Healthy Choice SM, LLC v. ABP Corporation

Filing 13

ORDER signed by Senior Judge William B. Shubb on 2/24/15 GRANTING defendant's 8 Motion, in case no. 2:14-cv-2370 WBS DAD, to Stay pending the District Court for the District of Massachusetts's decision regarding defendant's petition to compel arbitration. Defendant shall file a Status Report with this court addressing arbitrability of issues raised in plaintiffs' Complaints and the status of any pending arbitration no later than ten days after the District of Massachusetts's decision. (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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HEALTHY CHOICE SGH, LLC,
Plaintiff,

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MEMORANDUM AND ORDER RE: MOTION
TO STAY

v.
ABP CORPORATION,

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Defendant.

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HEALTHY CHOICE SM, LLC,

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CIV. NO. 2:14-2370 WBS DAD

Plaintiff,

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v.
ABP CORPORATION,
Defendant.

CIV. NO. 2:14-2371 WBS DAD
----oo0oo----

In lieu of filing an Answer, defendant in each of these
actions has filed motion to stay proceedings.

(Docket No. 8)

Defendant represents that both plaintiffs in this matter are

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owned and operated by Sajid Sohail, a non-party to this lawsuit

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who, through various corporate entities, operates Au Bon Pain

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franchises in New York and California.

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Defendant and Sohail are reportedly arbitrating franchise

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disputes relating to several New York franchises before the

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American Arbitration Association (“AAA”) in Boston,

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Massachusetts.

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(Docket No. 8-1)

On May 2, 2014, defendant filed a lawsuit in the

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District of Massachusetts against Sohail and ten related entities

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to enforce the termination of Sohail’s franchises for nonpayment

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of royalties.

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time, it believed an entity called “Healthy Choice Sacramento

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LLC” operated the California franchises at issue here, and it

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therefore named that entity as a defendant in its Massachusetts

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action.

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it voluntarily dismissed its action in Massachusetts to pursue

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arbitration before the AAA.

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their actions in this district.

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(Docket No. 8-2)1

(See id.)

Defendant states that, at that

Defendant states that, on September 8, 2014,

A month later, plaintiffs brought

On December 15, 2014, defendant filed a petition to

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compel plaintiffs to arbitrate their claims in the District of

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Massachusetts.

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moved to stay proceedings in this court pursuant to § 3 of the

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FAA or, alternatively, under principles of comity and judicial

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efficiency while the District of Massachusetts decides whether

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(See Cloar Decl. Ex. B.)

The same day, defendant

“A federal court may ‘take notice of proceedings in
other courts, both within and without the federal judicial
system, if those proceedings have a direct relation to matters at
issue.’” Schulze v. F.B.I., Civ. No. 1:05-0180 AWI GSA, 2010 WL
2902518, at *1 (E.D. Cal. July 22, 2010) (U.S. v. Black, 482 F.3d
1035, 1041 (9 Cir. 2007)).
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the issues here are referable to arbitration.

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to Stay Proceedings (Docket No. 8).)

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(See Def.’s Mot.

Defendant represents that the District of Massachusetts

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court has scheduled a hearing on its petition to compel

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arbitration for March 5, 2015, at 2 p.m.

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Judicial Notice Ex. E (Docket No. 13).)

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prompt decision regarding that petition.

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(Def.’s Req. for
The court anticipates a

Resolution of defendant’s petition in the District of
Massachusetts may or may not have a dispositive impact on issues

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raised in this district.

The court is persuaded, however, that a

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decision from that court on defendant’s petition will facilitate

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the proceedings in these actions in this district.

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Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 184 (1952).2

See Kerotest

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IT IS THEREFORE ORDERED that:

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(1)

Defendant’s motion to stay be, and the same hereby

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is, GRANTED pending the District Court for the

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District of Massachusetts’s decision regarding

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Plaintiffs argue that the “First-to-File” rule requires
this district to decide the issue of arbitrability, and that the
District of Massachusetts should stay its proceedings. (Pls.’
Opp’n at 2.) The court disagrees. Federal district courts have
long exercised the power to temporarily stay proceedings in order
to promote comity between courts and efficiently allocate
judicial resources. See Kerotest, 342 U.S. at 184. Moreover,
several federal courts have effectively employed temporary stays
in similar situations to the one here. See, e.g., Ansari v.
Qwest Commc'ns Corp., 414 F.3d 1214 (10th Cir. 2005) (affirming a
district court’s stay of proceedings pending a determination by a
district court in the District of Columbia regarding whether
arbitration of the plaintiff’s claims should be compelled); Roe
v. Gray, 165 F. Supp. 2d 1164 (D. Colo. 2001) (staying
proceedings pending the Eastern District of North Carolina’s
decision on arbitrability).
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defendant’s petition to compel arbitration;

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(2)

Defendant shall file a Status Report with this

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court addressing arbitrability of issues raised in

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plaintiffs’ Complaints and the status of any

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pending arbitration no later than ten days after

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the District of Massachusetts’s decision.

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Dated:

February 24, 2015

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