Just Film, Inc. et al v. Merchant Services, Inc et al

Filing 322

ORDER by Judge Claudia Wilken DENYING 303 MOTION TO STAY OR TRANSFER, DENYING WITHOUT PREJUDICE MOTION FOR PROTECTIVE ORDER AND CLARIFYING ORDER OF AUGUST 29, 2011. (ndr, COURT STAFF) (Filed on 1/3/2012)

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE NORTHERN DISTRICT OF CALIFORNIA 3 4 5 6 7 8 9 JUST FILM, INC.; RAINBOW BUSINESS SOLUTIONS, doing business as PRECISION TUNE AUTO CARE; BURLINGAME MOTORS, INC.; DIETZ TOWING, INC.; THE ROSE DRESS, INC.; VOLKER VON GLASENAPP; JERRY SU; VERENA BAUMGARTNER; TERRY JORDAN; LEWIS BAE; and ERIN CAMPBELL, on behalf of themselves, the general public and those similarly situated, United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 No. C 10-1993 CW ORDER DENYING MOTION TO STAY OR TRANSFER, DENYING WITHOUT PREJUDICE MOTION FOR PROTECTIVE ORDER AND CLARIFYING ORDER OF AUGUST 29, 2011 (Docket No. 303) Plaintiffs, v. MERCHANT SERVICES, INC.; NATIONAL PAYMENT PROCESSING; UNIVERSAL MERCHANT SERVICES, LLC; UNIVERSAL CARD, INC.; JASON MOORE; NATHAN JURCZYK; ROBERT PARISI; ERIC MADURA; FIONA WALSHE; ALICYN ROY; MBF LEASING, LLC; NORTHERN FUNDING, LLC; NORTHERN LEASING SYSTEMS, INC.; GOLDEN EAGLE LEASING, LLC; LEASE SOURCE-LSI, LLC; LEASE FINANCE GROUP, LLC; JAY COHEN; LEONARD MEZEI; SARA KRIEGER; BRIAN FITZGERALD; SAM BUONO; MBF MERCHANT CAPITAL, LLC; RBL CAPITAL GROUP, LLC; WILLIAM HEALY; JOSEPH I SUSSMAN; JOSEPH I. SUSSMAN, P.C.; and SKS ASSOCIATES, LLC, Defendants. ________________________________/ In a single joint motion, Defendant SKS Associates, LLC, 25 moves for a stay pending its appeal of the Court’s order denying 26 27 28 its motion to compel arbitration with Plaintiff Erin Campbell, Defendant MBF Leasing, LLC moves for a stay or transfer of 1 Plaintiffs’ breach of contract claim against it and Defendant 2 Northern Leasing Systems, Inc. moves for a stay or transfer of 3 Plaintiffs’ Fair Credit Reporting Act (FCRA) claim against it. 4 Defendants also seek protective orders limiting the scope of 5 discovery against them. 6 Plaintiffs oppose the motion. has been taken under submission on the papers. The matter Having considered 7 the papers filed by the parties, the Court DENIES Defendants’ 8 9 motion. The Court also clarifies its August 29, 2011 Order. BACKGROUND United States District Court For the Northern District of California 10 11 The facts relevant to this motion are largely set forth in 12 this Court’s Orders of June 13, 2011, August 29, 2011 and August 13 30, 2011. 14 instant motion are provided below. Only the additional facts necessary to resolve the 15 Prior to the filing of this action, two class action lawsuits 16 were filed in the Supreme Court of the state of New York against 17 18 certain Defendants in the instant case. 19 Leasing Systems, et al., Index No. 04/101059, filed in 2004 and 20 still ongoing, the plaintiffs are pursuing a breach of contract 21 claim on behalf of a certified class against Northern Leasing, 22 alleging that it improperly charged class members a monthly “loss 23 In Pludeman v. Northern damage waiver” fee that was not disclosed on the first page of 24 their lease. Second Amended Complaint ¶ 323. In Aldrich v. 25 26 Northern Leasing Systems, Inc., Index No. 07/602803, filed in 27 2007, the plaintiffs are pursuing claims under the Fair Credit 28 Reporting Act (FCRA) and the New York state law equivalent against 2 1 Northern Leasing for accessing their credit reports without 2 permission. 3 Simplicio Decl. ¶ 14, Ex. I ¶¶ 63(a)(i)-(ii). On August 30, 2011, this Court denied without prejudice SKS’s 4 first motion to stay proceedings pending its appeal of the order 5 denying its motion to compel arbitration and granting Plaintiffs’ 6 motion for a preliminary injunction against it. In that order, 7 the Court granted SKS leave to renew its motion if it could 8 9 establish that discovery has become unduly burdensome. The Court United States District Court For the Northern District of California 10 stated that the renewed motion to stay should be accompanied by 11 some evidence that the monies SKS seeks to collect from Plaintiff 12 Campbell are for taxes actually owed and paid during her lease 13 term. 14 DISCUSSION 15 I. SKS’s Motion to Stay Pending Appeal 16 “A stay is not a matter of right, even if irreparable injury 17 18 might otherwise result.” 