United States District Court, D. Colorado
GENSCAPE, INC. Plaintiff,
LIVE POWER INTELLIGENCE COMPANY NA, LLC, and WILLIAM P. TOWNSEND, Defendants.
ORDER ON MOTION TO STAY
Y. WANG UNITED STATES MAGISTRATE JUDGE.
matter comes before the court on Defendants Live Power
Intelligence Company NA, LLC (“Live Power”) and
William P. Townsend's (“Mr. Townsend”)
(collectively, “Defendants”) Motion to Stay
Proceedings Pending Resolution of Defendants' Motion to
Dismiss (“Motion” or “Motion to
Stay”), filed December 10, 2018. [#16]. The undersigned
Magistrate Judge considers the Motion pursuant to 28 U.S.C.
§ 636(b) and the Memorandum dated December 11, 2018
[#18]. This court concludes that oral argument will not
materially assist in the resolution of this matter.
Accordingly, having reviewed the Motion and associated
briefing, the applicable case law, and the entire docket,
this court DENIES the Motion to Stay for the
reasons stated herein.
Genscape, Inc. (“Plaintiff” or
“Genscape”) asserts several claims against
Defendants, both individually and collectively, based on Mr.
Townsend's previous employment with Genscape and
Defendants' alleged misappropriation of Genscape's
trade secrets. See [#1 at ¶¶ 15-17,
20-27]. These claims include violations of the Defend Trade
Secrets Act of 2016, 18 U.S.C. § 1836 et seq.,
the Colorado Uniform Trade Secrets Act, Colo. Rev. Stat.
§ 7-74-101 et seq., and the Kentucky Uniform
Trade Secrets Act, Ky. Rev. Stat. § 365.880 et
seq. by Defendants; civil theft pursuant to Colo. Rev.
Stat. § 18-4-405 by Defendants; conversion by
Defendants; breach of contract and breach of fiduciary duty
by Mr. Townsend; and aiding and abetting a breach of
fiduciary duty by Live Power. See generally [#1].
Plaintiff initiated this civil action on October 3, 2018,
see [id.], which is the second action in
this District involving Plaintiff and Live Power- the first
being a suit for patent infringement against Live Power that
Plaintiff and Genscape Intangible Holding, Inc. voluntarily
dismissed on August 31, 2018, see Genscape Intangible
Holdings, Inc. et al v. Live Power Intelligence Company NA,
LLC, No. 17-cv-02452-PAB-SKC (“Genscape
December 10, 2018, Defendants moved to dismiss
Plaintiff's Complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure, arguing that Plaintiff
fails to plead facts that establish plausible entitlements to
relief. See [#15]. Concurrently with their Motion to
Dismiss, Defendants filed the instant Motion to Stay,
requesting that the court stay this civil action pending
resolution of Defendants' Motion to Dismiss. See
[#16]. Plaintiff opposes the Motion to Stay, arguing that
Defendants fail to demonstrate that a stay of this civil
action is appropriate. See [#21]. The Motion to Stay
is now ripe for determination, and this court considers the
Parties' arguments below.
Federal Rules of Civil Procedure do not provide for the stay
of proceedings while a motion to dismiss is pending. Instead,
Rule 1 instructs that the rules of procedure ‘shall be
construed and administered to secure the just, speedy, and
inexpensive determination of every action.'”
Sutton v. Everest Nat'l Ins. Co., No. 07 CV
00425 WYD BNB, 2007 WL 1395309, at *1 (D. Colo. May 9, 2007).
Nonetheless, when ruling on a motion to stay, courts weigh
the following factors: (1) the plaintiff's interests in
expeditiously litigating this action and the potential
prejudice to plaintiff of a delay; (2) the burden on the
defendants; (3) the convenience to the court; (4) the
interests of persons not parties to the civil litigation; and
(5) the public interest. String Cheese Incident, LLC v.
Stylus Shows, Inc., No. 1:02-CV-01934-LTB-PAC, 2006 WL
894955, at *2 (D. Colo. Mar. 30, 2006). But “stays of
the normal proceedings of a court matter should be the
exception rather than the rule, ” Christou v.
Beatport, LLC, No. 10-CV-02912-CMA-KMT, 2011 WL 650377,
at *1 (D. Colo. Feb. 10, 2011), and courts in this District
generally disfavor stays, see, e.g., Chavez v.
Young Am. Ins. Co., No. CIVA 06CV02419PSFBNB, 2007 WL
683973, at *2 (D. Colo. Mar. 2, 2007).
bottom, Defendants argue for a stay of discovery pending
resolution of their Motion to Dismiss because the Motion to
Dismiss is potentially dispositive of all claims in this
action and Plaintiff and Live Power engaged in several months
of discovery previously in Genscape I. See
[#16 at 1-5; #29 at 2-5]. Defendants contend that a stay will
not prejudice Plaintiff because Plaintiff has been aware of
“Live Power's competition in the market to collect
and sell electrical power data and Mr. Townsend's
position as CEO of Live Power for at least eighteen
months” and already had eight months in which to
conduct discovery into the alleged theft of its confidential
information” in Genscape I. [#16 at 8-9];
see also [#29 at 3-7]. Defendants continue that they
on the other hand will suffer prejudice in the absence of a
stay because they have already been burdened by discovery in
Genscape I and discovery in this action will
“in all likelihood . . . prove to be unnecessary”
given their Motion to Dismiss. See [#16 at 10-11;
#29 at 7-8]. Defendants also argue that a stay is more
efficient for the court because it reduces the inconvenience
and burden of resolving discovery and procedural disputes;
that a stay favors the interests of nonparties because
Plaintiff sought in Genscape I and purports to seek
in this matter discovery from third parties; and that a stay
favors the public interest because the public has an interest
in not wasting court resources with “groundless
actions.” See [#16 at 11-13; #29 at 9-10].
