HONORABLE PAUL A. CROTTY, United States District Judge:
Plaintiff GOJO Industries, Inc. ("GOJO") moves to stay the action it commenced pending resolution of a regulatory enforcement action brought by the Food and Drug Administration ("FDA") and the Department of Justice ("DOJ") against Defendant Innovative Biodefense, Inc. ("IBD") and its President Colette Cozean. The Court DENIES Plaintiff's motion.
GOJO and IBD
GOJO commenced this lawsuit on April 15, 2015. Compl., Dkt. 1. This lawsuit has lumbered into its fifth year, beset by various discovery disputes and an unsuccessful
On June 6, 2018, the United States
IBD and Cozean moved to dismiss the Government's Amended Complaint on September 17, 2018. Greenfelder Dec. Ex. 4. On February 22, 2019, U.S. District Judge David O. Carter denied the motion. Greenfelder Supp. Dec., Dkt. 232, Ex. 9. Following denial, the parties agreed to a deadline of July 30, 2019 for fact and expert discovery, a deadline of October 21, 2019 for motion cut-off, and a trial date of December 17, 2019. Greenfelder Supp. Dec. Ex. 10.
GOJO filed its motion to stay this Southern District of New York action after IBD and Cozean moved to dismiss the FDA Action, but before Judge Carter denied it. Although Plaintiff initially sought a stay "pending resolution of the FDA Action," Pl.'s Mem., Dkt. 222, at 3, Plaintiff modified its request in Reply to instead seek a "tiered stay" that would terminate either at the end of the FDA Action, should IBD and Cozean prevail on their motion to dismiss, or six months after the motion in the FDA Action was denied. Reply, Dkt. 226, at 9. Plaintiff later supplemented its briefing to update the Court regarding Judge Carter's denial of IBD and Cozean's motion to dismiss the FDA Action. Dkt. 231. In the Supplemental Brief, Plaintiff renews its request that the Court "stay this case pending the outcome of the FDA Action." Pl.'s Supp. Mem., Dkt. 231, at 5. Since Plaintiff's tiered approach is now moot, the Court considers only Plaintiff's request to stay this action pending "resolution" of the FDA Action.
Where an action "requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body," the primary jurisdiction doctrine may be applicable. In re KIND LLC
Courts deciding whether to apply the primary jurisdiction doctrine in this Circuit consider four factors:
Ellis, 443 F.3d at 81. In weighing these factors, the Second Circuit has further instructed courts to "balance the advantages of applying the doctrine against the potential costs resulting from complications and delay in the administrative proceedings." Id. at 83.
Even absent an administrative agency conflict, courts have the authority to stay proceedings pending the disposition of another case that could affect the out-come. See Goldstein v. Time Warner N.Y. City Cable Group, 3 F.Supp.2d 423, 437-38 (S.D.N.Y. 1998). Indeed, the power to stay a proceeding is a discretionary one, "incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 S.Ct. 153 (1936); see also Credit Suisse Sec. (USA) LLC v. Laver, No. 18 CIV. 2920 (AT), 2019 WL 2325609, at *2 (S.D.N.Y. May 29, 2019). Still, "[a] stay is an intrusion into the ordinary processes of administration and judicial review," Maldonado-Padilla v. Holder, 651 F.3d 325, 328 (2d Cir. 2011) (quoting Nken v. Holder, 556 U.S. 418, 433-34, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009)), to be granted only in "rare circumstances." Landis, 299 U.S. at 255, 57 S.Ct. 163.
In deciding whether to stay proceedings, courts in this Circuit consider:
Readick v. Avis Budget Grp., Inc., No. 12 CIV. 3988 PGG, 2014 WL 1683799, at *2 (S.D.N.Y. Apr. 28, 2014) (quoting Kappel v. Comfort, 914 F.Supp. 1056, 1058 (S.D.N.Y. 1996)).
Addressing the primary jurisdiction doctrine test first, all factors weigh against staying this case. As for the first factor, the claims and counterclaims at issue in this case center on whether statements made by the parties were false or misleading, in violation of the Lanham Act and relevant New York and California laws.