19 (2009) (citation and internal quotation marks omitted). 20 it is “an exercise of judicial discretion,” and “the propriety of 21 its issue is dependent upon the circumstances of the particular 22 case.” 23 Nken v. Holder, 129 S. Ct. 1749, 1760 Instead, Id. (citation and internal quotation and alteration marks omitted). The party seeking a stay bears the burden of justifying 24 the exercise of that discretion. Id. 25 26 “A party seeking a stay must establish that he is likely to 27 succeed on the merits, that he is likely to suffer irreparable 28 harm in the absence of relief, that the balance of equities tip in 3 1 his favor, and that a stay is in the public interest.” 2 Soc. of U.S. v. Gutierrez, 558 F.3d 896, 896 (9th Cir. 2009); see 3 also Perry v. Schwarzenegger, 702 F. Supp. 2d 1132, 1135 (N.D. 4 Cal. 2010). 5 critical.” 6 Humane The first two factors of this standard “are the most Nken, 129 S. Ct. at 1761. Once these factors are satisfied, courts then assess “the harm to the opposing party” and 7 weigh the public interest. Id. at 1762. 8 With the renewed motion, SKS submits what it purports is 9 United States District Court For the Northern District of California 10 evidence that it seeks to collect from Campbell taxes actually 11 owed and paid during her lease term. 12 out, this evidence is not credible for a variety of reasons. 13 submits the declaration of Dinesh Kulangroth, Vice President of 14 Northern Leasing, from whom SKS “purchased the right to However, as Plaintiffs point SKS 15 reimbursement for certain taxes and fees,” accompanied by 16 documents that Mr. Kulangroth states are evidence that Northern 17 18 Leasing made payments on behalf of Campbell for the periods July 19 1, 2006 through June 30, 2007 and July 1, 2007 through June 30, 20 2008. 21 it is his “understanding that taxes were paid by the lessor on 22 behalf of [Campbell] in prior years as well,” but does not 23 Kulangroth Decl. ¶¶ 2-5. Mr. Kulangroth also attests that indicate that this statement is based on his personal knowledge. 24 Id. at ¶ 4. 25 26 Campbell’s lease was terminated in June 2007 and thus any 27 payments between July 1, 2007 through June 30, 2008 were not 28 within her lease period. 4 1 The documents related to the time period from July 1, 2006 2 through June 30, 2007 also lack foundation or otherwise lack 3 credibility. 4 County of Santa Clara for this time period assessing taxes in the 5 amount of $490.31, a “corresponding” check made payable to the 6 Mr. Kulangroth provides a property tax bill from the Santa Clara Tax Collector dated February 28, 2007 in the amount of 7 $45,746.46, and a “backup spreadsheet” that Mr. Kulangroth states 8 9 United States District Court For the Northern District of California 10 11 shows that the tax bill and payment included monies paid on behalf of Campbell. Kulangroth Decl. ¶ 2, Exs. A, B, C. The property tax bill shows taxes assessed upon “GCN Holdings 12 LLC” for the time period July 1, 2006 through June 30, 2007. 13 Kulangroth Decl. ¶ 2, Ex. A. 14 explains who GCN Holdings is or how an assessment upon GCN Neither SKS nor Mr. Kulangroth 15 Holdings could be related to Campbell’s lease with Northern 16 Leasing. Mr. Kulangroth does not describe his relationship with 17 18 GCN Holdings and does not provide any basis for finding that he is 19 able to authenticate the document. 20 The check made payable to the Santa Clara Tax Collector was 21 issued by “PFSC / Northern Leasing Systems,” not GCN Holdings, and 22 it is for an amount that is dramatically different than the amount 23 on the property tax bill. Kulangroth Decl. ¶ 2, Exs. A, B. It 24 is thus not clear that this check is related to the tax bill. 25 26 The spreadsheet also lacks foundation and is otherwise 27 unreliable. Mr. Kulangroth does not authenticate the document or 28 describe his knowledge of it. It is not clear if this document is 5 1 from the records of Northern Leasing, GCN Holdings, SKS or some 2 other entity, or when it was created. 3 indications that this document is not credible. 