Karoun Dairies, Inc. v. Karoun Dairies, Inc. et al

Filing 292

ORDER granting 261 Motion to Stay Trial Proceedings pending Decision by the Ninth Circuit Court of Appeal in related case and requiring the parties to submit a joint status report in 60 days. Signed by Judge Anthony J. Battaglia on 9/3/13. (cge)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 KAROUN DAIRIES, INC., a California corporation, 10 11 12 Plaintiff, v. 13 KARLACTI, INC., a Delaware corporation, et al., 14 Defendants. 15 ) ) ) ) ) ) ) ) ) ) ) ) ) ) Civil No. 08cv1521 AJB (WVG) ORDER GRANTING MOTION TO STAY TRIAL PROCEEDINGS PENDING DECISION BY THE NINTH CIRCUIT COURT OF APPEAL IN A RELATED CASE AND REQUIRING THE PARTIES TO SUBMIT A JOINT STATUS REPORT IN 60 DAYS (Doc. No. 261) 16 17 Before the Court is Defendants’ Motion to Stay Trial Proceedings Pending a 18 Related Decision by the Ninth Circuit Court of Appeal. (Doc. No. 261.) For the reasons 19 set forth below, Defendants’ motion is GRANTED, and this action is hereby STAYED 20 pending the Ninth Circuit’s decision. PROCEDURAL BACKGROUND1 21 22 On November 24, 2011, Plaintiff sought leave to file a Third Amended Complaint 23 in order to add a new claim for breach of an alleged oral contract, among other things.2 24 With regard to the proposed breach of oral contract claim, Plaintiff claimed Defendant 25 Ara Baghdassarian (“Ara”) had breached an oral agreement with his brother Anto 26 27 A more detailed, factual background of this case may be found in the Court’s previous order denying Plaintiff’s Motion for Reconsideration. (Doc. No. 234 at 2-6.) 28 2 Doc. No. 83. 1 1 08cv1521 AJB (WVG) 1 Baghdassarian (“Anto”) in addition to breaching a written agreement already raised as a 2 claim in this action. On June 24, 2011, the Court denied Plaintiff’s request to add a 3 breach of oral contract claim in this matter.3 (Doc. No. 208.) 4 Five months after this Court’s ruling, Anto filed a breach of oral contract claim 5 based on similar facts against Ara in the Superior Court of the State of California for the 6 County of Los Angeles, North Central Division on November 14, 2011.4 Ara subse- 7 quently removed the case to the Central District of California (the “Central District”) and 8 filed a Notice of Pendency of Other Proceedings.5 Ara then moved to dismiss the 9 10 Defendants attached a Request for Judicial Notice (“RJN”) to their Motion for a Stay. (Doc. No. 261-2.) Defendants seek judicial notice of the following: (1) a transcript from this Court’s June 24, 2011 hearing on Plaintiff’s Motion to File a Third Amended Complaint; (2) a notice of removal filed by Ara in the related case in the Central District; (3) a notice of pendency of other actions filed by Ara in the related case in the Central District; (4) a motion to dismiss or, alternatively, a motion to transfer filed by Ara in the related case in the Central District; (5) the Central District’s February 16, 2012 order denying Anto’s motion to remand the related case; (6) the Central District’s February 16, 2012 order granting Ara’s motion to dismiss the related case with prejudice; (7) Anto’s opening brief appealing the Central District’s ruling before the Ninth Circuit; (8) Ara’s response brief in the appeal before the Ninth Circuit; (9) Anto’s reply brief in the appeal before the Ninth Circuit; and (10) a transcript from the Central District’s February 6, 2012 hearing regarding Anto’s breach of contract claim. These items were attached as Exhibits A-J to Defendants’ Motion to Stay. Plaintiffs have not objected to Defendants’ request for judicial notice of these items. 