Wyers Products Group v. Cequent Performance Products, Inc.

Filing 57

ORDER granting 43 Cequent's Motion to Stay Discovery Pending Resolution of its Rule 12(b)(1) Motion. All discovery in this matter is hereby STAYED pending ruling on Cequent's Motion to Dismiss 23 . The Scheduling Conference set for 6/11/13 is VACATED. The parties shall file a joint status report within ten days of a ruling on Cequent's Motion to Dismiss to advise if the Scheduling Conference should be reset. by Magistrate Judge Kathleen M. Tafoya on 6/7/13.(mjgsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Kathleen M. Tafoya
Civil Action No. 12–cv–02640–REB–KMT

WYERS PRODUCTS GROUP, a Colorado corporation,
Plaintiff,
v.
CEQUENT PERFORMANCE PRODUCTS, INC.,
Defendant.

ORDER

This matter is before the court on “Cequent’s Motion to Stay Discovery Pending
Resolution of its Rule 12(b)(1) Motion.” (Doc. No. 43, filed May 17, 2013 [Mot. Stay].)
Plaintiff Wyers Products Group (“Wyers Products”) filed its Response on May 23, 2013 (Doc.
No. 46) and Defendant Cequent Performance Products, Inc. (“Cequent”) filed its Reply on May
28, 2013 (Doc. No. 51). For the following reasons, Cequent’s Motion to Stay is GRANTED.
BACKGROUND
Wyers Product’s First Amended Complaint (Doc. No. 13), filed November 6, 2012,
alleges two claims against Cequent, pursuant to 35 U.S.C. § 271, for infringement and
inducement of infringement of U.S. Patent 6,672,115 (“the ’115 Patent”) and U.S. Patent

7,121,121 (“the ’121 Patent”). Wyers Products further alleges that Philip W. Wyers,1 the
inventor listed on the ’115 and ’121 Patents, exclusively assigned the patents to it. (FAC ¶ 5.)
On January 29, 2013, Cequent filed a Motion to Dismiss Under Rule 12(b)(1) (Doc. No.
23 [Mot. Dismiss]) and Memorandum in Support (Doc. No. 24 [Memo. Dismiss].) Therein,
Cequent argues that this court lacks subject matter jurisdiction over Wyers Products claims
because, contrary to the allegations in the First Amended Complaint, there has been no written
assignment or transfer of ownership of the ‘115 and ‘121 Patent to Wyers Products and,
therefore, Wyers Products lacks standing to prosecute this action. (See generally Memo.
Dismiss.) As such, in its present Motion to Stay, Cequent argues that all discovery in this case
should be stayed until the court resolves whether it has subject matter jurisdiction over Wyer
Products’s claims. (See Mot. Stay.)
ANALYSIS
A motion to stay discovery pending determination of a dispositive motion is an
appropriate exercise of this court’s discretion. Landis v. North American Co., 299 U.S. 248,
254–255 (1936). The power to stay proceedings is incidental to the power inherent in every
court to control the disposition of the causes on its docket with economy of time and effort for
itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment,

