Nieves v. Just Energy New York Corp.
Filing
46
DECISION AND ORDER -- IT HEREBY IS ORDERED, that Defendant's Motion for a Stay (Docket No. 17) is GRANTED. Discovery is hereby stayed in this action until this Court resolves Defendant's Motion to Dismiss (Docket No. 8). SO ORDERED. Signed by William M. Skretny, United States District Judge on 11/13/2020. (JCM)
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
MALTA NIEVES, Individually and on behalf of
All Others Similarly Situated,
Plaintiff,
v.
DECISION AND ORDER
17-CV-561S
JUST ENERGY NEW YORK CORP.,
Defendant.
I.
Introduction
This case challenges improper pricing practices for electrical rates Defendant
imposed upon Plaintiff and the proposed class of New York customers (Docket No. 1,
Compl.). Before this Court is Defendant’s Motion to Stay (Docket No. 17) discovery until
Defendant’s pending Motion to Dismiss (Docket No. 8) is decided.
For the reasons stated herein, Defendant’s motion for a stay of discovery is
granted, pending resolution of its motion to dismiss (Docket No. 8).
II.
Background
A. Facts
This is a diversity class action in which Plaintiff (a New Yorker, suing for herself
and similarly situated New York rate payers) alleges that Defendant (a Delaware
corporation with its principal place of business in Toronto, Canada) engaged in deceptive
practices in setting electrical rates (Docket No. 1, Compl.).
Plaintiff charges that
Defendant took advantage of the regulatory scheme in deregulating electrical supply by
falsely promising lower energy rates but charging higher rates instead (id. ¶¶ 14-16, 20-
Case 1:17-cv-00561-WMS Document 46 Filed 11/16/20 Page 2 of 11
28). Plaintiff alleges breach of contract (id. ¶¶ 44-49), breach of implied covenant of good
faith and fair dealing (id. ¶¶ 51-56), and unjust enrichment (id. ¶¶ 58-60).
On September 11, 2017, Defendant moved to dismiss (Docket No. 8). Response
to that motion later were set for October 9, 2017 (Docket No. 10). After the parties
exchanged responding (Docket Nos. 14, 15) and reply papers (Docket No. 16), on
October 16, 2017, Plaintiff served her First Request for Production and Interrogatories
upon Defendant (see Docket Nos. 20, 21, Exs. 1, 2). Plaintiff sought responses and
Answers to Interrogatories within thirty days of that service (Docket No. 20, Ex. 1, Pl’s
First Set of Requests at 1; Docket No. 21, Ex. 2, Pl. First Set of Interrogatories at 1; see
also Docket No. 27, Pl. Memo. at 1 (responses due by November 15, 2017)).
B. Defendant’s Motion to Stay Discovery (Docket No. 17)
On November 21, 2017, Defendant filed the present motion to stay discovery,
pursuant to Fed. R. Civ. P. 26(c), pending resolution of its motion to dismiss (Docket
No. 17). Responses to the Motion for a Stay (following extension, see Docket No. 22)
was on December 12, 2017, and replies by December 19, 2017 (Docket No. 25). Plaintiff
then submitted her timely response (Docket No. 27, Pl. Memo. of Law) and Defendant
replied (Docket No. 28, Def. Reply Memo.). The motion then was deemed submitted
without oral argument.
With the Motion to Dismiss pending, the case was not yet referred to a Magistrate
Judge to manage pretrial proceedings (including pretrial scheduling and discovery) and
there is no general scheduling Order or a schedule for a class certification motion.
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III.
Discussion
A. Applicable Standards
1. Leave to Stay Discovery
Under Rule 26(c), a party from whom discovery is sought may move for a
protective Order, Fed. R. Civ. P. 26(c). Under that rule, this Court has the discretion to
stay discovery where the movant establishes good cause for the stay, to protect that party
“from annoyance, embarrassment, oppression, or undue burden or expense,” id. R.
26(c)(1) (see Docket No. 27, Pl. Memo. at 2). The motion must include a certification
(included here, Docket No. 18, Def. Atty. Decl. ¶ 2) that the movant has “in good faith
conferred or attempted to confer with the other affected parties in an effort to resolve the
dispute without court action,” id.
This Court has the discretion in granting a stay of discovery and does so by
evaluating a number of factors, including “the strength of the moving party’s showing of
an unmeritorious claim; the likely breadth and burden of discovery; and the risk of
prejudice to the party opposing the stay,” New York v. Grand River Enters. Six Nations.