4 of the spreadsheet are missing data in all rows except two that 5 purportedly relate to “Sunclare/Silicon Valley Pet C.” 6 Decl. ¶ 2, Ex. C. There are also a number of Several columns Kulangroth However, the lease number in these two rows 7 differs from the lease number on Campbell’s lease and from the 8 9 lease number on the letter that SKS sent to Campbell. Compare United States District Court For the Northern District of California 10 Kulangroth Decl. ¶ 2, Ex. 3 (spreadsheet with lease number 001- 11 0484101-00) with Krieger Decl. in Support of Mot. to Compel 12 Arbitration, Ex. 1, at 3 (Campbell’s lease with lease number 13 673597), and Campbell Decl. in Support of Mot. for Prelim. Inj., 14 Ex. A, at 1 (SKS letter to Campbell referencing lease number 15 0722579A). It is also not clear how this spreadsheet relates to 16 the check and the tax bill. There is nothing that correlates the 17 18 spreadsheet t the check paid to the Santa Clara Tax Assessor, and 19 the tax rate in the spreadsheet differs from that on the tax bill. 20 Kulangroth Decl. ¶ 2, Exs. 1-3. 21 22 23 Further, even if this evidence were credible, the spreadsheet would establish that the actual taxes paid on behalf of Campbell totaled $2.35 for 2006 through 2007 and that no fees were assessed 24 for this time period, while SKS seeks to collect $85.50 from 25 26 Campbell. Thus, the spreadsheet does not establish that the 27 amount that SKS seeks to collect is for taxes actually owed and 28 paid. 6 1 SKS responds to the lack of foundation and the various 2 inconsistencies in these documents by arguing that these arguments 3 “challenge the weight of the evidence,” which can only properly be 4 decided by “the arbitrator.” 5 the Court’s reason for suggesting that it present evidence of the 6 Reply, at 1-2. SKS misunderstands merits of its position, which was to assess its likelihood of 7 success. SKS fails to bolster its showing. 8 9 The Court notes that SKS could have, but did not, seek a stay United States District Court For the Northern District of California 10 from the Ninth Circuit. 11 DENIED. 12 II. Accordingly, SKS’s motion to stay is MBF and Northern Leasing’s Motion to Stay or Transfer of Claims 13 14 MBF and Northern Leasing move to stay the claims against them 15 to be stayed or to transfer them to the Supreme Court of the State 16 of New York based upon the first-to-file rule, arguing that the 17 earlier filed New York state actions should take priority over 18 this later filed federal action involving some overlapping issues. 19 While this Court may transfer a case to another federal 20 district court under certain circumstances pursuant to 28 U.S.C. 21 22 §§ 1404 and 1406, MBF and Northern Leasing cite no authority that 23 would give this Court authority to transfer the instant case to a 24 state court, including the Supreme Court of the State of New York. 25 Accordingly, MBF and Northern Leasing’s motion to transfer is 26 DENIED. 27 28 7 1 The first-to-file rule “is a generally recognized doctrine of 2 federal comity which permits a district court to decline 3 jurisdiction over an action when a complaint involving the same 4 parties and issues has already been filed in another district.” 5 Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 94-5 6 (9th Cir. 1982). This doctrine “gives priority, for purposes of 7 choosing among possible venues when parallel litigation has been 8 9 instituted in separate courts, to the party who first establishes United States District Court For the Northern District of California 10 jurisdiction.” Northwest Airlines, Inc. v. American Airlines, 11 Inc., 989 F.2d 1002, 1006 (8th Cir. 1993). 12 file priority presumption has evolved from and is applied in cases 13 involving intra-federal conflicts between federal district courts 14 of concurrent jurisdiction” in order to promote efficiency and to Because “the first to 15 avoid duplicative litigation, it “is not necessarily the guidepost 16 for the setting here, where parallel litigation is pending in 17 18 federal and state courts.” 19 Co., 2009 U.S. Dist. LEXIS 52365, at *13 (E.D. Wash. June 21, 20 2009) (citing Colorado River Water Conservation Dist. No. 7 v. 21 United States, 424 U.S. 800, 817 (1976)). 22 MBF and Northern Leasing cite in favor of the application of the 23 Newmont USA Ltd. v. Am. Home Assur. Indeed, each case that first-to-file doctrine involves simultaneous actions in federal 24 district courts. 