3 11 12 13 14 15 16 17 18 As an initial matter, the June 24, 2011 and February 6, 2011 hearing transcripts from this Court and the Central District respectively are not determinative of any of the 20 issues raised by Defendants’ motion; nor are the transcripts necessary to the Court’s resolution of the motion. Accordingly, the Court declines to take judicial notice of the 21 transcripts in Exhibits A and J. 19 22 23 24 25 26 27 Because the remaining documents are matters of public record and relevant to the Court’s decision herein, the Court takes judicial notice of the existence of the remaining documents, but not the truth of the disputed matters asserted by the parties therein. See Fed. R. Evid. 201(b)(2) (stating that the court may take notice of facts that are “not subject to reasonable dispute in that [they are] . . . capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned.”); Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (finding that matters that are part of the public record may be judicially noticed); Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001) (taking judicial notice of the existence of the documents, but not the truth of disputed matters asserted therein). RJN, Ex. B, Notice of Removal & attached Complaint in Antranik Baghdassarian v. Ara Baghdassarian. 28 5 RJN, Ex. C, Notice of Pendency. 4 2 08cv1521 AJB (WVG) 1 Central District action, or in the alternative, to transfer it to the Southern District.6 Anto 2 moved to remand the case to state court. On February 16, 2012, the Central District: (1) 3 denied Anto’s motion for remand, finding diversity jurisdiction under 28 U.S.C. § 1332;7 4 and (2) granted Ara’s motion to dismiss with prejudice, holding Anto’s breach of oral 5 contract claim time-barred.8 The Central District ruled that Anto’s “claim for breach of 6 oral contract is clearly barred” by the statute of limitations as Anto became aware of the 7 “alleged breach of the Oral Agreement in 2006 when [Ara’s] counsel notified him that 8 [Ara] intended to apply for the Karoun trademark.”9 9 On August 20, 2012, Anto appealed the Central District’s ruling regarding the oral 10 contract claim’s statute of limitations and the denial of the motion to remand to the Ninth 11 Circuit Court of Appeal.10 On October 3, 2012, Ara filed his responsive brief, arguing 12 that: (a) the district court properly exercised diversity jurisdiction; (b) removal was 13 proper; (c) the court also has federal question jurisdiction; (d) Anto’s duplicative lawsuit 14 in the Central District is barred because it violates the rule against claim splitting; (e) the 15 Central District correctly dismissed Anto’s complaint because his claim was barred by 16 the statute of limitations; (f) the dismissal was also proper because the alleged oral 17 agreement is void against California’s law and public policy prohibiting restraint of 18 trade; and (g) dismissal was proper because the alleged oral agreement is invalid under 19 Lebanese law because it does not comply with Lebanon’s statute of frauds.11 On 20 November 5, 2012, Anto filed his reply.12 Anto and Ara are currently awaiting the Ninth 21 22 RJN, Ex. D, Ara’s Central District Motion to Dismiss. 7 RJN, Ex. E, Central District Minute Order Denying Anto’s Motion to Remand. 8 RJN, Ex. F, Central District Minute Order Granting Ara’s Motion to Dismiss. 9 23 6 RJN, Ex. F at 159. 24 25 26 10 RJN, Ex. G, Anto’s Opening Brief. 11 RJN, Ex. H, Ara’s Responsive Brief. 12 RJN, Ex. I, Anto’s Reply Brief. 27 28 3 08cv1521 AJB (WVG) 1 Circuit’s decision in Antranik Baghdassarian v. Ara Baghdassarian, 11-cv-10385 2 SVW(JCx) (C.D. Cal. 2012), appeal docketed, No. 12-55458 (9th Cir. Mar. 9, 2012). 3 On June 28, 2013, Ara and the other Defendants in this action filed the instant 4 Motion to Stay Trial Proceedings Pending a Related Decision by the Ninth Circuit Court 5 of Appeal regarding the alleged oral contract between Anto and Ara.13 Plaintiff filed an 6 opposition to Defendants’ motion on July 12, 2013.14 On July 19, 2013, Defendants filed 7 their reply.15 LEGAL STANDARD 8 9 A court's power to stay proceedings is incidental to its inherent power to control 10 the disposition of its cases in the interests of efficiency and fairness to the court, counsel, 11 and litigants. Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936); see also Clinton v. 12 Jones, 520 U.S. 681, 706-07 (1997); Single Chip Sys. Corp. v. Intermec IP Corp., 495 F. 13 Supp. 2d 1052, 1057 (S.D. Cal. 2007). For the sake of judicial economy, such a stay 14 may be granted pending the outcome of other legal proceedings related to the case. 15 Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979). Such 16 discretion is appropriately used when the resolution of another matter will have a direct 17 impact on the issues before the court, substantially simplifying issues presented. 