Omnireps, LLC v. CDW Corporation et al
Filing
78
MEMORANDUM Opinion and Order. Signed by the Honorable Jeannice W. Appenteng on 5/8/2024. Mailed notice. (kl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
OMNIREPS, LLC,
v.
Plaintiff,
CDW CORPORATION, et al.,
Defendants.
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Case No. 1:23-cv-00868
Judge Martha M. Pacold
Magistrate Judge Jeannice W. Appenteng
MEMORANDUM OPINION AND ORDER
Before the Court is plaintiff’s motion for phased discovery. Dkt. 65. For the
reasons explained below, plaintiff’s motion is denied and defendants’ request for a
stay, Dkt. 72, is granted in part.
Background
Plaintiff filed a twelve-count second amended complaint against defendants.
Dkt. 29. Defendants then filed two separate motions to dismiss. Defendants CDW
Corp., John Coleman, Matt Troka, Byron Holden, and Tod Lichner filed the first
motion to dismiss arguing that: (1) Counts 4, 5, 9, 11, and 12 should be dismissed
for failure to state a claim, failure to properly plead under Rule 9 of the Federal
Rules of Civil Procedure, and as barred by the statute of limitations; and (2) Count
2 should be dismissed for failure to state a claim based on the interpretation of a
contract. Dkt. 42. Defendants Matt McCormick, Brent Loomis, James Patton, Cory
Christie, Add-On Computer Peripherals, LLC, Halo Technology Group, Amphenol
Corporation, and Inflexion Private Equity Partners, LLC filed the second motion to
dismiss arguing that: (1) Counts 1, 3–7, and 10–12 should be barred due to a broad
release that plaintiff agreed to in a previously-entered settlement agreement; (2)
Counts 3–7 and 10–12 should be time barred by the statute of limitations; (3) Count
10 should be dismissed for failure to properly plead under Rule 9 of the Federal
Rules of Civil Procedure; and (4) all claims should be dismissed against Halo
Technology Group and Inflexion Private Equity Partners, LLC for lack of personal
jurisdiction. Dkt. 46. Defendants did not move to dismiss Count 8 for copyright
infringement against Defendants Add-On Computer Peripherals, LLC, Matt
McCormick, James Patton, Brent Loomis, Cory Christie, and Drew Murrie.1
The parties held their Rule 26(f) conference to discuss discovery on August 21,
2023, and October 2, 2023. While plaintiff communicated its desire to begin
discovery on a phased basis, defendants expressed that they wanted to wait until
after the District Judge ruled on their motions to dismiss before proceeding with
discovery. Unable to reach an agreement, plaintiff filed the instant motion for
phased discovery. Dkt. 65. In their response, defendants ask the Court to stay
discovery. Dkt. 72.
For the reasons explained below, the Court denies plaintiff’s motion for
phased discovery and grants in part defendants’ request to stay discovery.
Additionally, plaintiff alleges Count 8 against Halo Technology Group and Inflexion
Private Equity Partners, LLC, but these entities have moved to dismiss for lack of personal
jurisdiction.
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Discussion
Normally, the filing of a motion to dismiss “does not automatically stay
discovery.” New Eng. Carpenters Health & Welfare Fund v. Abbott Labs., No. 12 C
1662, 2013 WL 690613, at *1 (N.D. Ill. Feb. 20, 2013); see also Harper v. Cent. Wire,
Inc., 19 CV 50287, 2020 WL 5230746, at *2 (N.D. Ill. Sept. 2, 2020) (recognizing that
granting a stay when a dispositive motion is filed is the exception, not the rule).
However, district courts have “broad discretion in managing discovery.” Calderon v.
Procter & Gamble Co., No. 22-cv-3326, 2022 WL 20742696, at *1 (N.D. Ill. Oct. 6,
2022). In accordance with the Federal Rules, a court may, “for good cause,” limit the
scope of discovery and control its sequence to protect from “undue burden or
expense.” See Fed. R. Civ. P. 26(c)–(d); see also Tamburo v. Dworkin, No. 04 C 3317,
2010 WL 4867346, at *1 (N.D. Ill. Nov. 17, 2010).
In determining whether to grant a stay, a court may consider the following
factors: “(1) whether a stay will unduly prejudice or tactically disadvantage the nonmoving party, (2) whether a stay will simplify the issues in question and streamline
the trial, and (3) whether a stay will reduce the burden of litigation on the parties
and on the court.” Vital Proteins, LLC v. Ancient Brands, LLC, No. 22-cv-2265, 2023
WL 5671857, at *3 (N.D. Ill. Sept. 1, 2023). Courts also consider “the numerosity
and substantiality of the bases for dismissal raised” when determining whether a
stay is warranted. Rao v. JPMorgan Chase Bank, N.A., No. 21 C 1361, 2021 WL
4927415, at *1 (N.D. Ill. May 12, 2021); cf. Hayes v. Bd. of Educ. for City of Chi., No.
21 C 1198, 2021 WL 8153761, at *1 (N.D. Ill. Dec. 22, 2021) (the nature of issues
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presented by a motion to dismiss is a consideration in determining whether to stay
discovery). Courts in this circuit have found stays appropriate where motions to
dismiss raise issues such as lack of jurisdiction, challenge whether the claims are
within the statute of limitation, allege a failure to satisfy Rule 9(b), turn on a
question of law, or where discovery may be especially burdensome and costly to the
parties. See Vital Proteins, 2023 WL 5671857, at *3, 6 (Rule 9(b)); Ogungemi v.
Omnicare, Inc., No. 22-cv-00649-SEB-MKK, 2023 WL 2139834, at *2 (S.D. Ind. Feb.
