Nexstar Broadcasting Inc v. Granite Broadcasting Corporation et al

Filing 39

OPINION AND ORDER GRANTING 34 MOTION to Stay Discovery by Defendants Granite Broadcasting Corporation, Wise-TV Inc, Wise-TV License LLC. Signed by Magistrate Judge Roger B Cosbey on 9/15/11. (cer)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION

NEXSTAR BROADCASTING, INC.,
Plaintiff,
v.
GRANITE BROADCASTING
CORPORATION, WISE-TV LICENSE
LLC, and WISE-TV, INC.,
Defendants.

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Case No. 1:11-cv-249

OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO STAY
I. INTRODUCTION
This matter is before the Court on Defendants’ Motion to Stay Discovery and supporting
memorandum filed on September 12, 2011. (Docket # 34, 35.) Argument on the motion was
heard and concluded at the scheduling conference on September 14, 2011. At the conference,
the Court GRANTED Defendants’ Motion to Stay for the reasons set forth in this opinion.
II. FACTUAL AND PROCEDURAL BACKGROUND
On July 25, 2011, Plaintiff Nexstar Broadcasting, Inc. (“Nexstar”) sued Defendants
Granite Broadcasting Corporation, Wise-TV License LLC, and Wise-TV, Inc. (collectively,
“Granite”) in this Court, alleging that Granite violated the Sherman Act, the Clayton Act, and the
Indiana Antitrust Act.1 (Compl. Counts I-V.) These allegations arise from an agreement
between Granite and FOX Broadcasting Company making Granite the new exclusive network

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Accordingly, subject matter jurisdiction arises under 28 U.S.C. § 1331.

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affiliate of FOX, effective August 1, 2011. (Compl. ¶ 30.) Prior to this agreement, WFFT-TV, a
Nexstar-owned station, was the FOX network affiliate in Fort Wayne. (Compl. ¶ 16.) Nexstar
alleges that as a result of Granite’s relationship with Malara, another broadcast group, Granite
controls sales and revenues for the NBC, ABC, CW, and MyNetworkTV affiliates in Fort Wayne
(Compl. ¶ 29) and, after August 1, 2011, for the FOX affiliate as well (Compl. ¶ 31).
Nexstar further claims that immediately after the public announcement of the new FOX
affiliation agreement, Granite attempted to hire away key Nexstar employees who possessed
confidential and proprietary information about WFFT-TV. (Compl. ¶¶ 32-33.) Furthermore,
Nexstar alleges that even before its exclusive affiliation agreement with FOX became effective,
Granite attempted to accelerate the movement of advertisers from Nexstar’s WFFT-TV to the
stations owned by Granite and Malara by denigrating WFFT-TV to advertisers and the public.
(Compl. ¶ 34.) As a result of Granite’s actions, Nexstar asserts that it has incurred and will incur
substantial harm, namely loss of substantial profits, increased costs of programming, and
preclusion from accessing certain viewer constituents. (Compl. ¶ 8.)
In lieu of responding to Nexstar’s Complaint, Granite filed a Motion to Dismiss for
Failure to State a Claim on September 12, 2011. (Docket # 32.) Specifically, Granite’s Motion
to Dismiss argues that Nexstar’s complaint must be dismissed for failure to allege the requisite
antitrust injury and causation elements, lack of antitrust standing, lack of a cognizable antitrust
claim for its allegations of denigrating speech and predatory hiring, and for failing to allege a
cognizable conspiracy necessary to support its concerted action claims. (Defs.’ Mem. in Supp.
of Mot. to Dismiss iii-iv.) Also on September 12th, Granite filed the present Motion to Stay
Discovery. (Docket # 34.) Nexstar, however, argues that all it is really seeking from Granite is

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the information Granite gave to the Indiana Attorney General as well as initial disclosures under
Federal Rule of Civil Procedure 26(a).
III. DISCUSSION
Under Federal Rule of Civil Procedure 26(c) and (d), a court may limit the scope and
sequence of discovery. In re Sulfuric Acid Antitrust Litig., 231 F.R.D. 331, 336 (N.D. Ill. 2005).
District courts have extremely broad discretion in controlling discovery, id., which includes
managing the timing, extent, frequency, and manner of discovery, Nixon v. Haag, No. 1:08-cv00648-LJM-JMS, 2009 WL 2026343, at *2 (S.D. Ind. July 7, 2009). The Court must use its
discretion to ensure that technically proper discovery does not impose oppression or undue
burden or expense. Id.
While a party’s filing of a motion to dismiss may be an appropriate circumstance in
which to limit discovery, “[t]he filing of a motion to dismiss by itself does not mandate a stay of
discovery pending resolution of that motion, nor does the right to discovery continue in light of a
pending dispositive motion.” Duneland Dialysis LLC v. Anthem Ins. Co., Inc., No. 4:09-CV-36RLM-PRC, 2010 WL 1418392, at *2 (N.D. Ind. Apr. 6, 2010) (quoting Simstad v. Scheub, No.
2:07 CV 407, 2008 WL 1914268, at *1 (N.D. Ind. Apr. 29, 2008)). Rather, whether a stay of
discovery is warranted depends on the individual case. Id. A stay is appropriate where the
motion to dismiss can resolve the case, where ongoing discovery is unlikely to produce facts
necessary to defeat the motion, or where the motion raises a potentially dispositive threshold
issue, such as a challenge to plaintiff’s standing. Id. (citing Simstad, 2008 WL 1914268, at *1;
Bilal v. Wolf, No. 06 C 6978, 2007 WL 1687253, at *1 (N.D. Ill. June 6, 2007); Builder’s Ass’n
of Greater Chi. v. City of Chi., 170 F.R.D. 435, 437 (N.D. Ill. 1996)).

