Power Integrations, Inc. v. Chan-Woong Park

Filing 39

ORDER denying 33 Motion to Stay Discovery. Signed by Judge Edward J. Davila on 10/24/2016. (ejdlc1S, COURT STAFF) (Filed on 10/24/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 POWER INTEGRATIONS, INC., Case No. 5:16-cv-02367-EJD Plaintiff, 9 ORDER DENYING DEFENDANT’S MOTION TO STAY DISCOVERY v. 10 11 CHAN-WOONG PARK, Re: Dkt. No. 33 United States District Court Northern District of California Defendant. 12 13 Plaintiff Power Integrations, Inc. (“Plaintiff”) alleges in this action for intentional and 14 negligent interference with contractual relations, intentional and negligent interference with 15 prospective economic relations, trade libel, and violation of California Business and Professions 16 Code § 17200 that one of its former employees, Defendant Chan-Woong Park, has obtained 17 Korean patents using Plaintiff’s proprietary information and is using those patents to assert 18 infringement claims against Plaintiff’s customers. In response to the Complaint, Park filed a 19 motion to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6). Park 20 now moves to stay discovery pending resolution of that motion. Dkt. No. 33. 21 This matter is suitable for resolution without oral argument, and the hearing scheduled for 22 October 27, 2016, is VACATED. Having considered the papers filed by both parties, the court 23 finds, concludes and orders as follows: 24 1. Pursuant to Federal Rule of Civil Procedure 26(c)(1), “[a] party or any person from 25 whom discovery is sought may move for a protective order in the court where the action is 26 pending.” Upon such motion, “[t]he court may, for good cause, issue an order to protect a party or 27 person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 28 1 Case No.: 5:16-cv-02367-EJD ORDER DENYING DEFENDANT’S MOTION TO STAY DISCOVERY 1 26(c)(1). Generally speaking, the moving party may demonstrate good cause “by demonstrating 2 harm or prejudice that will result from the discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 3 1063 (9th Cir. 2004). “[A] party seeking to stay discovery carries the heavy burden of making a 4 strong showing why discovery should be denied.” Kor Media Grp., LLC v. Green, 294 F.R.D. 5 579, 581 (D. Nev. 2013). 6 2. Here, Park moves for a protective order staying all discovery during the pendency 7 of a motion to dismiss. In those circumstances, federal district courts routinely apply a two-prong 8 test to determine whether a stay should issue: 9 First, the pending motion must be potentially dispositive of the entire case, or must at least be dispositive on the issue to which the discovery is aimed. Second, the court must determine whether the potentially dispositive motion can be decided without the discovery. A protective order may issue if the moving party satisfies both prongs. 10 United States District Court Northern District of California 11 12 13 S.F. Tech. v. Kraco Enters. LLC, No. 5:11-cv-00355 EJD, 2011 U.S. Dist. LEXIS 59933, at *7, 14 2011 WL 2193397 (N.D. Cal. June 6, 2011). 15 Conversely, “if either prong of this test is negative, discovery proceeds.” Seven Springs 16 L.P. v. Fox Capital Mgmt. Corp., No. S-07-0142 LKK GGH, 2007 U.S. Dist. LEXIS 32068, at *4, 17 2007 WL 1146607 (E.D Cal. Apr. 18, 2007). Moreover, even if both prongs are satisfied, a 18 motion to stay discovery may still be denied if a “preliminary peek” at the pending motion shows 19 the moving party is unlikely to prevail or that there exists a reasonable dispute as to the motion’s 20 merits. See, e.g., Cuadros v. State Farm Fire & Cas. Co., No. 2:16-cv-2025-JCM-VCF, 2016 U.S. 21 Dist. LEXIS 146195, at *3 (D. Nev. Oct. 20, 2016). 22 3. Park argues his motion to dismiss is potentially dispositive of the entire case 23 because he has challenged subject matter jurisdiction as well as general and specific personal 24 jurisdiction. He also argues these issues can be decided without discovery because motions to 25 dismiss under Rules 12(b)(1), 12(b)(2) and 12(b)(6) are normally decided based on the pleadings. 26 On these two points, the court agrees with Park to some extent; his motion can be decided without 27 discovery and could be dispositive if granted on any of the jurisdictional arguments. 28 2 Case No.: 5:16-cv-02367-EJD ORDER DENYING DEFENDANT’S MOTION TO STAY DISCOVERY 1 4. Plaintiff argues, however, that Park’s motion is not necessarily dispositive. To that end, Plaintiff disputes Park’s arguments concerning subject matter and personal jurisdiction, 3 noting its own contentions that diversity jurisdiction exists in this action between a domestic 4 corporation and a foreign domicile, and that Park has engaged in conduct sufficient to support 5 general and specific personal jurisdiction. Plaintiff also points out it requested leave to conduct 6 jurisdictional discovery in its opposition to the motion to dismiss. Thus, Plaintiff surmises Park’s 7 arguments on personal jurisdiction will not resolve the case in this court because it will be 8 permitted leave to undertake jurisdictional discovery even if the court finds the current allegations 9 are deficient. Furthermore, Plaintiff states the discovery it seeks overlaps with any jurisdictional 10 discovery it may engage because Park’s interactions with Plaintiff’s customers in California are 11 United States District Court Northern District of California 2 relevant to the issue of personal jurisdiction. 12 5. While the court recognizes that challenges to jurisdiction can sometimes present a 13 stronger case for a discovery stay than do standard challenges for failure to state a claim, it 14 nonetheless finds Park’s jurisdictional arguments insufficient to support the relief requested 15 through this motion. Indeed, a “preliminary peek” at Park’s motion to dismiss and Plaintiff’s 16 opposition to it reveals that issues of subject matter and personal jurisdiction are the subjects of 17 reasonable dispute, such that it cannot be confidently said that Park will succeed in ending the 18 action or that his arguments are entirely meritorious. For example, Park will not prevail on his 19 argument that this court lacks subject matter jurisdiction unless the court agrees with his 20 characterization that this case actually seeks to litigate the validity of foreign patents, despite the 21 legal claims Plaintiff asserts. Park does not, however, contest that diversity jurisdiction otherwise 22 exists. Similarly, the court concurs with Plaintiff that a finding for Park on the issue of personal 23 jurisdiction may not completely resolve this action because Plaintiff may still be entitled to 24 jurisdictional discovery, some of which is encompassed in the discovery Plaintiff seeks. 25 6. Finally, the court is not convinced the potential for this case to be related to another 26 case between these same parties is a reason to grant a stay of discovery. Since Plaintiff has 27 declined to consent to a magistrate judge in this action, it is unlikely a reassignment will occur 28 3 Case No.: 5:16-cv-02367-EJD ORDER DENYING DEFENDANT’S MOTION TO STAY DISCOVERY 1 even if the cases are deemed related under Civil Local Rule 3-12. And in any event, the 2 possibility for any convenience gained through relation of cases cannot be equated with the need 3 for a protective order. 4 5 Based on the foregoing, the court finds that Park has not satisfied the “heavy burden” imposed on parties seeking an outright stay of discovery. His motion is therefore DENIED. 6 7 8 9 10 IT IS SO ORDERED. Dated: October 24, 2016 ______________________________________ EDWARD J. DAVILA United States District Judge United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Case No.: 5:16-cv-02367-EJD ORDER DENYING DEFENDANT’S MOTION TO STAY DISCOVERY

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