17, 2023) (statute of limitations); Rodriguez v. Ford Motor Co., No. 21 C 2553, 2022
WL 704780, at *2 (N.D. Ill. Mar. 9, 2022) (legal question); DSM Desotech Inc. v. 3D
Sys. Corp., No. 08 CV 1532, 2008 WL 4812440, at *2 (N.D. Ill. Oct. 28, 2008)
(jurisdiction and where discovery would be burdensome and costly).
Here, the factors weigh in favor of a partial stay, with discovery proceeding
on Count 8 against defendants Add-On Computer Peripherals, LLC, Matt
McCormick, James Patton, Brent Loomis, Cory Christie, and Drew Murrie. First,
plaintiff does not assert it will suffer any prejudice if discovery is stayed, nor does
the Court find that plaintiff would experience prejudice or be placed at a tactical
disadvantage if discovery is stayed. A “mere delay in plaintiff’s ability to proceed to
discovery caused by the stay amounts to little, if any, prejudice.” Rao, 2021 WL
4927415, at *1. Also, there is no indication here that “witnesses or documents . . .
will be lost or no longer discoverable if discovery is stayed.” Rodriguez, 2022 WL
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704780, at *1.2 This case is largely in its early stages,3 the parties have not yet
engaged in discovery, and no deterioration of evidence concerns have been raised.
Also, permitting discovery to proceed on Count 8 in part weighs against any
potential prejudice to plaintiff.
Second, given the number of the claims and the alleged bases for dismissal
raised in defendants’ motions (e.g., jurisdiction, statute of limitations, interpretation
of contract, and Rule 9), staying discovery “could simplify the issues in the case by
waiting to see which issues remain after the motion [to dismiss] is decided.” Harper,
2020 WL 5230746, at *2; see also Rao, 2021 WL 4927415, at *1. Further, defendants
do not dispute that Count 8 will proceed regardless and suggest that if discovery is
permitted to move forward, plaintiff should be limited to seeking discovery relevant
to Count 8 only. See Dkt. 72 at 11, 12 n.6. The Court largely agrees.4
Third, plaintiff alleges twelve counts in its second amended complaint, and
its motion for phased discovery contemplates a round of requests for production on
all twelve counts “with no limit on the number of requests.” Dkt. 65 at 2; 65-1 at 2.
Additionally, parties have an obligation to preserve evidence material to the litigation. See
Fed. R. Civ. P. 37; Kucala Enters., Ltd. v. Auto Wax Co., Inc., No. 02 C 1403, 2003 WL
21230605, at *4 (N.D. Ill. May 27, 2003) (“Parties in litigation have a fundamental duty to
preserve relevant evidence over which the non-preserving entity had control and reasonably
knew or could reasonably foresee was material to a potential legal action.”) (cleaned up).
2
Although the lawsuit was filed February 13, 2023, Dkt. 1, plaintiff twice amended its
complaint, and the parties did not engage in Rule 26(f) conferences until August 21, 2023,
and October 2, 2023.
3
Again, defendants Halo Technology Group and Inflexion Private Equity Partners, LLC
have moved to dismiss for lack of personal jurisdiction. Because jurisdiction is a threshold
issue, discovery is stayed against Halo Technology Group and Inflexion Private Equity
Partners, LLC.
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Responding and producing relevant documents to these potentially sweeping
requests would likely be time-consuming and costly, in light of the posture of this
case. Because the motions to dismiss may simplify or narrow the issues, a stay
serves to preserve the parties’ and the Court’s resources. See Vital Proteins, 2023
WL 5671857, at *4 (finding that “responding to the discovery at issue would impose
a significant burden . . . due to the sweeping nature of the requests” that may
potentially be unnecessary and that “staying discovery would preserve the resources
of the parties and the Court if [the] motion [to dismiss] proves successful”); Aland v.
U.S. Dep’t of the Interior, No. 22-cv-5821, 2022 WL 18027569, at *4 (N.D. Ill. Dec.
30, 2022) (“To avoid the cost and burden of potentially unnecessary discovery,
courts frequently stay discovery pending a motion to dismiss the complaint ‘where
. . . discovery may be especially burdensome and costly to the parties.’”) (quoting
DSM Desotech, 2008 WL 4812440, at *2).
Last, the Court finds unpersuasive plaintiff’s argument that staying
discovery to some, but not all, defendants would not simplify the case and lead to
“duplicate depositions, complicate discovery, and actually serve to frustrate the
expeditious resolution of litigation.” Dkt. 65 at 4 (citing O’Conner v. Eden Mgmt.,
LLC, No. 13 C 7391, 2014 WL 5761138, at *2 (N.D. Ill. Nov. 4, 2014)). If plaintiff is
correct that Count 8 “will involve much of the same evidence as most other claims,”
id. at 5, then allowing discovery to proceed on Count 8 in part will only help
expedite the case after the District Judge has ruled on the motions to dismiss.
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Therefore, because Count 8 will proceed regardless of the District Judge’s
ruling on the motions to dismiss, a partial stay is in accord with the general rule
that motions to dismiss do not stay discovery. This resolution also reduces the
burden of litigation on the parties and the Court by waiting to see whether the
other counts withstand dismissal.
CONCLUSION
For the reasons stated above, plaintiff’s motion for a phased discovery is
denied, and defendants’ request for a stay on discovery is granted in part. The
parties shall proceed with discovery on Count 8 as against defendants Add-On
Computer Peripherals, LLC, Matt McCormick, James Patton, Brent Loomis, Cory
Christie, and Drew Murrie. By May 22, 2024, the parties shall meet and confer on
how they anticipate proceeding with Count 8 discovery and file a joint status report
setting forth a proposed discovery schedule consistent with this order.
So Ordered.
______________________________
Jeannice W. Appenteng
United States Magistrate Judge
Dated: 5/8/2024
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