff, ORDER 6 v. 7 Zuffa, LLC. Et al., 8 Defendant. — 9 — 10 Before the Court is Defendants Endeavor Streaming and Endeavor Group Holdings’ 11 Motion to Stay Discovery. ECF No. 79. Plaintiffs filed a response in opposition (ECF No. 84) to 12 which Defendant replied (ECF No. 90). 13 I. Background 14 This case arises from allegations that Defendant Zuffa violated the Video Privacy 15 Protection Act (“VPPA”), the California Constitution, and related California statutes by 16 disclosing Plaintiffs’ Facebook IDs and the URLs of video pages they accessed on the UFC Fight 17 Pass website to Meta Platforms, Inc. Plaintiffs added Defendants Endeavor Streaming and Group 18 Holding (Endeavor Defendants) in their First Amended Complaint. 19 The Endeavor Defendants move to stay discovery pending the resolution of their Motion 20 to Dismiss. Defendants argue (1) their Motion to Dismiss is dispositive, (2) the Motion to 21 Dismiss can be decided without additional discovery, and (3) good cause exists for a stay. As to 22 good cause they point to the following: (1) they will suffer undue burden and expense absent a 23 stay, (2) courts in this district favor the stay of discovery where jurisdictional issues have been 24 raised, (3) they are likely to prevail on their Motion to Dismiss, and (4) Plaintiffs will not be 25 prejudiced by a stay. 1 — 26 — — 27 — — 1 — 1 As to the first point, Plaintiffs do not contest that the Endeavor Defendants’ Motion to 2 Dismiss is dispositive. With regard to whether the Motion to Dismiss can be decided without 3 additional discovery, they take the position that the allegations in the First Amended Complaint 4 suffice to establish personal jurisdiction, but that jurisdictional discovery may be needed in the 5 event the Court disagrees. (ECF No. 84 at 5, 10). Lastly, they argue there is no good cause 6 because: (1) the Endeavor Defendants will not be subject to undue burden or expense, (2) a 7 jurisdictional challenge does not automatically entitle parties to a stay of discovery, (3) the 8 Endeavor Defendants will not prevail in their Motion to Dismiss, and (4) Plaintiffs will be 9 prejudiced by a stay of discovery. 10 Defendant’s reply relies on many of the same arguments contained in its moving papers. 11 II. Legal Standard 12 The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of 13 discovery because a potentially dispositive motion is pending. Skellerup Indus. Ltd. v. City of 14 L.A., 163 F.R.D. 598, 600-01 (C.D. Cal. 1995). 15 A court may, however, stay discovery under Federal Rule of Civil Procedure 26(c). Fed. R. 16 Civ. P. 26(c)(1); Clardy v. Gilmore, 773 F. App’x 958 , 959 (9th Cir. 2019) (affirming stay of 17 discovery under Rule 26(c)). The standard for staying discovery under Rule 26(c) is good cause. 18 Fed. R. Civ. P. 26(c)(1) (the court “may, for good cause, issue an order to protect a party or 19 person from annoyance, embarrassment, oppression, or undue burden or expense,” including 20 forbidding discovery or specifying when it will occur). 21 The Ninth Circuit has not provided a rule or test that district courts must apply to determine if 22 good cause exists to stay discovery. Salazar v. Honest Tea, Inc., No. 2:13-CV-02318-KJM-EFB, — 23 — 2015 WL 6537813 , at *1 (E.D. Cal. Oct. 28, 2015) (“The Ninth Circuit has not provided guidance 24 on evaluating a motion to stay discovery pending resolution of a potentially dispositive motion, 25 other than affirming that district courts may grant such a motion for good cause.”); Mlejnecky v. 26 Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 489743 , at *6 (E.D. Cal. Feb. 7, 27 2011) (“The Ninth Circuit Court of Appeals has not announced a clear standard against which to 1 evaluate a request or motion to stay discovery in the face of a pending, potentially dispositive 2 motion.”). 3 The Ninth Circuit has, however, identified one scenario in which a district court may stay 4 discovery and one scenario in which a district court may not stay discovery. The Ninth Circuit has 5 held that a district court may stay discovery when it is convinced that the plaintiff will be unable 6 to state a claim upon which relief can be granted. See Wood v. McEwen, 644 F.2d 797, 801 (9th 7 Cir. 1981) (“A district court may limit discovery ‘for good cause’, Rule 26(c)(4), Federal Rules of 8 Civil Procedure, and may continue to stay discovery when it is convinced that the plaintiff will be 9 unable to state a claim for relief.”); B.R.S. Land Invs. v. United States, 596 F.2d 353 , 356 (9th Cir. 10 1979) (“A district court may properly exercise its discretion to deny discovery where, as here, it is 11 convinced that the plaintiff will be unable to state a claim upon which relief can be granted.”).2 12 The Ninth Circuit has also held that a district court may not stay discovery when discovery is 13 needed to litigate the dispositive motion. Alaska Cargo Transp., Inc. v. Alaska R.R. Corp., 5 F.3d 14 378, 383 (9th Cir. 1993) (district court would have abused its discretion in staying discovery if 15 the discovery was necessary to decide the dispositive motion); Kamm v. Cal. City Dev. Co., 509 16 F.2d 205, 210 (9th Cir. 1975) (same). 