Filed: Jan. 14, 2016
Latest Update: Jan. 14, 2016
Summary: MEMORANDUM AND ORDER KEITH P. ELLISON , District Judge . Before the Court is Defendants' Renewed Motion for Stay of Proceedings. I. PROCEDURAL HISTORY On January 15, 2015, this Court granted in part Plaintiffs' motion for leave to amend their complaint. Defendants subsequently filed motions to (i) certify the January 15th decision for interlocutory appeal, which this Court granted and the Fifth Circuit accepted, 1 and (ii) stay further proceedings pending the appeal, which this Cour
Summary: MEMORANDUM AND ORDER KEITH P. ELLISON , District Judge . Before the Court is Defendants' Renewed Motion for Stay of Proceedings. I. PROCEDURAL HISTORY On January 15, 2015, this Court granted in part Plaintiffs' motion for leave to amend their complaint. Defendants subsequently filed motions to (i) certify the January 15th decision for interlocutory appeal, which this Court granted and the Fifth Circuit accepted, 1 and (ii) stay further proceedings pending the appeal, which this Court..
More
MEMORANDUM AND ORDER
KEITH P. ELLISON, District Judge.
Before the Court is Defendants' Renewed Motion for Stay of Proceedings.
I. PROCEDURAL HISTORY
On January 15, 2015, this Court granted in part Plaintiffs' motion for leave to amend their complaint. Defendants subsequently filed motions to (i) certify the January 15th decision for interlocutory appeal, which this Court granted and the Fifth Circuit accepted,1 and (ii) stay further proceedings pending the appeal, which this Court denied.2 Defendants' appeal of the January 15th decision is still pending. Briefing is scheduled to conclude on February 29, 2016.3
As Defendants' interlocutory appeal began to wend its way through the appellate process, Defendants filed a motion in this Court seeking a partial dismissal of Plaintiffs' First Amended Consolidated ERISA Complaint ("FAC"). The Court granted Defendants' motion on October 30, 2015, substantially narrowing Plaintiffs' "Count I" claims, and dismissing their "Count II" claims entirely. Plaintiffs' only remaining claims are: (i) that Lamar McKay, Neil Shaw, and James Dupree4 (the "Remaining Insider Defendants") violated ERISA's duty of prudence; and (ii) that the Remaining Insider Defendants violated ERISA's duty of loyalty.5 Defendants now renew their request, initially made on January 30, 2015, that the Court exercise its discretion to stay further proceedings in this case pending the Fifth Circuit's decision on Defendants' interlocutory appeal.
II. LEGAL STANDARD
To determine whether a district court should grant a discretionary stay pending an interlocutory appeal, district courts traditionally employ a four-factor test: "(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 other parties interested in the proceedings; and (4) [whether] public interest [favors a stay]."6 Each part of the test must be met.7 The movant bears the burden of showing that a stay is justified.8
The Fifth Circuit clarified in Ruiz v. Estelle, however, that "the movant need not always show a probability of success on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of the equities weighs heavily in favor of granting the stay."9 In other words, if the second, third, and fourth factors of the traditional test weigh heavily in favor of granting a stay, then a movant need only show that he has "a substantial case on the merits" to satisfy the first factor.10
II. ANALYSIS
In denying Defendants' initial request in January of 2015, this Court identified several considerations of equity that counseled against staying the proceedings. Nearly all of those considerations are equally applicable—if not more applicable—today than they were a year ago.11 Because Defendants have not shown that the balance of equities weighs in their favor, much less heavily in their favor, Defendants have failed to meet their burden under Ruiz. The Court therefore denies their Renewed Motion for Stay of Proceedings.
A. The Balance of Equities
Where, as here, a movant invokes Ruiz's "substantial case on the merits" standard,12 a court should begin its analysis by balancing the three equitable factors of the traditional test.13
(1) Irreparable Injury
Defendants imply that they will suffer irreparable injury because, absent the stay, they will be forced to engage in "expensive discovery practice."14 The legal merit of this proposition, however, is dubious. A court in this district rejected a virtually identical argument in M.D. v. Perry, and Defendants have provided no precedent that otherwise suggests that discovery expenses can constitute "irreparable harm" in the context of a motion for stay.15
Moreover, Defendants' concerns seem somewhat overstated. As Defendants themselves note, the scope of this case has been "sharply curtailed,"16 meaning that the scope of potential discovery has been similarly narrowed. Additionally, Defendants have already agreed to "provide Plaintiffs with access to the document production in the securities class action pending before this Court and the massive production in MDL 2179."17 Thus, Defendants have already reviewed and catalogued many of the documents that will be relevant to Plaintiffs' discovery requests.
(2) Injury to Other Parties Interested in the Proceeding
Defendants argue that granting the stay will not cause substantial harm to any party because "most putative class members" seek remedies related to future retirement benefits.18 But this seems a tacit acknowledgement that at least some putative class members seek remedies related to current retirement benefits, and that those members would be negatively affected by additional delay.19 Whether delaying those retirees' potential remedies constitutes "substantial harm" is difficult to say,20 but at least this much is clear: this equitable factor does not weigh "heavily" in favor of the Defendants.
(3) Public Interest
Defendants argue that a stay would serve the public interest by "promoting judicial efficiency and avoiding needless expenditure of resources."21 While promoting judicial efficiency undoubtedly serves the public interest in the abstract, it is unclear how Defendants think this concern is particularly applicable to the analysis here—they provide no citation or elaboration in support of their argument. Indeed, judicial efficiency concerns will always be implicated by the prospect of denying a stay—allowing a district court and a court of appeals to proceed in parallel means that the district court might do more work than is necessary. But those concerns bear particularly little relevance here. The parties are now entering the discovery phase of the litigation, which typically requires relatively minimal court involvement. The risk of unnecessarily expending substantial public resources during the pendency of the interlocutory appeal is low.
(B) Substantial Case on the Merits
Ruiz imposes two primary requirements on parties that move for a stay of proceedings: (1) "show that the balance of the equities weighs heavily in favor of granting a stay," and (2) "present a substantial case on the merits [involving] a serious legal question."22 Defendants have failed to meet the first requirement, so it is unnecessary for the Court to address the second.23
III. CONCLUSION
After considering the parties' filings, all responses and replies thereto, and the applicable law, the Court holds that Defendants' Renewed Motion for Stay of Proceedings is DENIED in its entirety.
IT IS SO ORDERED.