Arista Networks, Inc. v. Cisco Systems Inc.

Filing 95

ORDER GRANTING #48 DEFENDANT'S MOTION TO STAY CASE AND DENYING AS MOOT MOTION TO DISMISS. Signed by Judge Beth Labson Freeman on 8/23/2016. (blflc4S, COURT STAFF) (Filed on 8/23/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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ARISTA NETWORKS, INC.,

Case No. 16-cv-00923-BLF

Plaintiff,
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v.
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CISCO SYSTEMS INC.,
Defendants.

ORDER GRANTING DEFENDANT’S
MOTION TO STAY CASE AND
DENYING AS MOOT MOTION TO
DISMISS
[Re: ECF 48]

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Fighting a battle on two fronts, Defendant Cisco Systems, Inc. (“Cisco”) seeks a stay of

United States District Court
Northern District of California

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this antitrust action until its copyright and patent infringement case resolves. Mot. ECF 48. Cisco

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asks this Court to halt this action until judgment is entered in Cisco Systems, Inc. v. Arista

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Networks, Inc., No. 14-cv-05344-BLF (N.D. Cal. 2014) (the “CLI case”). Plaintiff Arista

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Networks, Inc. (“Arista”) opposes the motion, claiming that a stay would be prejudicial. Opp.

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ECF 60. As set forth below, the Court finds ample support for Cisco’s requested four-month stay

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and hereby GRANTS the motion.

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I.

BACKGROUND
Before the filing of the present antitrust action, Cisco had already brought in this Court a

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copyright and patent infringement action, the CLI case, against Arista. Trial of the CLI case is

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scheduled to occur in November 2016. CLI case, ECF 160. More than a year after Cisco filed its

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complaint in the CLI case, Arista requested leave to amend its answer and to add counterclaims

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based on information it learned from discovery relating to Cisco’s antitrust activities. Id., ECF 1,

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163. For reasons set forth in a previously issued order, this Court denied leave but allowed Arista

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to bring the present antitrust action separately. Id., ECF 204. Soon thereafter, Arista filed the

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present action on February 24, 2016 and this Court granted its motion to relate the present case to

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the CLI case. Id., ECF 214; Arista Networks, Inc. v. Cisco Systems, Inc., No. 16-cv-00923-BLF

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(N.D. Cal. 2016), ECF 1. Trial of the present action is scheduled to occur in August 2018. ECF

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75.

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Cisco moves to stay this case until the conclusion of trial of the CLI case in November,

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arguing that the outcome of that trial will either eliminate or simplify the issues in the present

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antitrust case. Mot. ECF 48. Cisco further claims that Arista will also be deprived of its antitrust

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standing when the exclusion orders from the International Trade Commissions (“ITC”) go into

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effect in the near future. Id.
In response, Arista contends that this case requires speedy relief to address Cisco’s

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anticompetitive conduct and the widespread harm on the market. Opp. ECF 60. Arista further

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urges this Court not to prematurely determine Cisco’s antitrust liability based on ITC’s exclusion

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orders. Id. Lastly, Arista argues that a stay is unwarranted in this case given Cisco’s prior urging

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United States District Court
Northern District of California

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and ultimate success in having this antitrust action filed separately from the CLI case. Id.

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II.

LEGAL STANDARD
District courts have the “discretionary power to stay proceedings.” Lockyer v. Mirant

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Corp., 398 F.3d 1098, 1109 (9th Cir. 2005) (citing Landis v. North Am. Co., 299 U.S. 248, 254

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(1936)). This power is “incidental to the power inherent in every court to control the disposition

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of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.”

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Landis, 299 U.S. at 254. The court may “find it is efficient for its own docket and the fairest

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course for the parties to enter a stay of an action before it, pending resolution of independent

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proceedings which bear upon the case.” Dependable Highway Exp., Inc. v. Navigators Ins. Co.,

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498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Levya v. Certified Grocers of Cal., Ltd., 593 F.2d

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863-864 (9th Cir. 1979)).

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In determining whether to grant a stay, “the competing interests which will be affected by

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the granting or refusal to grant a stay must be weighed.” CMAX, Inc. v. Hall, 300 F.2d 265, 268

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(9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). “Among these competing interests are [1] the

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possible damage which may result from the granting of a stay, [2] the hardship or inequity which a

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party may suffer in being required to go forward, and [3] the orderly course of justice measured in

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terms of the simplifying or complicating of issues, proof, and questions of law which could be

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expected to result from a stay.” Id.
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III.