17 Based on this Ninth Circuit law, district courts in the District of Nevada typically apply a 18 three-part test to determine when discovery may be stayed.3 See, e.g., Kor Media Group, LLC v. 19 Green, 294 F.R.D. 579 (D. Nev. 2013). This Court will refer to this test as the “preliminary peek 20 test.” The preliminary peek test asks whether (1) the pending motion is potentially dispositive, (2) 21 the potentially dispositive motion can be decided without additional discovery, and (3) after the 22 court takes a “preliminary peek” at the merits of the potentially dispositive motion, it is 23 “convinced” that the plaintiff cannot state a claim for relief. Id. at 581 . If all three questions are 24 answered affirmatively, the Court may stay discovery. Id. The point of the preliminary peek test — 25 — 26 2 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) (affirming stay of 27 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. Gilmore, 773 F. App’x 958 , 959 (9th Cir. 2019) 1 is to “evaluate the propriety of an order staying or limiting discovery with the goal of 2 accomplishing the objectives of Rule 1.” Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603 (D. 3 Nev. 2011 ). Rule 1 provides that the Federal Rules of Civil Procedure should be construed “to 4 secure the just, speedy, and inexpensive determination of every” case. Fed. R. Civ. P. 1. 5 This Court, however, has found the preliminary peek test to be problematic because it is often 6 inaccurate and inefficient. 7 First, applying the preliminary peek test does not always lead to “accurate results” in which 8 the cases that will ultimately be dismissed are stayed and vice versa. This is so for two primary 9 reasons. In the District of Nevada, a magistrate judge applies the preliminary peek test and 10 decides whether discovery should be stayed; however, a district judge decides the dispositive 11 motion. These judges sometimes have different views on the merits of the dispositive motion, 12 leading to discovery being stayed in some cases it should not have been stayed in and vice versa. 13 See also Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay 14 Discovery When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71 , 97 (2012) 15 (identifying same issue). Additionally, the test requires the magistrate judge to take a 16 “preliminary peek” (i.e., a superficial look) at the dispositive motion and be convinced that the 17 plaintiff cannot state a claim for relief before staying discovery. Kor Media, 294 F.R.D. at 583 -84 18 (discovery stay inappropriate when there is only “a possibility” defendant will succeed on its 19 dispositive motion; “[g]enerally, there must be no question in the court’s mind that the dispositive 20 motion will prevail . . . .”). When the preliminary peek test is applied as written, it leads to 21 discovery being stayed in only the simplest, legally baseless cases. For most cases, and certainly 22 complex cases, it is impossible for the Court to do a “preliminary peek” and be convinced that the 23 plaintiff cannot state a claim. This is problematic because complex cases, in which discovery will 24 be extremely costly, are the types of cases where discovery stays may be particularly appropriate 25 while a dispositive motion is pending (to accomplish the goals of Rule 1). Nevertheless, the 26 preliminary peek test, applied as written, leads to most motions to stay discovery being denied. 27 Accordingly, the preliminary peek test is not well-suited for sorting which cases will be dismissed 1 (and thus should have discovery stayed) from those cases that will proceed (and thus should not 2 have discovery stayed). 3 Second, the preliminary peek test is inefficient. As just explained, if the preliminary peek test 4 is applied as written (i.e., the Court must be convinced after a superficial look at the dispositive 5 motion that the plaintiff cannot state a claim), it often fails to accurately sort those cases that will 6 be dismissed (and should have discovery stayed) from those cases that will proceed (and should 7 not have discovery stayed). To improve the accuracy of the preliminary peek test (and allow 8 discovery stays in cases in which this Court believes the dispositive motion will be granted), this 9 Court has in the past engaged in a full analysis of the dispositive motion. This takes considerable 10 time and delays providing the parties with a decision on the motion to stay discovery.4 It is also 11 an inefficient use of judicial resources because both the magistrate judge and the district judge 12 fully analyze the same dispositive motion. And, even after all this effort, the magistrate judge and 13 district judge may still have different views on the merits of the dispositive motion. See also 14 Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay Discovery 15 When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71 , 101 (2012) (noting that 16 having two different judges decide the dispositive motion and the motion to stay discovery 17 introduces burden and error into the preliminary peek test). In short, doing a full analysis of the 18 dispositive motion may improve the accuracy of the preliminary peek test but it takes significant 19 time, duplicates effort, delays providing the parties a decision on whether discovery is stayed, and 20 may still lead to discovery being inappropriate stayed or allowed to proceed. 