25 26 “The Supreme Court has in fact repeatedly held that the 27 pendency of an action in a state court is no bar to proceedings 28 concerning the same matter in the federal court having 8 1 jurisdiction.” 2 Industries Corp., 544 U.S. 280, 293 (2005); McClellan v. Carland, 3 217 U.S. 268, 282 (1910)). 4 duplicative litigation in state and federal court is that “[e]ach 5 court is free to proceed in its own way and in its own time, 6 Id. at *13-14 (citing Exxon Mobil v. Saudi Basic The general rule regarding concurrent, without reference to the proceedings in the other court,” and that 7 “whichever court rules first will, via the doctrines of res 8 9 judicata and collateral estoppel, preclude the other from deciding AmerisourceBergen Corp. v. Roden, 495 F.3d United States District Court For the Northern District of California 10 that claim or issue.” 11 1143, 1151-1152 (9th Cir. 2007) (citation and internal quotation 12 and alteration marks omitted). 13 York Supreme Court, will guard against double recovery for 14 Plaintiffs. This Court, and surely the New 15 Accordingly, MBF and Northern Leasing have not established 16 that the first-to-file rule requires that this action be stayed 17 18 19 and their motion to stay the claims against them is DENIED. III. Motion for a Protective Order 20 Defendants SKS, MBF and Northern Leasing each request a 21 protective order limiting the scope of Plaintiffs’ discovery 22 against them. 23 The Court DENIES without prejudice Defendants’ motion for a 24 protective order. If Defendants renew their motion, it must be 25 26 accompanied by a certification that they have conferred or 27 attempted to confer with Plaintiffs again in a good faith effort 28 to resolve the dispute without court action and must comply with 9 1 Magistrate Judge Laporte’s Order Regarding Discovery Procedures, 2 Docket No. 313, in this case. 3 order shall be referred to Magistrate Judge Laporte in accordance 4 with Docket No. 312. 5 6 Any renewed motion for a protective The parties may use reciprocally the discovery obtained in this case, in the cases pending in the Supreme Court of the State 7 of New York and in arbitration to the extent possible to avoid 8 9 duplicative discovery, and shall prioritize discovery that is more United States District Court For the Northern District of California 10 relevant in light of the pending appeal and New York cases. 11 discovery disputes will be referred to Magistrate Judge Laporte, 12 after the parties have met and conferred. 13 14 IV. Any August 29, 2011 Order In their opposition, Plaintiffs note that this Court’s August 15 29, 2011 Order was less than clear regarding whether the Court had 16 dismissed their claim against Northern Leasing alleging a 17 18 violation of California’s Unfair Competition Law (UCL), Cal. Bus. 19 & Prof. Code §§ 17200, et seq. 20 the Court found that Plaintiffs Volker Von Glasenapp and Lewis Bae 21 stated an FCRA claim against several Defendants, including 22 Northern Leasing. 23 See Opp. at 2 n.1. Docket No. 292, at 32. In that Order, Later in the Order, the Court stated that “because Plaintiffs do not state claims [for 24 violations of federal and state law] against Northern Leasing [and 25 26 certain other Defendants], their UCL claims against these 27 Defendants are dismissed.” Id. at 35. 28 summary of its rulings, it omitted Northern Leasing from the list 10 However, in the Court’s 1 of Defendants against whom the UCL claims were dismissed. 2 at 41. 3 See id. Because the Court found that Plaintiffs Von Glasenapp and Bae 4 did sufficiently allege a claim against Northern Leasing for a 5 violation of the FCRA, they also sufficiently stated a UCL claim 6 against Northern Leasing. The Court’s August 29, 2011 Order did 7 not dismiss these Plaintiffs’ UCL claim against Northern Leasing. 8 CONCLUSION 9 United States District Court For the Northern District of California 10 For the foregoing reasons, the Court DENIES Defendants’ 11 motion to stay or transfer and DENIES without prejudice their 12 motion for a protective order (Docket No. 303). 13 IT IS SO ORDERED. 14 15 16 Dated: 1/3/2012 CLAUDIA WILKEN United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 11

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