DISCUSSION
A.

Possible Damage from Granting Stay

The Court first considers the possible damage that could arise from granting the stay. Id.
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Arista argues that a stay would permit Cisco to perpetuate its monopoly power, harming
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consumers and competitors in the technology sector as a result. Opp. ECF 60 at 16-17. Arista
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further asserts that given the long sales cycle for the products at issue, delay and uncertainty in the
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resolution of the case would lead to lost sales and would be ultimately prejudicial to Arista. Id.
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Cisco responds that a brief stay “until the conclusion of the CLI trial in November 2016” will not

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prejudice Arista. Mot. ECF 48 at 13; Reply ECF 76 at 2. Rather, the brief stay allows the Court
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and the parties to conserve resources because the claims at issue in this case could be impacted by
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the CLI case. Id. The Court agrees with Cisco and finds that Arista has not sufficiently shown
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United States District Court
Northern District of California

that it would face hardship or inequity as a result of a four-month stay. Given that trial in this
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action is not set until August 2018, the Court finds that a stay until December 2016 will not affect
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the trial date and thus will not significantly delay Arista’s remedy, if at all. ECF 75.

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B.

Possible Hardship or Inequity from Denying Stay

The Court next considers the possible damage that could arise from going forward.
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CMAX, 300 F.2d at 268. Cisco argues that denial of the stay would force it to devote resources to
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the present action, duplicating efforts for the CLI case. Mot. ECF 48 at 8, 13. Arista contends
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that the burdens typically associated with litigation are carried by both parties. Opp. ECF 60 at
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17. Recognizing the potential burden for both parties, the Court finds that the potential hardship
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from denying the stay weighs slightly in favor of granting it.
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C.

Orderly Course of Justice

The Court finds the third interest—whether a stay will complicate or simplify the issues
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before it—to be most instructive in this case. Cisco argues that the issues greatly overlap between
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the two cases and whether Arista prevails on its defenses in the CLI case could also eliminate or
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simplify the issues in the present action. Mot. ECF 48 at 8; Reply ECF 76 at 5-6. Specifically,
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Cisco’s conduct toward the industry supposedly underlies both the affirmative defenses asserted

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by Arista in the CLI case and the antitrust claims of the present action. Mot. ECF 76 at 5-6.
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ITC’s exclusion orders could also determine Arista’s ability to sell either current or future

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products, and in turn would affect the antitrust claims. Mot. ECF 48 at 9-12. In addition, Cisco

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cites to several cases in this District, where antitrust litigation had been stayed pending related

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intellectual property litigation. Id. at 9.

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Arista argues that the CLI case might not determine substantial factual issues in the case

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because whether those issues will get adjudicated and precluded from the present case remain

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unknown. Opp. ECF 60 at 19-20. Further, the antitrust allegations on bundling of SMARTnet

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services and Cisco’s intimidation are not implicated in the CLI case. Id. at 17-18.
Given the differences between the two cases, the Court cannot agree with Cisco that the

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CLI case will “eliminate” Arista’s antitrust allegations. However, the Court finds that resolution

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United States District Court
Northern District of California

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of the CLI case is likely to “bear upon” this case. See Leyva, 593 F. 2d at 863-4. The CLI case’s

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finding regarding infringement and Arista’s affirmative defenses will impact the scope and

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viability of certain antitrust allegations. Accordingly, the Court finds that the third factor weighs

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in favor of granting the stay.

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IV.

ORDER

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Based on the likely simplification of issues, unlikely harm to the parties from granting the

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stay, and the limited length of the stay, the Court GRANTS Defendant’s Motion to Stay until the

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Court enters judgment in Cisco Systems, Inc. v. Arista Networks, Inc., 14-cv-05344-BLF, which is

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anticipated to occur by December 22, 2016. The stay will not be extended to include post-trial

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motions or appeal. If a judgment has not been entered by December 22, 2016, the parties may

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request a brief continuance of the stay. The trial, final pretrial conference, and final hearing date

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for dispositive motions in the present action will remain set on the dates previously ordered by the

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Court. See ECF 75. Further, a case management conference is set on January 5, 2017 at 11 a.m.

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In light of the stay, the Court DENIES without prejudice Defendant’s Motion to Dismiss the

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Complaint.

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Dated: August 23, 2016

______________________________________
BETH LABSON FREEMAN
United States District Judge
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