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(internal quotation marks omitted).
Discovery concerns are particularly great in antitrust litigation, where discovery “can
quickly become enormously expensive and burdensome to defendants.” DSM Desotech Inc. v.
3D Sys. Corp., No. 08 CV 1531, 2008 WL 4812440, at *2 (N.D. Ill. Oct. 28, 2008); see Asahi
Glass Co. v. Pentech Pharm., Inc., 289 F. Supp. 2d 986, 995 (N.D. Ill. 2003) (Posner, J., sitting
by designation) (requiring that “some threshold of plausibility . . . be crossed at the outset before
a patent antitrust case should be permitted to go into its inevitably costly and protracted
discovery phase”). The Supreme Court recognized this concern in Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 558 (2007), stating that “it is one thing to be cautious before dismissing
an antitrust complaint in advance of discovery, but quite another to forget that proceeding to
antitrust discovery can be expensive.” The Twombly Court was “concerned lest a defendant be
forced to conduct expensive pretrial discovery in order to demonstrate the groundlessness of the
plaintiff’s claim.” Limestone Dev. Corp. v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir. 2008)
(construing Twombly, 550 U.S. at 559). Furthermore, when multiple theories of antitrust liability
are advanced, defendants face a potentially greater burden because the scope of discovery must
be further expanded to encompass each type of alleged anticompetitive action. DSM Desotech
Inc., 2008 WL 4812440, at *2.
Since Twombly, Seventh Circuit courts have taken this concern seriously, staying
discovery in antitrust litigation and other complex cases. Id. at 3 (relying on Twombly in
granting defendants’ motion to stay discovery pending the outcome of their motion to dismiss in
an antitrust litigation); see Coss v. Playtex Prod., LLC, No. 08 C 50222, 2009 WL 1455358, at
*4-5 (N.D. Ill. May 21, 2009) (granting a general stay based on the rationale of Twombly but

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ordering very focused discovery that the defendant agreed would not be burdensome); Bodnar v.
John Hancock Funds, Inc., No. 2:06 cv 87, 2007 WL 1577914, at *3 (N.D. Ind. May 30, 2007)
(granting motion to stay pending motion to dismiss in an ERISA case with numerous plaintiffs
because discovery of facts was unnecessary in response to a motion to dismiss); cf. Limestone
Dev. Corp., 520 F.3d at 802-804 (finding that RICO cases, like antitrust cases, were “likely to be
more than usually costly” and indicating that burdensome discovery in RICO cases during the
pendency of a motion to dismiss is inappropriate). After Twombly and Ashcroft v. Iqbal, 129 S.
Ct. 1937 (2009), which applied Twombly to all civil actions, “the policy against burdensome
discovery in complex cases during the pendency of a motion to dismiss holds fast,” requiring
district courts to carefully consider the potential discovery needed in complex cases. Coss, 2009
WL 1455358, at *3. If the case is susceptible to burdensome and costly discovery, the district
court should limit discovery once a motion to dismiss for failure to state a claim has been filed.
Id.
In the instant case, Granite moved for a stay of discovery pending its motion to dismiss
for failure to state a claim. While the mere filing of a motion to dismiss does not mandate a stay
of discovery pending the outcome of this motion, Duneland Dialysis LLC, 2010 WL 1418392, at
*2, in this case, granting the motion to stay is appropriate because of both the nature of the case
as well as the arguments in Granite’s Motion to Dismiss. Critically, this is an antitrust case,
which directly invokes the Supreme Court’s concerns in Twombly about burdensome and
expensive discovery. Moreover, multiple theories of antitrust liability are advanced, from
unreasonable restraint of trade to a conspiracy to monopolize to violations of the Clayton Act
and Indiana Antitrust Act, placing an even greater potential discovery burden on Granite. See

