Bailey et al v. LinkedIn Corporation et al

Filing 106

Order Denying #102 Motion to Stay Proceedings Pending Decisions by the Supreme Court in Hughes v. Nw. Univ. and the Ninth Circuit in Kong v. Trader Joe's Co., #103 ADMINISTRATIVE MOTION to Stay the Pleading Deadlines Pending Resolution of LinkedIn's Motion to Stay Proceedings. Defendants' response to Second Amended Complaint due by 1/27/2022. Signed by Judge Edward J. Davila on 1/12/2022. (ejdlc1, COURT STAFF) (Filed on 1/12/2022)

Case 5:20-cv-05704-EJD Document 106 Filed 01/12/22 Page 1 of 5

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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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Case No. 5:20-cv-05704-EJD

IN RE LINKEDIN ERISA LITIGATION

ORDER DENYING ADMINISTRATIVE
MOTION TO STAY PLEADING
DEADLINES AND MOTION TO STAY
PROCEEDINGS

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United States District Court
Northern District of California

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Re: Dkt. Nos. 102, 103

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Before the Court is Defendants LinkedIn Corporation, LinkedIn Corporation’s Board of

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Directors, and LinkedIn Corporation’s 401(k) Committee’s (collectively, “LinkedIn”) motion to

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stay this action pending decisions from the United States Supreme Court in Divane v. Nw. Univ.,

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953 F. 3d 980 (7th Cir. 2020), cert. granted sub nom. Hughes v. Nw. Univ., 141 S. Ct. 2882 (U.S.

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2021) and the Ninth Circuit in Kong v. Trader Joe’s Co., No. 20-05790, 2020 WL 7062395 (C.D.

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Cal. Nov. 30, 2020), appeal filed, No. 20-56415 (9th Cir. Dec. 30, 2020). LinkedIn’s Not. of Mot.

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and Mot. to Stay Proceedings Pending Decisions by the Supreme Court in Hughes v. Nw. Univ.

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and the Ninth Cir. in Kong v. Trader Joe’s Co. (“Mot.”), Dkt. No. 102. Also before the Court is

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LinkedIn’s administrative motion to stay its deadline to respond to Plaintiffs’ Second Amended

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Complaint (“SAC”) pending resolution of the motion to stay the action. Dkt. No. 103. Plaintiffs

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Douglas Bailey, Jason Hayes, and Marianne Robinson oppose both motions. Dkt. Nos. 104, 105.

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The Court finds the matter suitable for resolution without oral argument. Civ. L.R. 7-1(b).

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Having considered the parties’ submissions, for the reasons set forth below, the Court DENIES

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both motions.

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Case No.: 5:20-cv-05704-EJD
ORDER DENYING MOT. TO STAY
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Case 5:20-cv-05704-EJD Document 106 Filed 01/12/22 Page 2 of 5

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I.

BACKGROUND
Plaintiffs filed this putative class action on August 14, 2020, asserting breach of fiduciary

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duties under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. 1001

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et seq. Dkt. No. 1. On November 16, 2021, the Court granted in part and denied in part
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LinkedIn’s motion to dismiss the operative Amended Complaint under Federal Rules of Civil

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Procedure 12(b)(1) and (6). Dkt. No. 96. In particular, the Court dismissed for lack of standing
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and for failure to state a claim as to all of Plaintiffs’ theories of liability except for Plaintiffs’

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claims based on the Freedom Fidelity funds. Id.
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On December 16, 2021, Plaintiffs filed the operative SAC. Dkt. No. 99. The parties
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stipulated to extend LinkedIn’s deadline to respond to the SAC to January 20, 2021. Dkt. No.
101. LinkedIn’s motions to stay followed.

United States District Court
Northern District of California

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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. N. Am. Co., 299 U.S. 248, 254
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(1936)). The power to stay is “incidental to the power inherent in every court to control the

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disposition of the causes on its docket with economy of time and effort for itself, counsel, and for
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litigants.” Landis, 299 U.S. at 254. The Court may “find it is efficient for its own docket and the

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fairest course for the parties to enter a stay of an action before it, pending resolution of
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independent proceedings which bear upon the case.” Dependable Highway Exp., Inc. v.

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Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Leyva v. Certified Grocers of
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Cal. Ltd., 593 F.2d 863–64 (9th Cir. 1979)). “This rule applies whether the separate proceedings

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are judicial, administrative, or arbitral in character, and does not require that the issues in such
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proceedings are necessarily controlling of the action before the court.” Leyva, 593 F.2d at 863–64.

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Courts in this district have routinely granted stays where there are overlapping issues of
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fact or law with a case before different district courts or on appeal. See, e.g., Zurich Am. Ins. Co.
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v. Omnicell, Inc., No. 18-CV-05345-LHK, 2019 WL 570760 (N.D. Cal. Feb 12, 2019) (granting a
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stay pending resolution of another underlying action); Robledo v. Randstad US, L.P., No. 17-CV27
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Case No.: 5:20-cv-05704-EJD
ORDER DENYING MOT. TO STAY
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Case 5:20-cv-05704-EJD Document 106 Filed 01/12/22 Page 3 of 5

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01003-BLF, 2017 WL 4934205 (N.D. Cal. Nov. 1, 2017) (granting a stay pending appeal of

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another case with similar factual and legal issues); McElrath v. Uber Techs., Inc., No. 16-CV-

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07241-JSC, 2017 WL 1175591 (N.D. Cal. Mar. 30, 2017) (same).
In determining whether to grant a stay, “the competing interests which will be affected by

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the granting or refusal to stay must be weighed.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir.