18 Mediterranean Enters. v. Ssangyong Corp., 708 F.2d 1458 (9th Cir. Cal. 1983); San 19 Diego Padres Baseball P’ship v. United States, 2001 WL 710601, at *1 (S.D. Cal. May 20 10, 2001). 21 The district court's determination of whether a stay is appropriate, "must weigh 22 competing interests and maintain an even balance." Landis, 299 U.S. at 254-55. The 23 Ninth Circuit has noted that these competing interests include: the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice mea- 24 25 26 13 Doc. No. 261. 14 Doc. No. 271. 15 Doc. No. 289. 27 28 4 08cv1521 AJB (WVG) 2 sured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay. 3 CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254- 4 55). However, “‘if there is even a fair possibility that the stay . . . will work damage to 5 someone else,’ the stay may be inappropriate absent a showing by the moving party of 6 ‘hardship or inequity.’” Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 7 F.3d 1059, 1066 (9th Cir. 2007)(citing Landis, 299 U.S. at 255). “If a stay is especially 8 long or its term is indefinite, we require a greater showing to justify it.” Young v. I.N.S., 9 208 F.3d 1116, 1119 (9th Cir. 2000) (reversing stay imposed until the resolution of an 10 appeal that might be lengthy). “[A] stay should not be granted unless it appears likely 11 the other proceedings will be concluded within a reasonable time.” Dependable 12 Highway, 498 F.3d at 1066 (quoting Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 13 857, 864 (9th Cir. 1979)). 1 DISCUSSION 14 Based on the above factors, the Court finds a stay of proceedings is appropriate in 15 16 this case for the following reasons. 17 I. 18 Prejudice to Moving Party by Denying Stay As noted by Defendants in their moving papers, the Ninth Circuit is currently 19 considering the validity of an oral contract that is also at issue in this case. Defendants 20 argue moving forward with trial proceedings without awaiting the Ninth Circuit’s 21 decision requires the parties to expend significant time and expense to litigate issues 22 surrounding the oral contract that may be completely invalidated by the Ninth Circuit’s 23 decision. Additionally, Defendants argue moving forward would require witnesses, jury 24 members, and the Court to waste time on an issue that may be fully adjudicated by the 25 Ninth Circuit. 26 Under the circumstances, the Court agrees. The breach of oral contract claim 27 brought by Anto against Ara in the Central District appears to be the same one rejected 28 by this Court when it denied Plaintiff leave to add a breach of oral contract claim against 5 08cv1521 AJB (WVG) 1 Ara here. As a result, Ara has already been required to litigate the same issue in two 2 forums simultaneously, resulting in a much greater expense of time and resources than 3 ordinarily required. It would cause further prejudice to Defendants if litigation contin- 4 ued in this action and the Ninth Circuit subsequently issued a decision that would require 5 relitigation of this case in accordance with its ruling. Contrary to Plaintiff’s assertion, it 6 does not appear Defendants are seeking to avoid trial or needlessly drag out litigation. 7 Rather, it appears the Ninth Circuit will consider issues that will also need to be consid- 8 ered by the Court in this case. Thus, it would result in prejudice to both parties if the 9 decision reached by the Ninth Circuit required additional expense and effort in this case 10 by virtue of the case proceeding forward without awaiting its decision. 11 II. 12 Prejudice to Non-Moving Party by Granting Stay In contrast, Plaintiff argues a stay of trial for an indefinite amount of time would 13 result in prejudice to Plaintiff. Specifically, Plaintiff asserts that any further delay of trial 14 allows witnesses to grow older and their memories to fade, hampers Plaintiff’s business 15 activities, and increases expenses by litigating in an inconsistent fashion. 