Respectfully, this court disagrees.
start, as Genscape argues, a stay is not warranted merely
because Defendants filed a Motion to Dismiss that they
believe is dispositive of this entire matter. See Church
Mut. Ins. Co. v. Coutu, No. 17-CV-00209-RM-NYW, 2017 WL
3283090, at *3 (D. Colo. Aug. 2, 2017) (“[N]o element
of the String Cheese factors requires that this
court make a preliminary determination as to the likelihood
of success of either the dispositive motion or the ultimate
merits of this case” when considering the
appropriateness of a stay). Indeed, this court agrees with
Genscape that while courts may be more inclined to stay
discovery pending the resolution of a Motion to Dismiss
impacting immunity or jurisdictional issues, see,
e.g., Burkitt v. Pomeroy, No.
15-CV-02386-MSK-KLM, 2016 WL 696107, at *1 (D. Colo. Feb. 22,
2016) (“Questions of jurisdiction and immunity should
be resolved at the earliest stages of litigation, so as to
conserve the time and resources of the Court and the
parties.”), the same is not necessarily true for
motions testing the adequacy of the plaintiff's pleading,
see, e.g., De Leon v. Marcos, No.
CIVA09CV-02216MSKMEH, 2009 WL 3756374, at *1 (D. Colo. Nov.
9, 2009) (denying the defendant's Motion to Stay pending
resolution of its Rule 12(b)(6) Motion to Dismiss because
“it is the policy in this district not to stay
discovery pending a ruling on motions to dismiss, ” and
noting that a stay “could substantially delay the
ultimate resolution of the matter”).
this court disagrees with Defendants that Genscape will not
be prejudiced by a stay because it conducted several months
of discovery in Genscape I. Notably, Genscape
I dealt with claims for patent infringement, which
inherently concern matters of public disclosure, whereas this
action concerns the misappropriation of trade secrets-matters
deemed confidential. With this divergence in legal theories,
this court cannot conclude based on the current record before
it that Plaintiff conducted sufficient discovery as to its
claims in this action. Further, this court concludes
that Genscape has an interest in proceeding expeditiously
with discovery in this action such that granting a stay
pending resolution of Defendants' Motion to Dismiss
“could substantially delay the ultimate resolution of
the matter, with injurious consequences, ”
Chavez, 2007 WL 683973, at *2 (D. Colo. Mar. 2,
2007), especially where, as here, Genscape alleges continuous
injury from the alleged misappropriation of its trade
secrets, see United States v. Centerre Gov't
Contracting Grp., LLC, No. 13-CV-02823-CMA-MJW, 2014 WL
1924368, at *8 (D. Colo. May 13, 2014) (finding prejudice to
the plaintiffs if the case was stayed because the plaintiffs
alleged that defendants caused continuous consequential
damages, including financial hardship).
the second String Cheese factor, I conclude that
Defendants have not demonstrated that they will suffer
prejudice in the absence of a stay. While this court is aware
of the discovery burdens imposed on all litigants, that
burden on Defendants does not appear severe here. See
Webb v. Brandon Exp. Inc., No. 09-cv-00792-WYD-BNB, 2009
WL 4061827, at *2 (D. Colo. Nov. 20, 2009) (“Parties
always are burdened by discovery and the other requirements
for the preparation of a case. That is a consequence of our
judicial system and the rules of civil procedure. There is no
special burden here.”). Again, this court is not
persuaded that Defendants will suffer prejudice beyond
ordinary burdens of litigation in the absence of stay merely
because they believe in the success of their Motion to
Dismiss. See Baldwin v. United States, No.
11-CV-02033-MSK-KLM, 2011 WL 5177698, at *2 (D. Colo. Nov. 1,
2011) (concluding that the defendant would not be prejudiced
in the absence of a stay pending resolution of its Motion to
Dismiss because the “ordinary burdens associated with
litigating a case do not constitute undue burden, ” and
noting “motions relating to a failure to state a claim
are not unique nor do they raise similar concerns that the
defendants are unnecessarily subject to litigation.”).
neither the convenience to the court nor the interests of
nonparties and the public warrant a stay of this matter.
Although this court acknowledges that discovery in this
matter may result in several disputes for this court's
consideration, e.g., [#29 at 8-9], the potential for
discovery disputes does not outweigh the court's
determination that it is most efficient to move forward
without a stay. Should discovery disputes arise, the Parties
shall adhere to the undersigned's procedures for
scheduling informal discovery dispute resolutions. Relatedly,
while the public may have an interest in not wasting court
resources, this court is not convinced that such is the case
here. Further, it is unclear to what extent the interests of
nonparties will be impacted by discovery in this matter;
thus, this factor neither favors nor counsels against a stay.
whole, the String Cheese factors do not weigh in
favor of staying this action pending resolution of
Defendants' Motion to Dismiss. I ...