World Chess Museum, Inc. v. World Chess Federation, Inc. et al

Filing 74

ORDER Denying 70 OBJECTIONS re LR IB 3-1 or MOTION re 69 Order on Motion to Lift Stay. Signed by Judge Robert C. Jones on 5/7/15. (Copies have been distributed pursuant to the NEF - TR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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WORLD CHESS MUSEUM, INC.,

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Plaintiff,

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2:13-cv-00345-RCJ-GWF

vs.

ORDER

WORLD CHESS FEDERATION, INC. et al.,

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Defendants.

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This case arises from Defendants’ alleged infringement of Plaintiff’s trademark, World

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Chess Hall of Fame®. Before the Court is Plaintiff’s Objection (ECF No. 70) to an order of the

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Magistrate Judge that lifted the stay in this case.

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I.

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BACKGROUND
This action was filed on February 28, 2013, (ECF No. 1). Defendant World Chess

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Federation, Inc. (“WCF”) counterclaimed against Plaintiff on April 22, 2013 for trademark

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infringement and unfair competition based on WCF’s claimed marks: World Chess Federation®

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and World Chess Federation Hall of Fame. (ECF No. 15). At the time of WCF’s filing,

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Defendant Stan Vaughn was the owner of the World Chess Federation Hall of Fame mark, which

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he subsequently transferred to WCF on May 14, 2013. On May 20, 2013, Vaughn and his wife,

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Tatiana Vaughn (collectively, “Debtors”), filed for Chapter 7 bankruptcy.

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An issue currently pending in the bankruptcy court is whether Debtors fraudulently or

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otherwise illegally transferred the World Chess Federation Hall of Fame mark to WCF in an

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attempt to exclude it from the bankruptcy estate. Allegedly, Debtors bankruptcy petition and

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accompanying schedules failed to disclose the transfer of the claimed mark or Debtors’ positions

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as officers or directors of WCF. (See Statement of Financial Affairs, ECF No. 32-5, at 30, 32–

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33). Recognizing the impact that the bankruptcy court’s ruling would have on the instant case,

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the parties stipulated to stay the case on December 24, 2013 pending the outcome of the

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Trustee’s adversarial proceeding. The Magistrate Judge accepted the stipulation on December

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26, 2013 and ordered that the parties submit a status report every ninety days. (ECF No. 60).

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On February 12, 2015, Defendants filed a motion to lift the stay. (ECF No. 66). On

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March 18, 2015, the Magistrate Judge held a hearing to consider Defendants’ motion. (ECF

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No. 69). At the end of the hearing, the Magistrate Judge granted the motion to lift the stay and

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ordered that the parties meet and confer to conduct a Rule 26(f) conference. Plaintiff has now

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filed an Objection to that order (ECF No. 70), arguing that efforts in this case could be rendered

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moot depending on the bankruptcy court’s ruling in the adversary proceeding.

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II.

LEGAL STANDARD

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Neither party articulates the appropriate standard for challenging the ruling of a

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magistrate judge. Magistrate judges are authorized to resolve pretrial matters subject to district

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court review under a “clearly erroneous or contrary to law” standard. 28 U.S.C. § 636(b)(1)(A);

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see also Fed. R. Civ. P. 72(a); LR IB 3-1(a) (“A district judge may reconsider any pretrial matter

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referred to a magistrate judge . . . where it has been shown that the magistrate judge’s ruling is

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clearly erroneous or contrary to law.”). “A finding is clearly erroneous when although there is

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evidence to support it, the reviewing body on the entire evidence is left with the definite and firm

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conviction that a mistake has been committed.” United States v. Ressam, 593 F.3d 1095, 1118

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(9th Cir. 2010) (internal quotation marks omitted). A magistrate’s pretrial order issued under 28

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U.S.C. § 636(b)(1)(A) is not subject to de novo review, and the reviewing court “may not simply

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substitute its judgment for that of the deciding court.” Grimes v. City & Cnty. of S.F., 951 F.2d

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236, 241 (9th Cir. 1991).

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III.

DISCUSSION

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After listening to the recording of the March 18, 2015 hearing, it is clear that the

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Magistrate Judge lifted the stay because he found that certain discovery conducted in this case

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may be relevant to the proceedings pending in bankruptcy court and would therefore not amount

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to wasted efforts regardless of the resolution of the adversary proceeding. (Hr’g Recording, Mar.

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18, 2015, at 17:52). The Magistrate Judge was concerned that if the stay was left in place, this

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case might sit idle for at least another year while the adversary proceeding was resolved. (Id. at

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17:40). He acknowledged, however, that the stay was originally put in place so that the factual

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issues regarding WCF’s interest in the claimed mark could be determined before WCF was

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allowed to proceed on its counterclaims. (Id. at 17:43).

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To strike an equitable balance between protecting Plaintiff from what could turn out to be

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unnecessary work and nudging this case forward, the Magistrate Judge determined that some

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limited discovery that is not unduly burdensome could be helpful. (Id. at 18:00). Accordingly,

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he granted Defendants’ motion to lift the stay under the condition that the parties reach an

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agreement regarding the scope of discovery such that Plaintiff’s interests are protected. He

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ordered the parties to submit a proposed discovery plan and scheduling order by April 20, 2015,

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which they did. (See ECF No. 72). The Magistrate Judge advised that if the parties could not

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come to an agreement regarding the limited scope of the discovery plan, they should note that in

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the proposal for his review. (See Minute Order, ECF No. 69). On April 28, 2015, the Magistrate

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Judge accepted the parties’ proposed discovery plan.

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The Court finds that nothing in the Magistrate Judge’s reasoning reflects clear error, nor

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was the decision to grant Defendants’ motion contrary to law. Rather, the order presents a

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reasonable compromise between preventing potentially wasteful discovery efforts and ensuring

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that this case, which has already sat idle for two years, does not remain stagnant. Plaintiff has

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not demonstrated that the order warrants reversal.

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CONCLUSION
IT IS HEREBY ORDERED that Plaintiff’s Objection (ECF No. 70) is DENIED.
IT IS SO ORDERED.

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Dated _______________________
Dated: this 7th day of May, 2015.

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_____________________________________
ROBERT C. JONES
United States District Judge

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