16 As support for this argument, Plaintiff relies upon Murray v. City of Carlsbad for 17 the proposition that the potential delay of trial and the corresponding consequences to 18 Plaintiff outweigh the potential efficiency and expense saved by Defendants and the 19 Court. 16 In Murray, the court did find delay of trial constituted damage to the non- 20 moving party, such that the moving party needed to make a clear case of hardship or 21 inequity in being required to proceed with trial.17 However, when the court denied the 22 stay pending a decision by the Ninth Circuit in Murray, the court found the legal issues 23 raised by the plaintiff’s claims in the Ninth Circuit case were “separate and distinct from 24 the legal issues” raised in the case before the court.18 Accordingly, the moving party had 25 26 27 (Pl. Resp. 21-22 (Doc. No. 271)(citing Murray v. City of Carlsbad, 2010 WL 4822744, at *1 (S.D. Cal. Nov. 22, 2010)).) 16 17 Murray v. City of Carlsbad, 2010 WL 4822744, at *1 (S.D. Cal. Nov. 22, 2010). 18 Id. 28 6 08cv1521 AJB (WVG) 1 not satisfied its burden. In stark contrast to the situation in Murray, the issues raised in 2 the Ninth Circuit case are not “separate and distinct” from the issues raised here. As 3 noted above, the Ninth Circuit’s decision may have a direct impact on the proceedings in 4 this case. Accordingly, it would be inequitable to Defendants and a hardship upon both 5 parties to require further litigation of this issue here before the Ninth Circuit issues its 6 ruling. 7 Plaintiff also relies upon Palomar Medical Center v. Sebelius as support for 8 imposing an enhanced burden on Defendants in seeking a stay of an undetermined 9 duration at this late stage of the case.19 In that case, the court noted the moving party had 10 an enhanced burden to justify the stay where the stay requested was indefinite and denied 11 a stay pending a decision in a related case.20 However, the facts in Palomar Medical 12 Center are also distinguishable from this case. First, the court in Palomar Medical 13 Center observed that the related case “was just recently filed and its conclusion un- 14 known.” Second, the moving party in that case had “waited almost eight months before 15 filing” the motion for a stay. In this instance, the time frame is less uncertain as the 16 Ninth Circuit has not only accepted the appeal, but Anto filed his reply in November 17 2012, thereby completing the briefing on the issue. There is no reason to expect these 18 proceedings will not be concluded within a reasonable time.21 Additionally, there is no 19 evidence Defendants unreasonably delayed filing their request for a stay in this case. 20 Rather, Defendants have kept this Court informed regarding the status of the related case 21 in the Central District and its subsequent appeal to the Ninth Circuit. 22 23 24 Palomar Medical Center v. Sebelius, 2010 WL 2985839, at *1 (S.D. Cal. July 28, 2010). 19 Palomar Medical Center v. Sebelius, 2010 WL 2985839, at *1 (S.D. Cal. July 28, 2010). 20 25 26 Plaintiff argues Ara’s failure to request an expedited hearing schedule before the Ninth Circuit can lead to only one conclusion: Ara failed to do so in order “to delay the 27 trial of this long-pending case indefinitely and for as long as possible.” (Pl. Resp. 17.) The Court declines to make this inference as there are any number of reasons a party 28 might choose not to request an expedited hearing schedule that have absolutely nothing to do with intentionally delaying a related case. 21 7 08cv1521 AJB (WVG) 1 Even with an enhanced burden based on the indefinite time period of the requested 2 stay, the Court finds Defendants have made a persuasive case for hardship or inequity for 3 the Defendants if the stay is not granted. In fact, Defendants have made a persuasive 4 case for hardship or inequity on behalf of all those involved – the litigants, the witnesses, 5 the jury members, and the Court – if a stay is denied. There is a distinct possibility that 6 the Ninth Circuit’s ruling will impact the resolution of issues in this case. As discussed 7 above, moving forward with trial without awaiting the Ninth Circuit’s ruling on these 8 issues would