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

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

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must 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 the issues, proof, and questions of law which could be

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expected to result from the stay.” Id. (brackets original). In addition, “[t]he proponent of a stay

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United States District Court
Northern District of California

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bears the burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citing

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Landis, 299 U.S. at 255). “If there is even a fair possibility that a stay will work damage to

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someone else, the stay may be inappropriate absent a showing by the moving party of hardship or

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inequity.” Dependable Highway, 498 F.3d at 1066 (citing Landis, 299 U.S. at 255; internal

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quotation marks omitted).

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III.

DISCUSSION
LinkedIn contends that the Supreme Court’s upcoming decision in Hughes and the Ninth

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Circuit’s decision in Kong1 “will be highly instructive, if not entirely dispose of the claims

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asserted in Plaintiffs’ Complaint.” Mot. at 2. In particular, LinkedIn says that Hughes and Kong

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will provide guidance on whether an ERISA plaintiff can plausibly allege a breach of fiduciary

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duty claim based on a fiduciary’s offering of actively managed target date funds instead of better

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performing passively managed funds, and that it would be more efficient and conserve the parties’

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and the Court’s resources to stay the action until after both appeals are resolved. Id. at 2, 8.

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After reviewing the appellate briefs in Hughes and Kong, the Court does not agree that

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those appeals will have a definitively dispositive effect on this action. As LinkedIn notes in its

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The Ninth Circuit has held Kong in abeyance pending the Supreme Court’s resolution of Hughes.

Case No.: 5:20-cv-05704-EJD
ORDER DENYING MOT. TO STAY
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Case 5:20-cv-05704-EJD Document 106 Filed 01/12/22 Page 4 of 5

motion, Hughes concerns “‘[w]hether allegations that a defined-contribution retirement plan paid

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or charged its participants fees that substantially exceeded fees for alternative available investment

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products or services are sufficient to state a claim against plan fiduciaries for breach of the duty of

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prudence under ERISA, 29 U.S.C. § 1104(a)(1)(B).’” Id. at 5–6 (quoting Pet’rs’ Brief, Hughes v.

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Nw. Univ., 141 S. Ct. 2882 (2021) No. 19-1401, 2021 WL 4121358, at *1 (Sept. 3, 2021)).

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Somewhat similarly, Kong concerns primarily allegations of imprudence based on excessive

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management and recordkeeping fees. See Appellants’ Br., Kong v. Trader Joe’s Co., No. 20-

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56415, 2021 WL 1377339, at *6–7 (9th Cir. Apr. 1, 2021) (describing issues presented as whether

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the district court erred in finding failure to adequately plead breach of prudence based on, among

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other things, “higher investment management fees” between various share classes and “excessive

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United States District Court
Northern District of California

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recordkeeping fees”). Although both Hughes and Kong contain allegations concerning actively

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managed funds, neither appeal appears to focus expressly on the question—to the extent it is even

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raised—of whether and how a passively managed fund can serve as an adequate benchmark

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comparator for an actively managed fund. Thus, “[w]hile the Supreme Court’s decision in Hughes

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may or may not affect the law relevant to some of Plaintiffs’ claims, it does not appear that it will

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be determinative of all of Plaintiffs[’] arguments.” In re Prime Healthcare ERISA Litig., No.

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8:20-cv-01529-JLS-JDE, Dkt. No. 56, at 3 (C.D. Cal. Jan. 7, 2022).

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LinkedIn argues that in its upcoming motion to dismiss, it will likely cite “the Seventh

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Circuit’s decision in [Divane], the Ninth Circuit’s decision affirming White v. Chevron Corp., No.

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16-0793, 2017 WL 2352137 (N.D. Cal. May 31, 2017), aff’d, 752 F. App’x 453 (9th Cir. 2018),

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cert. denied, 139 S. Ct. 2646 (2019), and various district court rulings that follow those decisions.”

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Mot. at 8. These are the same authorities LinkedIn cited on in its previous motion to dismiss.

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Dkt. No. 44. But in ruling on that motion, the Court did not rely on Hughes or Kong, and the

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Court is hard-pressed to understand how those appeals would resolve Plaintiffs’ remaining claims.

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A cursory review of the SAC indicates that Plaintiffs appear to have dropped all theories of

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liability except the one based on the Freedom Fidelity funds, which the Court has found Plaintiffs

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to have adequately pled. Compare id. with Dkt. No. 99. It is unclear how a second motion to

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ORDER DENYING MOT. TO STAY
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Case 5:20-cv-05704-EJD Document 106 Filed 01/12/22 Page 5 of 5

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dismiss claims the Court has already ruled on based on case law the Court has already considered

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would be an efficient use of the parties’ or the Court’s time and resources.
The CMAX factors do not favor a stay. First, this action has been pending since August

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2020 with little progress, and further delay will prejudice Plaintiffs’ ability to develop facts

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necessary for their case. Second, LinkedIn has identified no hardship or inequity which it may

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suffer if required to go forward, other than actually litigating this suit. “[B]eing required to defend

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a suit, without more, does not constitute ‘a clear case of hardship or inequity’ within the meaning

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of Landis.” Lockyer, 398 F.3d at 1112. And as discussed above, Hughes and Kong are unlikely to

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address the passively versus actively managed funds issue in a manner pertinent to Plaintiffs’

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claims here.
Accordingly, the Court finds that a stay is not warranted under these circumstances.

United States District Court
Northern District of California

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IV.

CONCLUSION

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For the foregoing reasons, the Court DENIES LinkedIn’s motion to stay proceedings and

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administrative motion to stay the pleading deadlines. LinkedIn shall file its response to the SAC

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by January 27, 2022.

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IT IS SO ORDERED.
Dated: January 12, 2022

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EDWARD J. DAVILA
United States District Judge

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Case No.: 5:20-cv-05704-EJD
ORDER DENYING MOT. TO STAY
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