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Aronstein v. Thompson Creek M S Company Inc.

United States District Court, D. Colorado

May 15, 2015



NINA Y. WANG, Magistrate Judge.

This matter is before the court on Defendants Thompson Creek M s Company Inc. ("Thompson Creek"), Kevin Loughrey, Pamela Saxton, Pamela Solly, James L. Freer, Timothy J. Haddon, and Wendy Cassity's (collectively, the "Defendants")[1] Motion to Stay Discovery Pending A Decision on Their Motion to Dismiss ("Motion to Stay"). [#30, filed March 13, 2015]. Pursuant to the Order Referring Case dated February 20, 2015 [#16] and the memorandum dated March 13, 2015 [#42], this matter was referred to this Magistrate Judge. The court heard argument on the request for a limited stay during the Status Conference held on May 11, 2015. For the reasons addressed below, I GRANT IN PART and DENY IN PART the Motion to Stay, and ORDER certain discovery to proceed immediately.


The Parties and the court are well-acquainted with the procedural history of this case and therefore, I will recount herein only what is relevant to the Motion at issue. Plaintiffs initiated this civil action as pro se litigants in February 2014 in the United States District for the District of Connecticut claiming that Defendants (who are current or former directors or officers of Thompson Creek) are responsible for false statements and omissions to the public regarding Thompson Creek's resources, and that they relied on those statements and omissions to their detriment in purchasing and holding $6, 314, 303 worth of shares of Thompson Creek common stock. [#4]. Plaintiffs owned shares of Thompson Creek's stock from March 2011 to May 2012, which is defined as the relevant "PERIOD" in the Amended Complaint. [ Id. at ¶ 31]. Plaintiffs allege that "[d]uring the PERIOD the Defendants made numerous material false statements and material omissions in public filings, disclosures, press releases, conference calls, direct emails and phone conversations with the public at large, the SEC and directly with the Plaintiffs, " which "[u]niformly, [] overstated TCM's capital resources and understated its capital needs at a time when capital adequacy was the most important factor driving TCM's market valuation." [ Id. at ¶¶ 33-34]. The Amended Complaint identifies three claims for relief: (1) securities fraud under the Connecticut Uniform Securities Act; (2) fraud and intentional misrepresentation; and (3) negligent misrepresentation. [ Id. at 24].

This lawsuit was subsequently transferred on motion to the District of Colorado on January 30, 2015 [#1]. On March 6, 2015, Defendants filed a 39-page Motion to Dismiss Plaintiffs' Amended Complaint pursuant to Rule 12(b)(6) as to all Defendants and 12(b)(5) as to Defendants Loughrey and Freer. [#22]. Specifically, Defendants argue that Plaintiffs fail to meet the heightened pleading burden articulated in Rule 9(b), fail to allege an intention to deceive, and that the fraudulent or negligent misrepresentation claims are preempted by federal law and are untimely. [ Id. ] The Motion to Dismiss was referred to the undersigned Magistrate Judge on March 9, 2015 [#23]. On March 13, 2015, Defendants filed the pending Motion to Stay. [#30]. Counsel for Plaintiffs entered his appearance on behalf of Plaintiffs on April 1, 2015 [#45], and Plaintiffs filed a Response to the Motion to Stay on April 3, 2015. [#46]. Plaintiffs filed a Response to the Motion to Dismiss on April 8, 2015, and Defendants filed a Reply on April 22, 2015. [#48].

On April 3, 2015, Magistrate Judge Shaffer presided over a Scheduling Conference at which he stayed discovery until the Motion to Dismiss had been fully briefed and ordered the Parties to meet and confer regarding a protocol for discovery of electronically stored information ("ESI") in this action, which they would draft and submit to the court. [#47]. No Scheduling Order was entered. On April 17, 2015, Defendants filed their Reply in support of the Motion to Stay, in which they represent the Parties have agreed to exchange Rule 26(a)(1) disclosures and counsel are discussing a reciprocal exchange of certain categories of documents, but ask that all other discovery be stayed until the undersigned issues her Recommendation regarding the Motion to Dismiss. [#49]. Defendants filed their Reply in support of the Motion to Dismiss on April 22, 2015 [#50], and therefore, the Motion to Dismiss is now ripe for argument (which has been set for June 15, 2015) and disposition.

In anticipation of the Joint Status Conference and Motion Hearing on the Motion to Stay, the Parties filed a Joint Status Conference Update on May 8, 2015. [#57]. In that Status Report, the Parties indicated that they would exchange Rule 26(a)(1) Initial Disclosures on June 5, 2015 and identified certain categories of documents that they will voluntarily exchange.[2] [#57]. The Parties also reflected their respective requests, and corresponding disputes, for certain discovery to occur during the pendency of this Magistrate Judge's consideration of Defendants' Motion to Dismiss.[3] [ Id. ] The Parties have also agreed to postpone any depositions. [#46 at 4]. The court held the Status Conference on May 11, 2015, at which the Parties discussed at great length their disputes over the limited requests for discovery. In addition, Plaintiffs' counsel indicated that he intended to serve the additional Defendants once he could determine an address for those individuals. Again, no Scheduling Order was entered.

In light of the papers, the applicable case law, the statements of counsel on the record and their further request for oral argument on Defendants' pending Motion to Dismiss, the court hereby GRANTS IN PART and DENIES IN PART the Motion to Stay.


I. Standard of Review

While no Scheduling Order has yet been entered in this case, the Parties engaged in a Rule 26(f) conference on March 26, 2015 and April 26, 2015. [#34]. Pursuant to Rule 26(d), now that the Parties have conferred, discovery may proceed. However, "[a] court has inherent power to stay proceedings to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.'" Ellis v. J.R.'s County Stores, Inc., No. 12-cv-01916-CMA-KLM, 2012 WL 6153513 at *1, (D. Colo. Dec. 11, 2012) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (observing that docket management "calls for the exercise of judgment, which must weigh competing interests and maintain an even balance")). This District generally disfavors a stay of all discovery. Wason Ranch Corp. v. Hecla Mining Co., No. 07-cv-00267-EWN-MEH, 2007 WL 1655362, at * 1 (D. Colo. June 6, 2007) (citing Chavez v. Youn Am. Ins. Co., No. 06-2419, 2007 U.S. Dist. LEXIS 15054 (D. Colo. Mar. 2, 2007)).

The following factors guide this court in determining whether to stay discovery:

(1) the interest of the plaintiff in proceeding expeditiously with discovery and the potential prejudice to the plaintiff of a delay; (2) the burden on the defendant of proceeding with discovery; (3) the convenience to the Court of staying discovery; (4) the interests of nonparties in either staying or proceeding with discovery; and (5) the public interest in either staying or proceeding with discovery.

String Cheese Incident v. Stylus Shows, Inc., No. 1:05-CV-01934-LTB-PAC, 2006 WL 894955, at *2 ...

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