Ltd., No. 14CV910, 2015 WL 686819, at *2 (W.D.N.Y. Feb. 18, 2015) (Foschio, Mag. J.);
see also Justice v. King, No. 08CV6417, 2011 WL 1432130, at *5 (W.D.N.Y. Mar. 24)
(Payson, Mag. J.), adopted, 2011 WL 1431387 (W.D.N.Y. Apr. 14, 2011) (Siragusa, J.),
aff’d, 628 F. App’x 58 (2d Cir. 2016) (Docket No. 19, Def. Memo. at 2); Guiffre v. Maxwell,
No. 15CV7433, 2016 WL 2549832, at *1 (S.D.N.Y. Jan. 20, 2016) (Docket No. 27, Pl.
Memo. at 2). Defendant bears the burden of establishing good cause for a stay, Morien
v. Munich Reins. Am., Inc., 270 F.R.D. 65, 66 (D. Conn. 2010) (Docket No. 27, Pl. Memo.
at 2).
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2. Time to Commence Discovery
Rule 26(d)(1) generally provides for the timing of formal discovery. “A party may
not seek discovery from any source before the parties have conferred as required by
Rule 26(f), except in proceeding exempted from initial disclosure under Rule 26(a)(1)(B)
[not applicable here], or when authorized by these rules, by stipulation, or by court order,”
Fed. R. Civ. P. 26(d)(1); see also 8A Charles A. Wright, Arthur R. Miller & Richard L.
Marcus, Federal Practice and Procedure § 2046.1, at 286 (2010).
A Rule 26(f)
conference is scheduled “at least 21 days before a scheduling conference,” Fed. R. Civ.
P. 26(f)(1).
Commentators have noted that “despite the discovery moratorium of
Rule 26(d), a party may file a motion to dismiss or for summary judgment before
discovery,” 8A Federal Practice and Procedure, supra, § 2046.1, at 292 & n.14 (2010);
see Thrower v. Barney, 849 F. Supp. 1445, 1446 (N.D. Ala. 1994).
Rule 26(d) was amended to permit early Rule 34 production of documents, Fed.
R. Civ. P. 26(d)(2), with that early notice considered served at the first Rule 26(f)
conference, id., R. 26(d)(2)(B). The Rule 34 notice may be “delivered” more than 21 days
after service of the Complaint, Fed. R. Civ. P. 26(d)(2)(A). This delivery, however, is not
service and does not trigger the time to file a Rule 34 response, 8A Federal Practice and
Procedure, supra, § 2046.1, at 62 (Supp. 2020), “service” during the Rule 26(f)
conference does. The purpose for this early request is “to facilitate focused discussion
during the Rule 26(f) conference,” id. at 61.
This Court may “make whatever order about sequence and timing of discovery the
necessities of a case required,” 8A Federal Practice and Procedure, supra, § 2047, at
302, including permitting expedited early discovery upon the requesting party showing
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good cause, see Fed. R. Civ. P. 26(d)(1); 8A Federal Practice and Procedure, supra,
§ 2046.1, at 288, 290-91.
B. Motion to Stay Discovery Pending Motion to Dismiss
1. Parties’ Contentions
Defendant argues that it met the requirements for a stay pending decision on its
motion to dismiss. First, Defendant contends that its motion to dismiss strongly supports
being granted because each cause of action fails to state a claim. (Docket No. 19, Def.
Memo. at 3-5.) Defendant next complains that the breadth of discovery sought by Plaintiff
is unduly burdensome (id. at 5-7). To avoid apparent duplication, Defendant points out a
parallel class action in the Eastern District of New York, Donin v. Just Energy Group,
No. 17CV5787, where similar discovery may be produced. Defendant also argues that
the two alleged plaintiff classes in these cases may overlap. (Id. at 2.) Finally, Defendant
denies that Plaintiff would suffer any prejudice if discovery is stayed; if the motion to
dismiss is granted, the discovery would be unnecessary (id. at 7).
Plaintiff responds that other courts have denied similar motions to dismiss in
numerous cases (Docket No. 27, Pl. Memo. at 5-6, 1-2). Therefore, Defendant’s motion
to dismiss is not strong enough to justify staying discovery (id. at 2, 4-6). Plaintiff denies
that Defendant furnished any proof that the discovery sought was overly broad or
burdensome (id. at 2, 6-8). She also claims that Defendant failed to meet and confer on
the scope of Plaintiff’s requests (id. at 6 n.4), although she conceded that her counsel
declined Defendant’s request to delay discovery pending resolution of the motion to
dismiss, offering instead an extension of time to respond to the discovery requests (id. at
1 n.1; cf. Docket No. 18, Def. Atty. Decl. ¶ 3). Plaintiff argues that this motion was untimely
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relative to the deadline for responding to her discovery demands, filed six days after
responses or objections were due (Docket No. 27, Pl Memo. at 1). Plaintiff declares that
she would be prejudiced by the delay in discovery because Defendant could continue to
victimize customers and Plaintiff’s claims would remain unredressed (id. at 8). Defendant
replies to this point that Plaintiff misapprehends the prejudice in staying discovery,
arguing instead rhetoric regarding the merits of her underlying claim (Docket No. 28, Def.