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The parties dispute whether Mr. Wyers is also a plaintiff to this action. This issue is the
subject of Wyer Products’s “Motion to Amend Case Caption or, in the Alternative, to Join Philip
W. Wyers as Co-Plaintiff.” (Doc. No. 27, filed Feb. 15, 2013.) As that motion is pending before
District Judge Robert E. Blackburn, this court will not opine on that issue.
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which must weigh competing interests and maintain an even balance. Kansas City S. Ry. Co. v.
United States, 282 U.S. 760, 763 (1931).
The underlying principle governing whether to grant or deny a stay is that “[t]he right to
proceed in court should not be denied except under the most extreme circumstances. Commodity
Futures Trading Comm’n v. Chilcott Portfolio Mgmt., Inc., 713 F.2d 1477, 1484 (10th Cir. 1983)
(quoting Klein v. Adams & Peck, 436 F.2d 337, 339 (2d Cir.1971)). In other words, stays of the
normal proceedings of a court matter should be the exception rather than the rule. As a result,
stays of all discovery are generally disfavored in this District. Chavez v. Young Am. Ins. Co.,
No. 06–cv–02419–PSF–BNB, No. 2007 WL 683973, at *2 (D. Colo. Mar. 2, 2007) (citation
omitted).
Nevertheless, “a court may decide that in a particular case it would be wise to stay
discovery on the merits until [certain challenges] have been resolved.” 8A CHARLES ALAN
WRIGHT, ARTHUR R. MILLER & RICHARD L. MARCUS, FEDERAL PRACTICE AND PROCEDURE §
2040, at 198 (3d ed.2010). Courts have routinely recognized that discovery may be
inappropriate where the court’s jurisdiction is at issue. Gilbert v. Ferry, 401 F.3d 411, 415–16
(6th Cir. 2005) (finding stay permissible pending ruling on a dispositive motion asserting a
jurisdictional issue); Democratic Republic of Congo v. FG Hemisphere Assocs., LLC, 508 F.3d
1062, 1064 (D.C. Cir. 2007) (noting that the reason jurisdictional defenses should be raised at
the outset is to avoid unnecessary litigation).
Indeed, a lack of subject matter jurisdiction may be asserted at any time by the court
either at the trial or appellate level, and that has been done on innumerable occasions at all levels
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of the federal judiciary. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999). A Rule
12(b)(1) challenge is usually among the first issues resolved by a district court because if it must
dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and
objections become moot and do not need to be determined by the judge. Id. As such, decisions
from this District have concluded that stays are generally favored when a jurisdictional defense
under Rule 12(b)(1) is asserted. See Weatherspoon v. Miller, No. 11-cv-00312-REB-MEH, 2011
WL 1485935, at *2 (D. Colo. Apr. 19, 2011).
When considering a stay of discovery, this court has considered the following factors: (1)
the plaintiff’s interests in proceeding expeditiously with the civil action and the potential
prejudice to plaintiff of a delay; (2) the burden on the defendants; (3) the convenience to the
court; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.
String Cheese Incident, LLC v. Stylus Shows, Inc., No. 02-cv-01934-LTB-PA, 2006 WL 894955,
at *2 (D. Colo. Mar. 30, 2006) (citing FDIC v. Renda, No. 85–2216–O, 1987 WL 348635, at *2
(D.Kan. Aug. 6, 1987)).
Wyers Products argues that a stay is inappropriate because Cequent’s dismissal
arguments do not actually implicate the court’s subject matter jurisdiction, but instead are
“premised on, at best, a mere defect in prudential standing, which will be cured by joining Mr.
Wyers under Rules 19 to 21.” (Resp. at 5.) Consistent with this position, Wyers Products has
filed a “Motion to Amend Case Caption or, in the Alternative, to Join Philip W. Wyers as CoPlaintiff” in order to cure any standing deficiencies. (Doc. No. 27, filed Feb. 15, 2013
[(hereinafter “Mot. Amend or Join”].) Both Cequent’s Motion to Dismiss and Wyer Products’s
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Motion to Amend or Join are pending before District Judge Robert E. Blackburn; thus, it is
inappropriate for this court to weigh in on the proper resolution of these motions. Nevertheless,
for purposes of resolving the present motion, the court finds that Cequent has lodged colorable
arguments that the court lacks subject matter jurisdiction over Wyer’s Products’s claims due to
the lack of a valid written assignment (see generally Mot. Dismiss), and that joining Mr. Wyers
as a co-plaintiff would not cure this purported defect (Memo. Dismiss at 4 (quoting Schreiber
Foods, Inc. v. Beatrice Cheese, Inc., 402 F.3d 1198, 1203 (Fed. Cir. 2005)) (where a plaintiff
suing for patent infringement lacks constitutional standing, “‘the suit must be dismissed, and the
jurisdictional defect cannot be cured by the addition of a party with standing, nor by the
subsequent purchase of an interest in the patent in suit.”).
Turning to the String Cheese Incident factors, the court acknowledges that Wyer
Products has an interest in proceeding expeditiously with this case. However, the court finds
that this interest is overcome by the burden Cequent might face if it were forced to proceed with
discovery only to have the case dismissed for lack of subject matter jurisdiction. Cf. String
Cheese, 2006 WL 894955, at *2 (finding “that subjecting a party to discovery when a motion to
dismiss for lack of personal jurisdiction is pending may subject him to undue burden or expense,
particularly if the motion to dismiss is later granted.”). For similar reasons, the court finds its
own convenience also favors a stay; any inconvenience in rescheduling the docket is outweighed
by the potential waste of judicial resources if discovery were to proceed in the absence of
jurisdiction. Chavous v. D.C. Fin. Responsibility & Mgmt. Assistance Auth., 201 F.R.D. 1, 2
(D.D.C. 2005) (“A stay of discovery pending the determination of a dispositive motion is an
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eminently logical means to prevent wasting the time and effort of all concerned, and to make the
most efficient use of judicial resources.”) (internal quotation omitted).
Finally, the interests of non-parties and the public do not prompt the court to reach a
different result. Therefore, having balanced the five String Cheese factors, the court finds that a
stay of discovery is appropriate in this case. Accordingly, it is
ORDERED that “Cequent’s Motion to Stay Discovery Pending Resolution of its Rule
12(b)(1) Motion” (Doc. No. 43) is GRANTED. All discovery in this matter is hereby STAYED
pending ruling on “Cequent’s Motion to Dismiss under Rule 12(b)(1)” (Doc. No. 23). The
Scheduling Conference set for June 11, 2013 is VACATED. The parties shall file a joint status
report within ten days of a ruling on Cequent’s Motion to Dismiss to advise if the Scheduling
Conference should be reset.
Dated this 7th day of June, 2013.

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