Brown et al v. CMH Manufacturing, Inc. et al

Filing 37

MEMORANDUM OPINION & ORDER granting the defendants' 30 MOTION for a protective order to stay discovery pending resolution of the defendants' 6 motion to compel arbitration; discovery is stayed pending resolution of the defendant s' motion to compel arbitration; granting the defendants' 35 MOTION to continue the scheduling order as specified herein; the deadlines imposed by the scheduling order in this case, to the extent those deadlines have not already passed, are continued pending resolution of the defendants motion to compel arbitration. Signed by Judge John T. Copenhaver, Jr. on 7/2/2014. (cc: attys; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
LARRY BROWN and
ROSANNA BROWN,
Plaintiffs,
v.

Civil Action No. 2:13-31404

CMH MANUFACTURING, INC.
a foreign corporation, and
CMH HOMES, INC.
a foreign corporation, and
VANDERBILT MORTGAGE AND FINANCE, INC.
a foreign corporation,
Defendants.

MEMORANDUM OPINION & ORDER

Pending is a motion by defendants CMH Manufacturing,
Inc., CMH Homes, Inc., and Vanderbilt Mortgage and Finance, Inc.,
filed June 18, 2014, for a protective order to stay discovery
pending resolution of their motion to compel arbitration. Also
pending is defendants’ motion to continue the scheduling order in
this case, filed July 1, 2014.

The defendants wish to stay discovery until their motion
to compel arbitration is decided.

The plaintiffs responded to the

motion to stay discovery, also on June 18, 2014, opposing it,
followed by the defendants’ reply on June 30, 2014.

Similarly, in

their motion to continue the scheduling order, the defendants

request that the scheduling order be continued until the court
rules on their motion to compel arbitration, as expert witness
disclosure deadlines are soon approaching.

With respect to a stay of discovery, the defendants
argue that conducting discovery in this court would defeat the
purposes of arbitration.

See CIGNA Health Care of St. Louis, Inc.

v. Kaiser, 294 F.3d 849, 855 (7th Cir. 2002); 9 U.S.C. § 7 (2012).
The defendants request an order under Federal Rule of Civil
Procedure 26(c)(1) staying discovery until the motion to compel
arbitration is decided.

Rule 26(c)(1) provides:
A party or any person from whom discovery is sought may move
for a protective order . . . . The court may, for good
cause, issue an order to protect a party or person from . . .
undue burden or expense, including one or more of the
following: (A) forbidding the disclosure of discovery; (B)
specifying terms, including time and place, for the
disclosure or discovery . . . .
Fed.R.Civ.P. 26(c)(1).

Under this rule, the court has the

authority to stay discovery pending the outcome of a dispositive
motion.

See Thigpen v. United States, 800 F.2d 393, 396-397 (4th

Cir. 1986).

In this case, an order compelling arbitration could

be dispositive, as the defendants argue that the entire case
should be submitted to an arbitrator under the arbitration

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agreement.

See Durham Cnty. v. Richards & Assocs., Inc., 742 F.2d

811, 814 (4th Cir. 1984). 1

A number of factors, none wholly dispositive, guide the
analysis under this rule for granting a stay pending the outcome
of a dispositive motion.

They are (1) the type of motion, (2)

whether the motion is a legal challenge or dispute over the
sufficiency of allegations, (3) the “nature and complexity of the
action,” (4) “whether counterclaims and/or cross-claims have been
interposed”, (5) whether other parties agree to the stay, (6) the
“posture or stage of the litigation”, (6) “the expected extent of
discovery in light of the number of parties and complexity of the
issues in the case”, (7) and “any other relevant circumstances”.
Bragg v. U.S., Civ. Action No. 2:10-0683, 2010 WL 3835080, at *1-2
(S.D.W. Va. Sept. 29, 2010) (quoting Hatchette Distribution, Inc.
v. Hudson Cty. News Co., Inc., 136 F.R.D. 356, 358 (E.D.N.Y.
1991)).

1

The court notes that its decision to stay discovery in this case
does not rest upon 9 U.S.C. § 3. That statute compels the court
to “stay the trial of the action until . . . arbitration has been
had” when the court is “satisfied that [an] issue involved in such
suit or proceeding is referable to arbitration.” 9 U.S.C. § 3
(2012). Because the court has yet to decide the motion to compel
arbitration, the court is not satisfied that any issue in this
case is referable to arbitration, so a stay under § 3 is
unwarranted at this time.
3

The defendants’ motion to compel arbitration could be
dispositive of the matter, and is a legal challenge.

There are no

cross-claims or counterclaims.

The court notes that the plaintiffs do not agree to a
stay.

The plaintiffs’ argument centers on what they see as

dilatory conduct on behalf of the defendants in responding to the
plaintiffs’ discovery requests.

The plaintiffs believe this

motion for a protective order is a last ditch effort by the
defendant to avoid responding to the plaintiffs’ requests. 2

The

plaintiffs contend that the defendants’ delay in requesting a stay
until four months after the scheduling order was entered, and less
than two months before the close of discovery, is indicative of
the defendants’ intent to thwart discovery.

The plaintiffs also argue that the defendants have not
put forth good cause for a stay of discovery, and that staying
discovery will cause additional harm and increased damages to the
plaintiffs, as they continue to reside in a substandard home.

While the defendants have waited a considerable time
since discovery began to move to stay discovery, that does not

2

The plaintiffs also argue that the defendants have “waived their
objections” to discovery under Federal Rule of Civil Procedure
26(b)(5). But the defendants are not objecting to any duty to
make discovery responses. Rather, they are requesting a stay of
discovery.
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negate the fact that the defendants will not be afforded the
benefits of arbitration should discovery continue and they prevail
on their motion to compel arbitration.

See Klepper v. SLI, Inc.,

45 Fed. App’x 136, 139 (3d Cir. 2002).

Moreover, the plaintiffs

will also be prejudiced if discovery proceeds and arbitration is
ordered, because the plaintiffs will have wasted the expense of
conducting discovery, only to conduct it again before an
arbitrator.

In addition, despite that the discovery completion

date is August 15, 2014, discovery does not appear to have
progressed beyond the plaintiffs’ first interrogatories, requests
for production, and requests for admissions, and the plaintiffs’
expert witness disclosures. 3

The court finds a stay of discovery

is warranted.

Similarly, with respect to other deadlines imposed by
the scheduling order, such as deadlines for dispositive motions,
the court finds a general continuance of these deadlines until the
court rules on the motion to compel arbitration is warranted.
Both parties will be prejudiced by being forced to further prepare
experts and make dispositive motions should this case be
arbitrated instead.

3

It is not lost upon the court that some of the delay in the
progression of discovery may be due to the defendants’ failure to
timely respond to the plaintiffs’ requests. However, it is still
the case that discovery has not sufficiently progressed.
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Accordingly, it is ORDERED as follows:
(1) the defendants’ motion for a protective order to stay
discovery pending resolution of the defendants’ motion to
compel arbitration, filed June 18, 2014, be, and it hereby
is, granted;
(2) discovery in this matter be, and it hereby is, stayed
pending resolution of the defendants’ motion to compel
arbitration;
(3) the defendants’ motion to continue the scheduling order,
filed July 1, 2014, be, and it hereby is, granted as
specified herein;
(4) the deadlines imposed by the scheduling order in this
case, to the extent those deadlines have not already passed,
be, and they hereby are, continued pending resolution of the
defendants’ motion to compel arbitration.

The Clerk is directed to transmit this order to all
counsel of record and any unrepresented parties.

ENTER: July 2, 2014
John T. Copenhaver, Jr.
United States District Judge

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