Reply Memo. at 4).
Neither party has updated the status of Donin as to whether discovery was sought
and produced there. No effort, to date, has been made to consolidate the classes alleged
here and in Donin or to consolidate these cases.
2. Timing of Discovery and Defense Motion to Dismiss
The parties here argue the propriety of staying discovery during the pendency of
the motion to dismiss. They fail to address, however, whether that discovery is premature
and should not have commenced in the first place. Rule 26(d)(1) provides for the timing
of discovery and generally it does not begin until after the parties have met in a Rule 26(f)
conference, entered a stipulation to conduct early discovery, or obtained an Order to
begin discovery prior to a conference or scheduling Order, Fed. R. Civ. P. 26(d)(1).
Rule 34 document production as requested here (see Docket No. 20, Ex. 1) can be
delivered prior to a Rule 26(f) conference but the “delivered” Rule 34 requests are not
formally served (and start the time for responses) until the Rule 26(f) conference is held.
Defendant’s time to respond to those early Rule 34 requests is dependent upon the
parties holding the Rule 26(f) conference.
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The record here does not indicate that the parties held a Rule 26(f) conference or
that they entered into a stipulation where they agreed to conduct discovery prior to entry
of a scheduling Order.
While early Rule 34 requests may be delivered under
Rule 26(d)(2), Rule 33 does not specify a different starting period for Interrogatories (see
Docket No. 21, Ex. 2) from the rest of discovery, that is commencement after the parties’
Rule 26(f) conference, Fed. R. Civ. P. 26(d)(1).
There is no Order from this Court authorizing this discovery; there also is no
scheduling Order yet in place. Plaintiff also did not seek leave to lift the pre-conference
moratorium on discovery.
Absent any of these conditions, the discovery sought here should not have
commenced.
Both sides cite various cases seeking stays of discovery during the pendency of
the motion to dismiss.
These cases, however, do not discuss the timing for
commencement of that discovery relative to Rule 26(d).
In Justice v. King, supra,
2011 WL 1432130, at *5 (see Docket No. 19, Def. Memo. at 2-3; Docket No. 27, Pl.
Memo. at 4), Magistrate Judge Payson granted a stay pending one defendant’s motion
to dismiss after other defendants have answered in that case and responded to some of
that pro se plaintiff’s discovery requests, id. at *1. Thus, discovery had commenced after
defendants answered although Rule 26(d)(1)’s timing also did not apply because this
action was brought “without an attorney by a person in the custody of the United States,
a state, or a state subdivision,” Fed. R. Civ. P. 26(d)(1), (a)(1)(B)(iv); see Justice, supra,
2011 WL 1432130, at *1, noting that the plaintiff was under parole supervision; see also
Ward v. LeClaire, No. 9:07-CV-0026 (LEK) (RTF), 2008 WL 1787753, at *2-3 (N.D.N.Y.
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Apr. 17, 2008) (Treece, Mag. J.) (under Rule 26(a)(1)(B)(iv) courts look to plaintiff’s
custody status as of when case was filed, even if plaintiff is subsequently released from
custody).
In New York v. Grand River Enterprises Six Nations, Ltd., supra, 2015 WL 686819
(W.D.N.Y. Feb. 18, 2015) (see Docket No. 19, Def. Memo. at 3), and according to the
docket, the case originated in the Eastern District of New York.
There, the court
scheduled an initial conference (No. 14CV910, Docket No. 5) but canceled it and reset
for a later date while the parties moved either to dismiss or to amend the Complaint
(No. 14CV910, Text Order of June 25, 2013). Defendants then moved to dismiss or to
transfer the case to this District (No. 14CV910, Docket Nos. 44, 46). The Eastern District
denied motion to dismiss but granted the motion to transfer (No. 14CV910, Docket No. 65,
Minute Text Order). After that transfer and following an amendment to the Complaint
(No. 14CV910, Docket No. 76), New York State moved requesting a conference to
discuss the initiation of discovery and entry of a case management Order (No. 14CV910,
Docket No. 77) while one defendant moved to dismiss and to stay discovery pending
disposition of the motion to dismiss (No. 14CV910, Docket Nos. 79-81), Grand River,
supra, 2015 WL 686819, at *1, 3. Magistrate Judge Foschio granted the defense motion
to stay discovery, noting that discovery on the remaining claims was likely to proceed
regardless of the result of the motion to dismiss, id. at *3. The plaintiff State of New York
had not sought discovery absent that conference leading to defendants’ motion to stay
discovery.
