Abrams et al v. Peppermill Casinos, Inc.

Filing 30

ORDER granting 26 Motion to Stay discovery pending ruling on motion to dismiss. Signed by Magistrate Judge Valerie P. Cooke on 6/8/17. (Copies have been distributed pursuant to the NEF - DN)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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JOSHUA ABRAMS, et al.,

Case No. 3:16-CV-0454-MMD (VPC)

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Plaintiff, ORDER
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v.
PEPPERMILL CASINOS, INC.,

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Defendants.

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Before the court is the motion of defendant Peppermill Casinos, Inc. (“defendant) to stay

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this case pending ruling on motion to dismiss (ECF No. 26). Plaintiffs, Joshua Abrams, et al.,

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(“plaintiffs”) responded (ECF No. 28), defendant replied (ECF No. 29), and this order follows.

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I.

Procedural History

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Plaintiffs, on behalf of themselves and the putative class, assert the following claims

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against the defendant: (1) violation of Article XV, Section 16 of the Nevada Constitution; and (2)

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a declaratory relief action alleging a violation of N.R.S. 608.1555 (ECF No. 1, Exh. B). Plaintiffs

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allege they were improperly paid below Nevada’s upper tier minimum wage because they were

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not provided “quality health insurance” pursuant to the Nevada Constitution and N.R.S. 508.1555.

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(Id.) The basis of these allegations is Nevada’s two-tier minimum wage (currently $7.25 if

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qualified health insurance is offered and $8.25 if it is not) and plaintiffs’ assertion that N.R.S.

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608.1555 defines what benefits must be provided to constitute “health insurance.” (Id.) The

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parties describe the legal and factual issues in this case as follows: “whether the Defendant was

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permitted to pay Plaintiffs and the putative class less than $8.25 per hour as a result of offering

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each of them its health plan [, and] [w]hether Plaintiffs’ two causes of action based on allegations

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that NRS 608.1555 defines what benefits must be provided to constitute ‘health insurance’ under

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Nevada’s Minimum Wage Act (“MWA”) are preempted by ERISA and must be dismissed?” (ECF

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No. 25).

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The defendant removed this case to federal court on the basis that plaintiffs’ N.R.S.

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608.1555 claims and Nevada Constitution claims are completely preempted by ERISA (ECF No.

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1). The defendant also filed a motion to dismiss, seeking dismissal of the entire lawsuit on those

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same grounds (ECF No. 5). Plaintiffs filed a motion to remand (ECF No. 7) and argued that ERISA

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preemption did not apply; however, the District Court denied that motion and found that complete

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preemption did apply (ECF No. 16). The District Court also denied the defendant’s motion to

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dismiss without prejudice, but directed the parties to meet and confer, since – in light of its order

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– the Court hoped the parties might be able to reach a resolution that would change the defendant’s

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arguments in the motion to dismiss (ECF. No. 16). The parties met and conferred, but reached no

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resolution (ECF No. 25). Instead, plaintiffs filed a motion for reconsideration of the order denying

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the motion for remand (ECF No. 17), which is now under submission to the District Court. The

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defendant also renewed its motion to dismiss (ECF No. 18). Therefore, the parties find themselves

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back where they were in June 2016 – one year ago – when they filed the initial motion to remand

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and motion to dismiss (ECF Nos. 5 & 7).

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II.

Legal Analysis and Discussion

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Courts have broad discretionary power to control discovery including the decision to allow

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or deny discovery. See e.g., Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988). In evaluating

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the propriety of an order staying or limiting discovery while a dispositive motion is pending, the

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court considers the goal of Federal Rule of Civil Procedure 1, which provides that the Rules should

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“be construed, administered, and employed by the court and the parties to secure the just, speedy,

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and inexpensive determination of every action.” With Rule 1 as its prime directive, the court must

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decide whether it is more just to speed the parties along in discovery while a dispositive motion is

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pending or to delay discovery to accomplish the inexpensive determination of the case. See Turner

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Broadcasting System, Inc. v. Tracinda Corp., 175 F.R.D. 554, 556 (D. Nev. 1997); see also Twin

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City Fire Ins. v. Employers Insurance of Wausau, 124 F.R.D. 652, 653 (D. Nev. 1989).
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Further, in assessing a request to stay discovery, the court takes a “preliminary peek” at the

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merits of the dispositive motion. Tradebay, LLC v. Ebay, Inc., 278 F.R.D. 597, 603 (D. Nev.

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2011). This “preliminary peek” does not prejudge the outcome of the motion; it merely evaluates

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whether an order staying discovery is warranted. Id. Common examples of situation in which

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good cause has been found to stay discovery are when jurisdiction, venue, or immunity are

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preliminary issues. Id. Ultimately, the party seeking the stay “carries the heavy burden of making

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a strong showing why discovery should be denied.” Id. (citing Blankenship v. Hearst Corp., 519

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F.2d 418, 429 (9th Cir. 1975)).

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The court finds that under the circumstances of this case, a stay is warranted. It is

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undisputed that plaintiffs’ claims are based on the assertion that health insurance plans under the

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MWA must provide the same benefits and pay providers of health care in the same manner as a

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policy of insurance pursuant to N.R.S. 608.1555. The District Court rejected this argument, and

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the Nevada Supreme Court recently held that the MWA itself defines health insurance. See ECF

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No. 16; Western Cab Company v. Eighth Judicial District Court, 133 Nev. Adv. Op. 10 (Mar.16,

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2017). See also Tyus et al., v. Wendy’s of Las Vegas, et al., 2:14-cv-00729-GMN-VCF (ECF No.

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81).

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The defendant’s renewed motion to dismiss may well be dispositive of the entire case, as

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defendants requests dismissal with prejudice on the bases that: (1) N.R.S. 608.1555 is preempted

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by ERISA; (2) the plain language of the MWA makes no reference to N.R.S. 607.1555; and (3)

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plaintiffs have not alleged any facts that demonstrate a plausible deficiency in the defendant’s

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health benefits (ECF No. 18). In its February 15, 2017 order the District Court addressed two of

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these arguments when it found that plaintiffs’ second claim for relief is entirely preempted by

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ERISA and how it resolved the second claim for relief “will dispose of the first claim.” (ECF No.

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16 at 5:14-15). In essence, the District Court itself took a “preliminary peek” at the amended

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complaint and appeared to determine it should be dismissed, but encouraged the parties to meet

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and confer on defendant’s motion to dismiss. (Id.) The District Court gave defendant leave to

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renew its motion to dismiss if no resolution could be reached. One was not; instead, plaintiffs

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moved the District Court to reconsider its order and defendant renewed its motion to dismiss.

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Finally, the court does not believe that either party will suffer prejudice or hardship if

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discovery is stayed. The District Court has signaled its views about the viability of plaintiffs’

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claims for relief, and notwithstanding the passage of one year since the case was removed to

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Federal Court, this court is convinced that a stay is proper under these circumstances.

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Defendant’s motion for stay pending ruling on motion is dismiss (ECF No. 26) is
GRANTED.
DATED: June 8, 2017.

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UNITED STATES MAGISTRATE JUDGE

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