Farmlands Partners Inc. v. Fortunae

          ORDER

          KRISTEN L. MIX UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on the following discovery related motions filed by Defendant Rota Fortunae (“Rota”): (1) Rota's Motion for a Stay Pending Appeal [#52]^[1](the “Motion to Stay”); and (2) Rota's Motion for a Protective Order and/or Stay of Discovery Pursuant to F.R.C.P. 26(c) [#56] (the “Motion for a Protective Order”) (collectively, the “Motions”). Plaintiff filed Responses [#59, #67] in opposition to the Motions and Defendant Rota^[2] filed Replies [#64, #68]. The Court has reviewed the Motions, Responses, Replies, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion to Stay [#52] is DENIED and the Motion for a Protective Order [#56] is GRANTED in part and DENIED without prejudice in part.

         I. Summary of the Case

         Plaintiff initiated this action against Defendants on July 23, 2018, in Denver District Court. Compl. [#3]. In short, Plaintiff alleges that Defendants engaged in a “short and distort” scheme whereby Defendants conspired to publish false and misleading statements regarding Plaintiff's company in order to profit from short positions taken against Plaintiff's stock price. Id. at 1-7. The Complaint asserts claims for defamation/defamation by libel per se, disparagement, intentional interference with prospective business relations, unjust enrichment, deceptive trade practice in violation of the Colorado Consumer Protection Act, and civil conspiracy. Id. at 7-12.

         On August 16, 2018, Plaintiff served Rota in state court by substituted service through Rota's former counsel. Proof of Service of Rota [#1-3].; see Order Granting Plaintiff's Motion to Allow Substituted Service [#1-4]. On August 29, 2018, the state court granted Plaintiff's request to serve Defendants John/Jane Does 2-10 (the “Doe Defendants”) also by substituted service through Rota's current counsel, John Chanin (“Chanin”). Order Granting Plaintiff's August 28, 2018, Motion to Allow Substituted Service [#1-7] (the “State Court Order”). Accordingly, Plaintiff delivered service to Mr. Chanin and filed its Proof of Service [#15-10] with respect to the Doe Defendants on August 30, 2018.

         On that same day, August 30, 2018, Rota filed his Motion to Reconsider Order Granting Substituted Service of Fictitious Defendants John/Jane Does 2-10 [#72] (the “Motion to Reconsider Substituted Service”), ^[3] requesting that the state court reconsider its order permitting Plaintiff to serve the Doe Defendants by substituted service. On August 31, 2018, the state court ordered expedited briefing on Rota's Motion to Reconsider Substituted Service. See Register of Actions [#1-11] at 1. Before the state court could rule, however, Rota removed the case to this Court on September 14, 2018, leaving the Motion to Reconsider Substituted Service unresolved. Notice of Removal [#1].

         Shortly after the case was removed, Plaintiff filed its Motion to Remand [#15] on October 5, 2018. In the Motion to Remand, Plaintiff argued that removal was procedurally defective because none of the served Doe Defendants had joined in or consented to Rota's removal of the case pursuant to 28 U.S.C. § 1446(b)(2)(A). See generally [#15]. Plaintiff sought to remand the case to state court and, in the alternative, requested that the Court permit early limited discovery in order to determine the citizenship of the Doe Defendants for diversity jurisdiction purposes and whether consent was in fact provided for removal. See Id. at 11-13. Rota opposed remand and, throughout the proceedings thus far, has denied the existence of any Doe Defendants. See, e.g., Response to Motion to Remand [#29] at 3; Motion to Reconsider [#72] at 3.

         Also on October 5, 2018, Rota filed its Motion to Dismiss the Complaint [#18] (the “Motion to Dismiss”) pursuant to Fed.R.Civ.P. 12(b)(2), (3) and (6). Ten days later, on October 15, 2018, Rota again moved to dismiss the case, this time pursuant to Texas' anti-SLAPP^[4] statute, the Texas Citizens' Participation Act (“TCPA”), Tex. Civ. Practice. & Rem. Code § 27.004 et seq. Motion to Dismiss Under the Texas Citizens' Participation Act [#22] (the “TCPA Motion”). Pursuant to the TCPA's procedural requirements, Rota moved for a hearing on the TCPA Motion [#22] on October 31, 2018. Motion to Set Hearing on Defendant Rota Fortunae's Motion to Dismiss Under the Texas Citizens['] Participation Act [#32] (the “Motion for a Hearing on the TCPA Motion”); see Tex. Civ. Practice. & Rem. Code § 27.004. On November 28, 2018, Plaintiff filed its Motion for a Default Judgment Against John/Jane Does 2-10 [#37] (the “Motion for Default Judgment”).^[5]