In Guiffre v. Maxwell, No. 15CV7433, 2016 WL 2549832, at *1 (S.D.N.Y. Jan. 20,
2016) (Docket No. 27, Pl. Memo. at 2), Defendant sought an extension of time to answer
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or move against plaintiff’s defamation complaint, with that request granted on October 12,
2015. On October 30, 2015, the court then ordered the parties to complete fact discovery
by July 1, 2016, setting a pretrial schedule. On December 1, 2015, defendant moved to
dismiss and moved to stay discovery pending decision of that motion. Id. Unlike the case
at bar, the Southern District of New York here set a discovery deadline that defendant
later moved to stay pending her motion to dismiss.
Thus, in the cited cases, either discovery had begun or was scheduled when
defendants moved to dismiss and to stay that discovery.
Here, Defendant moved to dismiss, then Plaintiff served document demands and
Interrogatories without a stipulation, Rule 26(f) conference, or an Order authorizing
expedited discovery. Absent stipulation or Order allowing the purported discovery, that
discovery is premature. This is distinct from whether discovery is appropriate while a
motion to dismiss is pending. Therefore, Defendant’s motion (Docket No. 17) for a stay
of discovery pending resolution of its motion to dismiss is granted but for reasons other
than those argued by Defendant. The motion is granted because Plaintiff’s discovery is
premature under Rule 26(d), see Batiste v. Bonin, No. 06-1352, 2007 WL 1772010, at *1
(W.D. La. June 15, 2007) (Methvin, Mag. J.) (denying motion to compel for premature
discovery when there was no Rule 26(f) conference); Cavero v. Law Office of Eskine &
Fleisher, No. 12-21196-CIV-ZLOCH/ROSENBAUM, 2012 WL 12886632, at *2 (S.D. Fla.
May 25, 2012) (deny motion to compel where discovery was premature); see also Gerrard
v. Acara Solutions Inc., No. 18CV1041, 2019 WL 2647758, at *14 (W.D.N.Y. June 27,
2019) (Foschio, Mag. J.) (denying as premature defendant’s motion for stay of discovery
pending motion to dismiss, finding that discovery could not commence prior to Rule 26(f)
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conference), Report & Recommendation rejected on other grounds, 2020 WL 3525949
(W.D.N.Y. June 30, 2020) (Sinatra, J.) (granting motion to dismiss), hence warranting a
stay. Discovery therefore is stayed until Defendant’s motion to dismiss is ruled upon.
Furthermore, as noted by another court, “it would be wasteful for the parties to
engage in extensive discovery prior to a ruling” on a motion to dismiss, Cima v. Wellpoint
Health Networks, Inc., No. 4:05-CV-4127-JPG, 2006 WL 1064054, at *4 (S.D. Ill. Apr. 20,
2006) (Wilkerson, Mag. J.). This Court is not weighing the factors for a Rule 26(c) stay
of discovery due to the pending motion; rather, the premature discovery will not be
responded to until after that motion is decided. Upon ruling on the motion to dismiss, the
scheduling of subsequent proceedings (if necessary) will be established. Ultimately, if
the motion to dismiss is granted, then discovery would not occur. If that motion to dismiss
is denied, however, this Court would refer the case to the Magistrate Judge to issue a
scheduling Order (after the parties conduct a Rule 26(f) conference, see Fed. R. Civ. P.
26(f)(1); W.D.N.Y. Loc. Civ. R. 16(b)(2); see Fed. R. Civ. P. 16(b)), with that Order
including deadlines for conducting discovery (either class certification, see W.D.N.Y. Loc.
Civ. R. 23(c), or the case in general).
IV.
Conclusion
Defendant’s Motion for a stay of discovery (Docket No. 17) until this Court resolves
the submitted Motion to Dismiss (Docket No. 8) is granted. If the Motion to Dismiss is
denied, this Court intends to address scheduling discovery.
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V.
Orders
IT HEREBY IS ORDERED, that Defendant’s Motion for a Stay (Docket No. 17) is
GRANTED. Discovery is hereby stayed in this action until this Court resolves Defendant’s
Motion to Dismiss (Docket No. 8).
SO ORDERED.
Dated:
November 13, 2020
Buffalo, New York
s/William M. Skretny
WILLIAM M. SKRETNY
United States District Judge
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