Lindell et al v. Synthes USA et al

Filing 48

ORDER to STAY Action and to Set Status Conference: (1) STAYS 35 this action until the final determination of the bankruptcy proceeding in the US Bankruptcy Court for ED of CA; (2) DIRECTS Plaintiffs Troy Lindell and Mark Pope to inform the Court of the Bankruptcy Court's decision when it is rendered; (3) VACATES the Scheduling Conference SET for June 25, 2012 at 8:30 a.m. in Dept. 8 (BAM); and 4) SETS a Status Conferene for July 16, 2012 at 9:30 AM in Courtroom 8 (BAM) before Magis trate Judge Barbara A. McAuliffe. Counsel are encouraged to appear at the status conference by telephone by arranging a one-line conference call and adding the Court at [phone]. signed by Magistrate Judge Barbara A. McAuliffe on 5/10/2012. (Herman, H)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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TROY LINDELL AND MARK POPE,
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Plaintiff,
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v.
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SYNTHES, USA., et. al.:
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Defendant.
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____________________________________ )
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CASE NO. 1:11-cv-2053 LJO-BAM

ORDER TO STAY ACTION AND TO SET
STATUS CONFERENCE

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Plaintiffs in this case are Troy Lindell and Mark Pope (“Plaintiffs”), former employees of

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Defendant Synthes, USA (“Synthes”), a major medical device manufacturer. Plaintiffs have sued

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Synthes on behalf of a putative class of current, former, and future Synthes employees for various

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Labor Code violations (“Pope Action”). Synthes has moved for an order staying the Pope Action

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pending the outcome of a bankruptcy proceeding in the related case of In re Mark Randall Pope, case

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no. 1:11-cv-12222 (the “Pope Bankruptcy”), which is currently pending before the Bankruptcy Court

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of this District and Division. Plaintiffs’ filed an opposition to the motion (Doc. 42), to which

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Synthes replied on May 4, 2012 (Doc. 46). The matter was taken under submission without oral

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argument by this Court on May 7, 2012. (Doc. 47). For the reasons that follow, the Court orders

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that Defendant’s Motion to Stay is GRANTED.

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FACTUAL AND PROCEDURAL BACKGROUND

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On December 13, 2011, Plaintiffs filed the proposed class action seeking reimbursement for

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business expenses and unlawfully withheld wages on behalf of a putative class of former, and future

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sales consultants employed in California by Synthes. (Pl’s Compl. at ¶ 1, Doc. 24). According to

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the Complaint, the sales consultants in the proposed class worked overtime hours and traveled

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frequently without proper reimbursement and compensation. (Id. at ¶ 3.) As alleged, Plaintiffs’

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claim Synthes wrongfully denied sales consultants business expense reimbursement in violation of

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California Labor Code § 2802 and took unlawful wage deductions in violation of California Labor

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Code §§ 221, 223, and 300. (Id. at ¶¶ 70–84). Plaintiffs have also pleaded violations of the

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California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq., and seek related civil

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penalties under the California Private Attorneys General Act of 2004 (“PAGA”). (Id. at ¶¶ 91-105.).

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A.

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On June 6, 2010, Synthes commenced and action against Mark Pope in the United States

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District Court for the Eastern District of Pennsylvania for an alleged failure to honor a non-compete

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agreement. (“Synthes Action”). (Doc. 31, Ex. 1). On September 10, 2010, the Pennsylvania Court

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entered an order enjoining Pope from certain solicitation activities and imposing a judgment in favor

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of Synthes for over $156,000.00. (Doc. 31, Ex. 2).

Pertinent Procedural History

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On February 25, 2011, after the Pennsylvania default judgment was entered, Pope sought

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bankruptcy protection in the United States Bankruptcy Court for the Eastern District of California.

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(Pl’s Opp’n. at 5, Worthman Decl. ¶ 3, Ex. 1). On April 26, 2011, the Bankruptcy Trustee

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determined that Pope’s bankruptcy case was no asset case. (Doc. 31, Ex. 4). Pope was granted a

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discharge, and a final decree was entered on June 30, 2011. The Pope Bankruptcy was subsequently

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closed on July 11, 2011. (Id.)

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As seen above, after receiving a discharge of his debts, on December 13, 2011, Pope and

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Lindell commenced the Pope Action against Synthes. (Doc. 1). Several months later, on March 15,

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2012, Pope moved to reopen his bankruptcy proceedings in order to schedule the potential asset

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involved with his stake in the Pope Action. The Bankruptcy Court for the Eastern District of

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California reopened Pope’s case, and again directed the appointment of a Chapter 7 Bankruptcy
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Trustee. (Worthman Decl., Doc. 42, Ex. 2). After the bankruptcy was reopened, Pope amended

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his Schedules to include his claim against Synthes. On April 25, 2012, Synthes moved in the

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Bankruptcy Court for an order to vacate the order reopening the case, which is still pending before

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the Bankruptcy Court. (Worthman Decl. ¶ 3, Ex. 1).

