American Packing and Crating of GA, LLC v. Resin Partners, Inc.

Filing 16

ORDER denying 12 Motion to Stay. The Court extends the 26(f) Conference deadline until 14 days after the date this Order is served. The parties' Rule 26(f) Report is due seven days thereafter. Signed by Magistrate Judge G. R. Smith on 1/1/16. (bcw)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
AMERICAN PACKING AND
CRATING OF GA, LLC,
Plaintiff,
V.

Case No. CV415-256
RESIN PARTNERS, INC. a
Subsidiary of KETER PLASTICS,
LTD., an Israeli Corporation d/b/a
KETER NORTH AMERICA,
Defendant.

ORDER
In this breach of contract case, plaintiff American Packing and
Crating of Georgia, LLC ("API") contends that Defendant Resin
Partners, Inc. failed to pay three invoices for shipping, warehousing, and
logistics services that APC provided to Resin. Doc. 1 at 2-3. Resin moves
to dismiss, claiming that API (1) knowingly "sued the wrong party," and
(2) "failed to properly plead the necessary information to satisfy the
requirements of diversity jurisdiction." Doc. 11 at 2. That motion is
before the district judge.

Before the undersigned is Resin's motion to stay discovery pending
resolution of its dismissal motion. Doc. 12. API's Complaint, it says,
"has significant and fatal deficiencies," and, "[i]f granted, [Resin's]
motion [to dismiss] resolve[s] the claims asserted against [it] in their
entirety." Doc. 13 at 3. Hence, it wants the stay to avoid "costly and
time consuming discovery which will include multiple depositions many
of which will require significant travel."

Id. at 2. API disagrees,

insisting that it sued the right debtor and adequately pleaded diversity
jurisdiction. See doc. 15.
Long has the Eleventh Circuit recognized that:
[f]acial challenges to the legal sufficiency of a claim or defense, such
as a motion to dismiss based on failure to state a claim for relief,
should . . . be resolved before discovery begins. Such a dispute
always presents a purely legal question; there are no issues of fact
because the allegations contained in the pleading are presumed to
be true. See Mitchell v. Duval County Sc/i. Bd., 107 F.3d 837, 838 n.
1 (11th Cir. 1997) per curiam). Therefore, neither the parties nor
the court have any need for discovery before the court rules on the
motion. See Kaylor v. Fields, 661 F.2d 1177, 1184 (8th Cir. 1981)
("Discovery should follow the filing of a well-pleaded complaint. It
is not a device to enable a plaintiff to make a case when his
complaint has failed to state a claim.").

Gliudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir. 1997);
see also SP Frederica, LLC v. Glynn Cy., 2015 WL 5242830 at * 2 (S.D.

2

Ga. Sept. 8, 2015) (discovery in mandamus action against municipality
stayed pending resolution of nonfrivolous motion to dismiss).
As many courts have noted, however, "Chudasama does not stand
for the proposition that all discovery in every circumstance should
be stayed pending a decision on a motion to dismiss. Instead,
Chudasama and its progeny stand for the much narrower
proposition that courts should not delay ruling on a likely
meritorious motion to dismiss while undue discovery costs mount."
Alexander v. Allen, 2014 WL 3887476 at * 1 (M.D. Fla. Aug.7, 2014)
(citations and internal quotations omitted); accord Jones v. Bank of
America corp., 2013 WL 5657700 at * 2 (M.D. Ga. Oct.15, 2013)
("nothing in Chudasama . . . means discovery should be stayed as a
matter of course whenever a defendant files a motion to dismiss.");
Reilley v. Amy's Kitchen, Inc., 2013 WL 3929709 at * 1 (S.D. Fla.
July 31, 2013) ("there is no general rule that discovery be stayed
while a pending motion to dismiss is resolved.").

S. Motors Chevrolet, Inc. v. Gen. Motors, LLC, 2014 WL 5644089 at * 1
(S.D. Ga. Nov. 4, 2014). Consequently, when a party seeks a stay
pending resolution of a motion to dismiss, a "court must take a
'preliminary peek' at a dispositive motion to assess the likelihood that
the motion will be granted. McCabe v. Foley, 233 F.R.D. 683, 685 (M.D.
Fla. 2006) (citing Feldman v. Flood, 176 F.R.D. 651, 652 (M.D. Fla.
1997)); Arriaga-Zacarias v. Lewis Taylor Farms, 2008 WL 4544470 at *
2 (M.D. Ga. Oct. 10, 2008). Generally, a stay should be granted only
where the motion to dismiss appears, upon preliminary review, 'to be
clearly meritorious and truly case dispositive,' Feldman, 176 F.R.D. at
3

652-53 (emphasis added), rendering discovery a mere futile exercise."

Id.
The Court's peek at Resin's motion to dismiss reflects that it packs
insufficient punch to justify a stay.' As the case caption reflects, API
sued Resin, a subsidiary of Keter Plastics, Ltd., which does business in
the U.S. (Keter Plastics is apparently an Israeli corporation) as Keter
North America. See, e.g., doe. 14. Keter North America is the entity that
API invoiced for its services (see, e.g., doe. 1-3). So, says Resin, Keter is
the entity API should have sued. Doc. 11 at 2.
API refutes that by pointing to a copy of search results from the
Indiana Secretary of State's website (Keter North America/Resin is
allegedly a Delaware into with its principal place of business in Indiana,
see doe. 14 at 2), which reveal that Keter North America's "legal name"
is Resin Partners, Inc. 2 See doe. 15-1. That, says API, is why it sued
Resin. Doc. 15 at 2.

1

Resin's argument that API failed to plead complete diversity holds no water. In an
amended complaint, API (an LLC) alleges that all its members are diverse from Resin
or Keter North America and that the amount in controversy exceeds $75,000. See
doe. 14. The Court thus addresses in detail only Resin's argument that API sued the
wrong entity.
2

As API correctly points out, courts may take judicial notice of facts that can be
readily determined from reasonably unimpeachable sources. Fed. R. Civ. P.
4

Taken as true, API's allegations about the relationship between
Keter North America and Resin suggest that it may indeed have sued the
proper party and, thus, that Resin's motion to dismiss is no "slam-dunk."

Southern Motors, 2014 WL 5644089 at * 3. "Just as a plaintiff should not
be able to embark on unfettered discovery by filing a defective complaint,
neither should a defendant be able to halt resolution of a case every time
it conceives of a Rule 12 motion." Id.

Weighing the cost of delaying

discovery against the probability that the pending motion will eliminate
the need for discovery, the Court finds that, in this case, the scale tips in
favor of allowing discovery to proceed. Accordingly, Resin's motion to
stay discovery is DENIED. Doc. 12.
Meanwhile, the Court reminds the parties of their Fed. R. Civ. P.
26(f) obligations. Originally, they had to confer and develop a discovery
plan within 45 days of Resin filing its motion to dismiss (December 3,
2015), see doc. 3 at 1, which means they should have conferred no later
than January 18, 2016. They then had to file a Rule 26(f) report no later
than February 1, 2016. See id.

Given the motion to stay, however, the

201(b)(2). Nevertheless, in the case of publically available documents like corporate
filings, the Court may only take judicial notice of what the documents contain, not
the truth of their contents. See Thompson v. RelationServe Media, Inc., 610 F.3d
628, 642 n. 1 (11th Cir. 2010).

5

Court extends the conference deadline until 14 days after the date this
Order is served. The parties' Rule 26(f) report is due seven days
thereafter.
SO ORDERED, this 1st day of February, 2016.

UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF GEORGIA