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DSM Desotech Inc., 2008 WL 4812440, at *2.
A stay is also appropriate because Granite’s Motion to Dismiss may not only resolve the
case, but it raises a potentially dispositive threshold issue, two of the circumstances in which a
stay was deemed appropriate in Duneland Dialysis LLC and the cases cited therein. Granite
argues that all of the claims in Nexstar’s complaint must be dismissed on the basis of lack of
standing, failure to pled the necessary elements of the antitrust and concerted action claims, and
raising claims that are not cognizable. (Defs.’ Mem. in Supp. of Mot. to Dismiss iii-iv.) If
Granite’s motion is granted, all of Nexstar’s claims would be dismissed, and the case could be
resolved completely. More importantly, Granite’s motion challenges Nexstar’s standing, which
is a threshold issue that, if standing is not found, would end the case as well. Accordingly, the
Court found that the Motion to Stay Discovery pending the outcome of Granite’s Motion to
Dismiss to be appropriate and granted this Motion to Stay at the scheduling conference.
During the scheduling conference, Nexstar argued that since it was requesting only the
information that Granite provided to the Indiana Attorney General and initial disclosures under
Rule 26(a), this would not be burdensome as the information was already compiled and required
only duplication. Granite objected to this proposition on the grounds that the information
provided to the Attorney General was confidential and, if disclosed to Nexstar, could damage
Granite’s competitiveness. A California district court dealing with this same issue found that
while “it is true that the discovery sought at this time is the same discovery already gathered,
assembled, and produced to the government,” making the costs of producing a duplicate set for
the plaintiff minimal, “there would be the issue of various objections . . . that might be assertable
against plaintiffs that were unasserted against the government.” In re Graphics Processing Units

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Antitrust Litig., No. C 06-07417, 2007 WL 2127577, at *5 (N.D. Cal. July 24, 2007). Moreover,
turning documents over to the government “does not mean that everyone else has an equal right
to rummage through the same records.” Id. Accordingly, the court found that the defendants
had a legitimate interest in maintaining the confidentiality of these records and refused to permit
discovery at that point in the litigation. Id.; see also Rio Grande Royalty Co., Inc. v. Energy
Transfer Partners, L.P., No. H-08-cv-0857, 2008 WL 8465061, at *1 (S.D. Tex. Aug. 11, 2008)
(finding that discovery request would place undue burden on defendants, even though documents
had already been assembled and produced to government agencies, because of defendants’ need
to review a large volume of documents before producing them and the plaintiff’s concession that
it did not need the discovery to respond to the pending motion to dismiss); cf. Sisk v. Guidant
Corp., No. 1:05-cv-01658-SEB-WTL, 2007 WL 1035090, at *3-4 (S.D. Ind. Mar. 30, 2007)
(refusing to lift an automatic stay under the PSLRA pending a motion to dismiss for disclosure
of documents already produced to governmental entities because the fact that defendants already
produced the documents did not create undue prejudice for plaintiffs).2
In this case, the information that Granite was required to provide to the Attorney General,
such as customer lists and their prices in the market, could give a competitive edge to Nexstar or
hurt Granite’s ability to compete if Nexstar were provided with it. Granite had objections to
sharing such information with Nexstar that it did not have when sharing that information with
the Attorney General. Therefore, Granite has “a legitimate interest in maintaining the

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One recent Northern District of Illinois case, Rawat v. Navistar Int’l Corp., No. 08 C 4305, 2011 WL
3876957, at *6-8 (N.D. Ill. Sept. 1, 2011), granted the plaintiffs’ motion to compel the defendant to produce
documents that the defendant had already produced in an earlier case and an SEC investigation because the
defendant did not show that producing these documents would be unduly burdensome. However, this case is easily
distinguishable as there was no pending motion to dismiss and the parties had moved passed the pleading stage,
which is not the case here.

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confidentiality of [its] records.” In re Graphics Processing Units Antitrust Litig., 2007 WL
2127577, at *5. Furthermore, requiring Granite to review all of the information provided to the
Attorney General to parse out the relevant and non-confidential information that could be given
to Nexstar would be burdensome at this point in the litigation, especially considering that
Nexstar did not argue that it needed such information to respond to Granite’s Motion to Dismiss.
See Rio Grande Royalty Co., Inc., 2008 WL 8465061, at *1. Therefore, the Court denied
Nexstar’s requests for the information Granite provided to the Indiana Attorney General as well
as initial disclosures under Rule 26(a).
IV. CONCLUSION
Having heard arguments at the scheduling conference on September 14, 2011, the Court
determined that Defendants’ Motion to Stay (Docket # 34) should be GRANTED for the reasons
set forth in this opinion.
SO ORDERED.
Entered this 15th day of September, 2011.
/s/ Roger B. Cosbey
Roger B. Cosbey
United States Magistrate Judge

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