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On May 5, 2012, having found that Pope’s bankruptcy was a no asset case, the Bankruptcy

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Trustee again requested a discharge from any further duties as trustee in the Pope Bankruptcy. Pope

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has until June 2, 2012 to file any objections to the trustee’s determination. If no objections are filed,

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the Bankruptcy Court will enter an order discharging the trustee and closing the case. In re Mark

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Randall Pope (case no. 1:11-cv-12222).

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Synthes now moves for an order staying the underlying Pope Action pending the final
determination of the Pope Bankruptcy.
LEGAL STANDARD

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Federal district courts have the power to stay ongoing proceedings “incidental to the power

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inherent in every court to control the disposition of the causes on its docket with economy of time

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and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).

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Where there is an independent proceeding related to a matter before the trial court, the Court may

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“find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action

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before it, pending resolution of independent proceedings which may bear upon the case.”

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Mediterranean Enters. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983).

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In determining whether a stay is appropriate, the Court is to consider “the possible damage

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which may result from the granting of a stay, the hardship or inequity which a party may suffer in

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being required to go forward, and the orderly course of justice measured in terms of the simplifying

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or complicating of issues, proof, and questions of law which could be expected to result from a stay.”

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Landis, 299 U.S. at 254. A district court’s decision to grant or deny a stay is a matter of discretion.

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See Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007).

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The party seeking a discretionary stay bears the burden of proving that a stay is warranted. See

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Clinton v. Jones, 520 U.S. 681, 708 (1997).

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DISCUSSION

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A.

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Synthes now moves to stay this action pending the final resolution of the Bankruptcy Case.

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In Synthes view, a stay of the Pope Action is necessary because it will determine whether Pope, as

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a potential class representative, has standing to bring a claim against Synthes. Thus, the judgment

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in Pope’s bankruptcy proceeding directly affects the issues and claims in the Pope Action.

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According to Synthes, it should not be forced to litigate this action in the face of uncertainty

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regarding threshold issues with respect to Pope’s standing and a possible bar of Pope’s claims

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against Synthes resulting from his earlier filed bankruptcy.

Summary of the Parties’ Positions

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Plaintiffs argue that this action should not be stayed. According to Plaintiffs’, “standing is

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satisfied if at least one named plaintiff meets the requirements.” Bates v. United Parcel Serv., Inc.,

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511 F.3d 974 (9th Cir. 2007). Lindell is prepared to serve as the class representative in the Pope

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Action and thus any standing issues with respect to Pope are irrelevant. (Pls’. Opp’n at 6).

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B.

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After considering the parties’ arguments, the Court finds that a stay pending the Bankruptcy

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Court’s resolution of In re Mark Randall Pope (case no. 1:11-cv-12222), is the fairest course for the

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parties. At the outset, the Court recognizes that the existence of another proceeding that may have

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a substantial impact on a pending case is a particularly compelling reason to grant a stay. See Leyva

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v. Certified Grocers of California, Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979). This rule applies

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whether the separate proceedings are judicial, administrative, or arbitral in character, and does not

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require that the issues in such proceedings are necessarily controlling of the action before the court.

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See S.E.C. v. Global Materials and Services, Inc., No. SACV 08-0881 DOC (RNBx), 2008 U.S.

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Dist. LEXIS 97243, 2008 WL 4948748, *2 (C.D. Cal. Nov. 17, 2008). Pope’s bankruptcy represents

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a separate judicial proceeding—while not controlling—that will directly affect the case at hand. If

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Pope’s bankruptcy is reopened on a final basis, Pope will not have standing to pursue his claims

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against Synthes. In a Chapter 7 proceeding, only the trustee, and not the debtor, may prosecute a

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lawsuit on behalf of the bankruptcy estate. Griffin v. Allstate Ins. Co, 920 F.Supp. 127, 130 (C.D.

A Stay is Appropriate

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Cal. 1996). The existence of this proceeding and its potential to alter the course of the Pope Action

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weighs in favor of granting the stay.

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The duration of the requested stay also strongly weighs in favor of granting the stay. The

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Supreme Court in Landis recognized that a stay is unlawful if not concluded within reasonable time

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limits. Landis, 299 U.S. at 257 (a stay “is immoderate and hence unlawful unless so framed in its

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inception that its force will be spent within reasonable limits”). Here, Plaintiffs have not presented

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any compelling argument suggesting that the bankruptcy proceedings will be protracted. In reality,

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the evidence suggests that the resolution of any remaining bankruptcy issues is proceeding

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expeditiously. The Bankruptcy Trustee has already issued its decision, and after a brief objection

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period, ending June 2, 2012, the Bankruptcy Court will issue its final determination. Therefore, the

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stay of the action would conclude within a reasonable period of time, significantly minimizing the

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possible damage of granting the stay.