result in significant expenditures of time and resources by the parties to 9 litigate issues that may ultimately be invalidated. In light of this potential hardship for both parties and non-parties, the Court is not 10 11 persuaded by Plaintiff’s argument that any delay of trial allows witnesses to grow older 12 and their memories to fade, hampers Plaintiff’s business activities, and increases 13 expenses by litigating in an inconsistent fashion. The generalized risks cited by Plaintiff 14 are not unique to the situation here. The Court's determination of whether a stay is 15 appropriate, "must weigh competing interests and maintain an even balance." Landis, 16 299 U.S. at 254-55. Even taking into account the damage to Plaintiff from delaying trial, 17 the Court finds that the potential prejudice to the parties if the trial moves forward 18 outweighs the potential prejudice to Plaintiff if a stay is granted. 19 III. Judicial Economy 20 Similarly, a stay serves the Court’s interest in judicial economy. Staying proceed- 21 ings pending the Ninth Circuit’s decision could simplify and clarify the issues presented 22 for the Court’s consideration in the parties’ Daubert motions and motions in limine as 23 well as the issues to be presented to the jury at trial. Under these circumstances, the 24 Court finds significant value in temporarily staying proceedings to wait for any insight 25 provided in the Ninth Circuit’s opinion. It makes little sense to address the complicated 26 issues of Lebanese contract law raised in the parties’ Daubert motions, and likely to be 27 raised in the parties’ motions in limine, while these issues are simultaneously being 28 considered by the Ninth Circuit. In all likelihood, the Ninth Circuit’s consideration of 8 08cv1521 AJB (WVG) 1 the oral contract will substantially aid the resolution of the present action by narrowing 2 and simplifying the issues and facts presented before for the jury and Court. 3 Furthermore, the Court echoes Defendants’ concern that moving forward with trial 4 prior to a decision being reached by the Ninth Circuit could result in inconsistent rulings. 5 It appears many of the issues raised before the Ninth Circuit would also be raised before 6 this Court with regard to the parties’ Daubert motions and motions in limine. If this 7 Court or the jury reaches conclusions contrary to those reached by the Ninth Circuit, it 8 would result in significant confusion and would likely extend litigation in order to 9 address the inconsistent decisions. As a result, inconsistent rulings would waste judicial 10 11 time and resources as well as impose further hardship and inequity to the parties. Based on these considerations, the Court concludes a stay serves the interest of 12 judicial economy. Overall, it appears the issues before the Ninth Circuit may have a 13 direct impact on the issues currently before this Court, and the prejudice to the parties in 14 moving forward without the benefit of the Ninth Circuit’s decision outweighs the 15 damage to Plaintiff of further delaying trial in this matter. Therefore, a stay is warranted 16 under the circumstances. CONCLUSION 17 18 19 20 For the reasons set forth above, the Court GRANTS Defendants’ Motion to Stay Trial Proceedings. It is further ORDERED as follows: 1. This case is STAYED pending a decision by the Ninth Circuit in the related 21 case, Antranik Baghdassarian v. Ara Baghdassarian, 11-cv-10385 22 SVW(JCx) (C.D. Cal. 2012), appeal docketed, No. 12-55458 (9th Cir. 23 Mar. 9, 2012); 24 2. As a result, the parties’ pending Daubert Motions and accompanying 25 Motions to Seal are hereby taken off calender.22 These motions will be reset 26 once the stay has been lifted. 27 28 22 (Doc. Nos. 253, 256, 257, 258, 259, 262, 263, 264, 265, and 268.) 9 08cv1521 AJB (WVG) 1 2 3. The parties must submit a joint status report in 60 days to inform the Court of the status of the Ninth Circuit case. 3 4 IT IS SO ORDERED. 5 6 DATED: September 3, 2013 7 8 Hon. Anthony J. Battaglia U.S. District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 08cv1521 AJB (WVG)

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