The second factor also weighs against a stay because nothing in this action raises an unresolved question of FDA discretion. Of the four claims and four counterclaims at issue in this action, only a single claim even arguably turns on an interpretation of FDA law—IBD's counterclaim that GOJO made false or misleading statements about its Zylast sanitizers, including that Zylast products do not comply with FDA regulations. Obviously, a finding in the FDA Action that IBD's products do in fact violate the FDCA would substantially undermine IBD's ability to argue the falsity of that charge here. But GOJO's use of this single counterclaim to advocate a stay on the basis of agency expertise and deference confuses the inquiry. The FDA has already taken a clear position regarding the legality of IBD's sales of certain Zylast products under the FDCA. This Court is aware of that position
The third and fourth factor also weigh against a stay. There is little to no risk of inconsistent results because the claims here do not require a finding as to whether IBD's products violate the FDCA, the sole issue in the FDA Action. As already noted, this action is brought under the Lanham Act, not the FDCA, and seven of the eight claims and counterclaims are in no way affected by the outcome of the FDA Action. As for IBD's counterclaim, there remains no risk of inconsistent results between this Court and the FDA, as this Court is aware of the FDA's settled position. Regarding the fourth factor, the FDA has made no indication that any additional action or guidance regarding IBD or hand sanitizer products—beyond seeking an injunction in the FDA Action—is forthcoming. Thus, awaiting FDA guidance on any issue relating to this action may mean waiting forever. The Court rejects GOJO's invocation of the primary jurisdiction doctrine for an Article III judicial proceeding as plainly inapplicable.
Moving on to assess GOJO's motion under the Kappel factors, the Court's finding that the FDA Action is irrelevant to most of the claims at issue here similarly counsels against granting a stay, particularly in light of the substantial prejudice facing IBD in further delay.
As the movant, GOJO bears the burden of demonstrating the need for a stay. Notably absent from its briefing, however, is any articulation of any prejudice it faces—as opposed to the court or the public—should this action and the FDA Action proceed simultaneously. The sole harm GOJO points to is damages. According to GOJO, denying a stay risks the "unjust and incongruous result" that IBD will be awarded damages for lost sales of products in this action which the FDA Action later determines were not able to be sold. GOJO Mem. at 11-12. But this argument fails because the feared result will never come to fruition. Even assuming the FDA prevails in the FDA Action, the FDA seeks only prospective injunctive relief preventing future sales of certain IBD products until IBD obtains a new drug application, abbreviated new drug application, or investigational new drug application. Greenfelder Dec. Ex. 3 at 10. The FDA is not seeking declaratory relief stating that IBD's could not sell its products, that IBD's products are a new drug that could not be sold, or anything similar. Thus, GOJO's exposure to damage liability in this Lanham Act action will not be affected.
IBD's potential prejudice, however, is substantial. The parties in this action are business competitors, both of whom claim that the other's marketing practices are deceptive and causing them commercial harm. And while IBD has stipulated to
GOJO's application also fails to account for the prejudice of Hotan Barough. Although not a party in this action, Barough is a party in a separate lawsuit filed by GOJO in the U.S. District Court for the Central District of California on August 10, 2017 (Case No. 8:17-cv-01382) (the "Barough Action"). Matsuishi Decl., Dkt. 225, Ex. E. The claims in the Barough Action largely mirror the claims at issue here apart from the additional allegation that Barough was acting as IBD's agent. Id., Recognizing this overlap, the court presiding over the Barough Action has stayed the Barough Action pending resolution of this action. Matsuishi Decl. Ex. F. Thus, granting a stay in this action risks not only prejudice to IBD, but also to Barough, who cannot defend himself against GOJO's claims until this action is definitively resolved.
In light of all this prejudice, GOJO's appeals to the public interest (based on a purported need to defer to agency expertise) and the court's interest are unavailing. As already noted, a judgment on GOJO's and IBD's Lanham Act claims in this action will have no effect on the FDA's regulatory authority under the FDCA. The implication that the FDA's interests would somehow be hindered if a stay is not granted is simply not so.
GOJO's motion to stay this proceeding pending resolution of the FDA Action is DENIED. The Clerk of the Court is directed to close the motion at Dkt. 221.
SO ORDERED.