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Further, the posture of this case also weighs in favor of granting the stay. “In determining

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whether to grant a stay, Courts may also consider the stage in litigation, whether substantial

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discovery has already taken place, and whether the matter has been set for trial.” ASCII Corp. v. STD

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Entm’t USA, Inc., 844 F. Supp. 1378, 1380 (N.D. Cal. 1994). Id. Although this action was filed on

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December 13, 2011, the Court has not conducted its initial scheduling conference under Federal Rule

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of Civil Procedure 26(f). The parties are in the initial stages of the lawsuit and if any discovery has

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taken place, it has just begun. Moreover, the case has not been set for trial. Counter-claims have

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now been filed and as the parties determine which causes of action to allege, a clear indicator of the

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proper parties is critical not only to Synthes, but to the unnamed parties in the putative class.

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Therefore, a stay at this juncture could assist the parties in alleging their claims.

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Synthes has also made a compelling case of hardship or inequity. If Pope’s case is not

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reopened on a final basis, Pope’s claims will belong to the bankruptcy estate and Pope will not have

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standing to purse claims against Synthes. See e.g. Griffin, 920 F.Supp. at 130. This presents a

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notable burden to Synthes in not staying the case because it requires them to undergo the expense

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of discovery as to Pope while waiting for the Bankruptcy Court’s final decision—which could alter

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Pope’s claims. It would be unjust for Synthes to have to litigate this case and incur related expenses

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with respect to an improperly named plaintiff.

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Contrary to Plaintiffs’ argument that Pope’s standing is irrelevant to the Pope action, this

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Court’s conclusion to stay the case is not undermined by the holding in Bates v. United Parcel

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Services. The Ninth Circuit in Bates stated that “[i]n a class action, standing is satisfied if at least

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one named plaintiff meets the requirements.” Bates, 511 F.3d at 984. However, as other courts have

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noted, Bates did not resolve the question of whether all members of a class must satisfy Article III

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requirements. See, e.g., O’Shea v. Epson Am., Inc., 2011 U.S. Dist. LEXIS 105504 (C.D. Cal. Sept.

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19, 2011)(distinguishing Bates); Burdick v. Union Security Ins. Co., No. CV07-4028 ABC (JCx),

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2009 U.S. Dist. LEXIS 121768, 2009 WL 4798873, at *4 (C.D. Cal. 2009) (“As an initial matter,

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nowhere in Bates does the Ninth Circuit actually address whether absent class members are required

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to have Article III standing.”). Thus, Pope’s existence as an absent class member could still affect

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other members of the class. Further, while Plaintiffs’ argue that Lindell and not Pope will serve as

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class representative, no motion to voluntarily dismiss Pope has been filed. Thus, in the Court’s view,

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his status as a named plaintiff and a proposed class representative has not changed. Avoiding

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potential standing issues early on in this matter is likely to simplify the potential issues before the

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Court, and aid in the speedy resolution of the action, while conserving judicial resources and the

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parties’ time and resources.

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For the reasons listed above, the Court finds that, in light of the pending bankruptcy matter,
a stay of all proceedings in this case pending resolution of the bankruptcy matter is appropriate.

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CONCLUSION
Therefore, IT IS HEREBY ORDERED Defendants Motion to Stay Action Pending Final
Resolution by the Bankruptcy Court (Doc. 35) is GRANTED.

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Therefore, the Court:

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1.

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STAYS this action until the final determination of the bankruptcy proceeding in the
United States Bankruptcy Court for the Eastern District of California;

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DIRECTS Plaintiffs Troy Lindell and Mark Pope to inform this Court of the
Bankruptcy Court’s decision when it is rendered; and
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VACATES the Scheduling Conference SET for June 25, 2012 at 8:30 a.m. in
Department 8 (BAM).

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SETS a status conference for July 16, 2012 at 9:30 a.m. in Department 8 (BAM).

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Counsel are encouraged to appear at the status conference by telephone by arranging

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a one-line conference call and adding the Court at [phone]. At the status

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conference, counsel shall be prepared to discuss the status of the Bankruptcy

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Proceeding and whether to continue the stay of this action.

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IT IS SO ORDERED.
Dated:
10c20k

May 10, 2012

/s/ Barbara A. McAuliffe
UNITED STATES MAGISTRATE JUDGE

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