ORDER:
1) DENYING IMPLANT DIRECT'S MOTION TO STAY ENFORCEMENT OF MONETARY SANCTIONS PENDING APPEAL; [Dkt. No. 573.]
2) VACATING HEARING DATE
GONZALO P. CURIEL, District Judge.
Presently before the Court is a motion to stay enforcement of monetary sanctions pending appeal by Defendants Implant Direct MFG, LLC, Implant Direct LLC, and Implant Direct International (collectively, "Implant Direct"). (Dkt. No. 573.) The parties have fully briefed the motion. (Dkt. Nos. 581, 584.) The Court finds the motion suitable for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the reasons set forth below, the Court DENIES Implant Direct's motion to stay enforcement of monetary sanctions pending appeal.
BACKGROUND
As set forth in prior orders in this case, this is a patent and trademark infringement action filed by Plaintiffs Zest IP Holdings, LLC and Zest Anchors LLC (collectively, "Zest") and involving dental attachment products. (See Dkt. No. 1.) The procedural history in this five-year-old litigation is long and complex.
On June 16, 2014, the Court imposed monetary sanctions against Implant Direct because "Implant Direct acted in bad faith to impede and delay the discovery process." (Dkt. No. 440 at 30.) Subsequently, on December 3, 2014, the Court ordered Implant Direct to pay Zest $122,486.95 in sanctions ("Sanctions Order"). (Dkt. No. 568.)
On January 12, 2015, Implant Direct filed the instant motion to stay enforcement of these sanctions pending appeal of the Court's Sanctions Order. (Dkt. No. 573.) Implant Direct requests that the Sanctions Order be stayed until at least thirty days after the entry of final judgment so that it will have an opportunity to file a notice of appeal after the final judgment and request a further stay. (Id. at 3.) Implant Direct also states that it is willing to post a bond in the amount of the Sanctions Order during the stay. (Id. at 4-5.) On February 13, 2015, Zest opposed Implant Direct's motion. (Dkt. No. 581.) Implant Direct replied on February 27, 2015. (Dkt. No. 584.)
LEGAL STANDARD
As a preliminary matter, the parties dispute the correct legal standard to apply to Implant Direct's motion to stay monetary sanctions pending appeal.
Implant Direct argues that its motion is akin to a "stay with bond on appeal" under Federal Rule of Civil Procedure 62(d). (Dkt. No. 573-1 at 5; Dkt. No. 584 at 2, 4-5.) Rule 62(d) provides: "If an appeal is taken, the appellant may obtain a stay by supersedeas bond, except in an action described in Rule 62(a)(1) or (2). The bond may be given upon or after filing the notice of appeal or after obtaining the order allowing the appeal. The stay takes effect when the court approves the bond."1
Zest counters that Rule 62(d) is not applicable here because there is no final judgment yet and therefore Implant Direct cannot immediately appeal.2 (Dkt. No. 581 at 9.) See Wright, Miller & Kane, 11 Fed. Prac. & Proc. Civ. § 2901 (3d ed. 2014) (Rule 62 "does not govern stays in proceedings other than to enforce a judgment."); accord Law v. NCAA, 134 F.3d 1025, 1030 (10th Cir. 1998) ("When there is no appeal of right there is no duty on the district court to grant a stay upon the filing of a supersedeas bond.").
Instead, Zest contends that the Court should apply the test for a stay pending appeal set forth by the U.S. Supreme Court in Hilton v. Brauskill, 481 U.S. 770, 776 (1987). (Dkt. No. 581 at 4-5.) Under this test, courts consider four factors: "`(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.'"3 Golden Gate Rest. Ass'n v. City & Cnty. of S.F., 512 F.3d 1112, 1115 (9th Cir. 2008) (quoting Hilton, 481 U.S. at 776). Zest cites several cases which have applied the Hilton test to deny a motion to stay monetary sanctions pending appeal. See Pattison v. Nevada, No. 12-cv-670-RCJ-WGC, 2014 WL 548200, at *2-3 (D. Nev. Feb. 11, 2014); Mitchell v. Daniels, No. 06-cv-00624-DRH, 2014 WL 2117084, at *2 (S.D. Ill. May 21, 2014); In re Reese, No. 08-41173, Dkt. No. 111 at 10 (Bankr. N.D. Ohio, June 30, 2011).4
Implant Direct responds that the Hilton test is irrelevant because it applies to requests for stays of injunctions under Rule 62(c),5 not monetary damages under Rule 62(d). (Dkt. No. 584 at 2-6.) Implant Direct relies on Bolt v. Merrimack Pharms., Inc., No. 04-0893-WBS-DAD, 2005 WL 2298423, at *2 (E.D. Cal. 2005), which held that Rule 62(d), rather than Rule 62(c) and the Hilton test, applied to a motion for an unsecured stay of execution of judgment pending appeal. The court reasoned that:
[W]hether the court granted injunctive or monetary relief is significant in a motion to stay in light of an appeal. The Federal Rules of Civil Procedure impose distinct standards for stays of judgments involving injunctions, see Fed. R. Civ. P. 62(c), and stays of other judgments, see Fed. R. Civ. P. 62(d). Given these distinctions, it should come as no surprise that courts evaluate unsecured stays of these categories of judgments under different tests. Although the court could not find a single case straightforwardly acknowledging the existence of two separate tests, an examination of the case law clearly reveals a different method of analysis applicable to motions for unsecured stays when Rule 62(d), rather than Rule 62(c), applies.
