Filed: May 01, 2017
Latest Update: May 01, 2017
Summary: ORDER DENYING MOTION TO STAY STATE-COURT DISCOVERY CHARLES R. BREYER , District Judge . After earning the dismissal of this securities class action with prejudice, Defendant Sunrun, Inc. ("Sunrun") moves to stay discovery in a parallel state court action. 1 Plaintiffs there have specially appeared here to oppose. See Opp'n (dkt. 88) at 1. Under the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), "all discovery" in a securities class action filed in federal court "shall b
Summary: ORDER DENYING MOTION TO STAY STATE-COURT DISCOVERY CHARLES R. BREYER , District Judge . After earning the dismissal of this securities class action with prejudice, Defendant Sunrun, Inc. ("Sunrun") moves to stay discovery in a parallel state court action. 1 Plaintiffs there have specially appeared here to oppose. See Opp'n (dkt. 88) at 1. Under the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), "all discovery" in a securities class action filed in federal court "shall be..
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ORDER DENYING MOTION TO STAY STATE-COURT DISCOVERY
CHARLES R. BREYER, District Judge.
After earning the dismissal of this securities class action with prejudice, Defendant Sunrun, Inc. ("Sunrun") moves to stay discovery in a parallel state court action.1 Plaintiffs there have specially appeared here to oppose. See Opp'n (dkt. 88) at 1.
Under the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), "all discovery" in a securities class action filed in federal court "shall be stayed during the pendency of any motion to dismiss," except under certain circumstances. 15 U.S.C. § 77z-1(b)(1). This automatic stay provision prevents plaintiffs from, among other things, exploiting federal-court discovery to force settlement. See SG Cowen Sec. Corp. v. U.S. Dist. Ct., 189 F.3d 909, 911 (9th Cir. 1999). And to prevent them from using state-court discovery to circumvent the automatic stay, the Securities Litigation Uniform Standards Act of 1998 (the "SLUSA") allows a federal court to "stay discovery proceedings in any private action in a State court as necessary in aid of its jurisdiction, or to protect or effectuate its judgments, in an action subject to a stay of discovery pursuant to this subsection."2 15 U.S.C. § 77z-1(b)(4). The problem for Sunrun is that this action is no longer "subject to a stay of discovery pursuant" to the PSLRA; the case has been dismissed and judgment entered. See Order on MTD (dkt. 79) at 14; Judgment (dkt. 80). So although the Court has subject-matter jurisdiction to hear Sunrun's motion,3 it lacks the statutory authority to grant the requested relief.
Sunrun's own cases confirm this understanding. Not one of them contemplated—let alone imposed—a stay of state-court discovery after the district court had entered judgment. See, e.g., In re Dot Hill Systems Corp. Sec. Lit., 594 F.Supp.2d 1150, 1168 (S.D. Cal. 2008) ("The stay shall remain in effect until the Court denies a future motion to dismiss . . . or grants the motion to dismiss with prejudice."); In re DPL Inc., Sec. Lit., 247 F.Supp.2d 946, 951 (S.D. Ohio 2003) ("Th[e] stay will remain in effect until the Court has ruled upon a to-be-filed motion seeking dismissal of the Plaintiffs' federal securities claims."); Moomjy v. HQ Sustainable Mar. Indus., Inc., 2011 WL 4048792, at *3 (W.D. Wash. Sept. 12, 2011) ("[T]he Court grants defendants' motion to stay discovery in the state court action . . . until after this Court has ruled on defendants' anticipated motions to dismiss."); accord Newby v. Enron Corp., 338 F.3d 467, 476 n.4 (5th Cir. 2003) (praising district court's restraint in "barring discovery in the state case only pending decision on the" motion to dismiss).
Sunrun's requested relief is unprecedented in the most literal sense: it appears that no federal court has ever granted it. The Court therefore DENIES the instant motion without oral argument pursuant to Local Rule 7-1(b). Whatever the wisdom of staying discovery in state court pending appeal here, that decision rests with the state court.
IT IS SO ORDERED.