21 This Court believes a better analytical framework exists for determining when motions to stay 22 should be granted. As the Court previously discussed, the Court may grant motions to stay 23 discovery when a dispositive motion is pending if (1) the dispositive motion can be decided 24 without further discovery; and (2) good cause exists to stay discovery. See Alaska Cargo Transp., — 25 — 5 F.3d at 383 (district court would have abused its discretion in staying discovery if 26 the discovery was necessary to decide the dispositive motion); Kamm, 509 F.2d at 210 (same); 27 Fed. R. Civ. P. 26(c)(1) (the Court “may, for good cause, issue an order to protect a party or 1 person from annoyance, embarrassment, oppression, or undue burden or expense,” including 2 forbidding discovery or specifying when it will occur). “The burden is upon the party seeking the 3 order to ‘show good cause’ by demonstrating harm or prejudice that will result from the 4 discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). Good cause may be 5 established using the preliminary peek test, but it may also be established by other factors, not 6 related to the merits of the dispositive motion. 7 III. Analysis — 8 — A. The dispositive motion to dismiss can be decided without additional discovery 9 Plaintiffs do not take the position that discovery is currently needed for the Court to determine 10 their Motion to Dismiss. Instead, they argue that the allegations in their First Amended Complaint 11 suffice to establish personal jurisdiction. ECF No. 84 at 5. While they do state that additional 12 discovery may be required if the Court does not agree with them, they are not asserting a need to 13 supplement the record before the court decides that motion. Thus, at this stage, it does not appear 14 that either party is arguing that additional discovery is needed to determine the pending Motion to 15 Dismiss. 16 B. Good cause 17 1. Burdens and cost to the Endeavor Defendants 18 While Plaintiffs question the assertions made by the Endeavor Defendants as to the burdens 19 and costs associated with continued discovery, the Court is persuaded by the Endeavor 20 Defendants’ arguments to the contrary. Defendants have been very specific in their motion (and 21 reply) to explain the reasons for their position. The Court adopts those representations as its 22 rationale for finding that Defendants’ will be subject to significant burdens absent a stay. This is 23 especially so given that the Court’s jurisdiction is being challenged. 24 2. Jurisdictional challenges can favor a stay of discovery 25 The Court agrees with Plaintiffs that a jurisdictional challenge does not automatically 26 translate into a stay of discovery. Nevertheless, it is true that courts in this District have found that 27 a motion challenging personal jurisdiction strongly favors a stay of discovery until the question of 1 jurisdiction is resolved. Kabo Tool Co. v. Porauto Indus. Co., 2013 WL 5947138 , at *2 (D. Nev. 2 Oct.31, 2013); Hologram USA, Inc. v. Pulse Evolution Corp., 2015 WL 1600768 , at *1 (D. Nev. 3 Apr. 8, 2015); Int’l Markets Live, Inc. v. Profit Connect, 2019 WL 8161569 , at *1 (D. Nev. May 4 20, 2019); AMC Fabrication Inc. v. KRD Trucking West, Inc., 2012 WL 4846152 , *4 (D. Nev. 5 Oct. 10, 2012). 6 3. Likelihood that the Endeavor Defendants will prevail in their Motion to Dismiss 7 For the reasons discussed above, the Court will not engage in the likelihood of success on 8 the Motion to Dismiss. 9 4. Plaintiffs will not be prejudiced by a stay. 10 First, the Court notes that Plaintiffs have no burden to show that they will be prejudiced. 11 Nevertheless, the Court is not convinced by Plaintiffs’ arguments that they will suffer prejudice 12 should discovery be stayed. Even assuming Zuffa has destroyed documents, it is still not clear to 13 the Court how staying discovery as to the Endeavor Defendants would prejudice Plaintiffs. 14 Moreover, to the extent Plaintiffs are concerned that a stay of discovery will facilitate the 15 destruction of documents by the Endeavor Defendants due to the passage of time, the Endeavor 16 Defendants have represented that a litigation hold is in place. 17 IV. Conclusion 18 The Court finds the pending dispositive motion can be decided without further discovery. In 19 addition, the Court finds that Defendants have met their burden of showing that good cause exists 20 to stay discovery based on the undue burden they will face absent a stay of discovery and the fact 21 that jurisdictional issues must first be resolved. Should the Court dismiss the First Amended 22 Complaint on jurisdictional grounds with leave to amend, the Court will certainly allow for 23 Plaintiffs to pursue discovery on that issue. 24 IT IS ORDERED that the Endeavor Defendants’ Motion to Stay Discovery (ECF No. 79) is 25 GRANTED. 26 /// 27 /// ] IT IS FURTHER ORDERED that the hearing set for September 26, 2023, is 2 || VACATED. 3 DATED: September 22, 2023 4 Gx Les WORN BRENDA WEKSLER 5 UNITED STATES MAGISTRATE JUDGE — 6 — — 7 — — 8 — — 9 — — 10 — 1] — 12 — — 13 — — 14 — — 15 — — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 —