Bolt, 2005 WL 2298423, at *2 (internal citation omitted).6 Implant Direct argues that the cases cited by Zest which apply the Hilton test to monetary awards applied the wrong standard.7 (Dkt. No. 584 at 4-6.)
Neither Rule 62(c) or 62(d) directly control here because both provisions expressly apply to cases in which an appeal is "pending" or "taken," and no appeal of the Sanctions Order has been (or can be) filed yet in this case. Fed. R. Civ. P. 62(c)-(d); see also In re Matter of Seizure of Approximately 26 Grams of Marijuana, No. 01-M-30204-MHP, 2004 WL 2915286, at *5 (N.D. Cal. Dec. 17, 2004). Nonetheless, the Court has inherent authority to consider Implant Direct's motion. See Oliva v. Sullivan, 958 F.2d 272, 273 (9th Cir. 1992) ("[d]istrict courts have inherent power to control their dockets . . . ."); Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) ("Courts have inherent power to manage their dockets and stay proceedings[.]"); see also Wright, Miller & Kane, 11 Fed. Prac. & Proc. Civ. § 2904 (While "[i]t may be argued . . . that the court may not make an order under Rule 62(c) before the appeal has been taken . . . [w]hen there is reason to believe that an appeal will be taken, there is no reason why the district court should not make an order preserving the status quo during the expected appeal. The order can be conditioned on an appeal being taken by a stated date.").
The Court determines that it need resolve the precise standard to apply here because, as discussed below, under either standard the Court declines to exercise its discretion to stay the enforcement of monetary sanctions.
DISCUSSION
The Court declines to exercise its discretion to stay the enforcement of monetary sanctions against Implant Direct. The Court imposed monetary sanctions "due to Zest's submitted evidence and the Court's record of Implant Direct's delay, disruption of the discovery process and this litigation, gamesmanship, and repeatedly vexatious discovery abuses between the filing of this litigation and the close of fact discovery in this case." (Dkt. No. 440 at 27.)
If the Hilton test applies here, the Court denies Implant Direct's request for a stay because: (1) Implant Direct has not shown that it is likely to succeed on the merits; (2) Implant Direct has not indicated that it will be irreparably injured absent a stay; (3) Zest would likely be harmed by having to wait years to collect the sanctions; and (4) the public interest will not be served because the delay would reward Implant Direct's misconduct in this case. See Golden Gate Rest. Ass'n, 512 F.3d at 1115.
If Implant Direct's request is more analogous to a stay of monetary judgment under Rule 62(d), the Court still denies Implant Direct's request for a stay because Zest would likely be harmed by having to wait years to collect the sanctions, the delay would reward Implant Direct's misconduct in this case, and Implant Direct has not indicated that it would suffer any hardship if the sanctions were not stayed, or shown that a stay is necessary to permit it to later appeal the Sanctions Order. Cf. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (holding that the competing interests that a district court must weigh in exercising its discretion to stay proceedings are: (1) "possible damage which may result from granting a stay"; (2) "the hardship or inequity which a party may suffer in being required to go forward"; and (3) "the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay" (citing Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936)).
As such, the Court DENIES Implant Direct's motion to stay enforcement of monetary sanctions pending appeal.
CONCLUSION AND ORDER
For the foregoing reasons, the Court:
1. DENIES Implant Direct's motion to stay enforcement of monetary sanctions pending appeal, (Dkt. No. 573);
2. ORDERS Implant Direct to pay the monetary sanctions within fourteen (14) days of the filing date of this order; and
3. VACATES the hearing date set for this matter on March 20, 2015 at 1:30 p.m.
IT IS SO ORDERED.