         On December 20, 2018, Plaintiff and Rota appeared before the Court for the initial Rule 16(b) Scheduling Conference. See Minute Entry [#45]. At the hearing, the Court vacated the Scheduling Conference in light of the parties' pending motions, specifically Plaintiff's Motion to Remand [#15]. Id. Moreover, given the issues raised by the Motion to Remand [#15] and Plaintiff's alternative request for limited discovery, the Court directed Rota to answer four interrogatories propounded by Plaintiff regarding the existence or non-existence of the Doe Defendants. Id. Specifically, the Court found that four interrogatories proffered by Plaintiff sought appropriate information from Rota regarding two issues raised by the Motion to Remand [#15] concerning the existence or non- existence of the Doe Defendants. The first issue was jurisdictional, i.e., whether the citizenship of the Doe Defendants could be ascertained at that time to satisfy the Court of its subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332(a)(1). The second issue was procedural, i.e., whether the Doe Defendants were required to consent to removal of this case pursuant to 28 U.S.C. § 1446(b)(2)(A), given the state court's grant of substituted service. Finally, given the uncertainty surrounding this Court's jurisdiction, the Court denied without prejudice the Motion to Dismiss [#18], the TCPA Motion [#22], the Motion for a Hearing on the TCPA Motion [#32], and the Motion for Default Judgment [#37]. Id.

         Rota's deadline to submit responses to Plaintiff's interrogatories was January 4, 2019, and the Court set a Status Conference for January 11, 2019, for purposes of addressing Rota's responses. Id. On the January 4, 2019 deadline to respond, however, Rota filed a Motion to Reconsider [#46] that portion of the Court's December 20, 2018 Order directing Rota to respond to the interrogatories. On January 9, 2019, the Court granted Rota's Motion to Reconsider [#46] in part, by reducing the number of interrogatories to which Rota was required to respond. Order [#48]. Later that same day, January 9, 2019, Rota filed the Notice of Appeal [#49] with respect to the Court's December 20, 2018 Order and the Order [#48] on the Motion to Reconsider [#46].

         At the January 11, 2019 Status Conference, the Court extended Rota's deadline to respond to Plaintiff's interrogatories until January 14, 2019. See Minute Entry [#54]. During the Status Conference, Rota's counsel, Mr. Chanin, stated that it was Rota's position that the Notice of Appeal effectively stayed the Court's prior orders and divested this Court of jurisdiction. Tr. of January 11, 2019 Status Conference [#58] at 3:25-4:3.

         On January 13, 2019, Rota filed the Motion to Stay [#52] presently before the Court in which Rota seeks an order confirming that this case is stayed pending the Notice of Appeal. Motion to Stay [#52] at 1. On January 14, 2019, Rota filed a Notice [#55] indicating that Rota had responded to Plaintiff's interrogatories in compliance with the Court's prior Order [#48]. Four days later, on January 18, 2019, Rota filed its Motion for a Protective Order [#56] which again seeks a stay of discovery in this case or a protective order “shielding” Rota from answering Plaintiff's discovery requests. Motion for a Protective Order [#56] at 1.

         Also on January 18, 2019, Plaintiff requested a hearing before the Court to address the impact of and issues related to Rota's interrogatory responses. Motion for Hearing [#57]. The Court granted Plaintiff's request and, after Rota's unopposed motion to reschedule, the Court set a Status Conference for March 5, 2019. See Minute Order [#63]; Unopposed Motion to Reschedule Status Conference [#65]; Minute Order [#66].

         At the March 5, 2019 Status Conference, the Court directed Rota to supplement his interrogatory responses with respect to the citizenship of a company previously identified in Rota's responses by no later than March 19, 2019. Minute Entry [#69]. Following the Status Conference, Plaintiff filed a Renewed Motion for Default Judgment Against John/Jane Does 2-10 [#70] on March 8, 2019. On March 14, 2019, Rota separately filed the Motion to Reconsider Substituted Service [#72] regarding the substituted service of the Doe Defendants which had previously been filed in state court. On April 24, 2019, Rota filed his Motion to Quash [#79] which seeks a protective order that precludes Goldman Sachs & Co, LLC (“Goldman Sachs”) from responding to a subpoena duces tecum served by Plaintiff or, in the alternative, an order quashing the subpoena.

         On June 11, 2019, the Court issued its Order [#83] granting Rota's Motion to Reconsider Substituted Service [#72], thereby vacating the State Court Order [#1-7] which had granted Plaintiff's request to serve the Doe Defendants by substituted service; and striking Plaintiff's Proof of Service [#15-10] of process on the Doe Defendants. Order [#83] at 18. Accordingly, the Court further denied as moot Plaintiff's Motion to Remand [#15] and Renewed Motion for Default Judgment Against John/Jane Does 2-10 [#70]. See Orders [#84, #85]. Finally, in light of these Orders [#83, #84, #85], the Court reset the Rule 16(b) Scheduling Conference in this case, which is now currently set for August 1, 2019, at 10:00 a.m. Minute Order [#86]; Minute Order [#89].

         II. Analysis

         A. The Motion to Stay [#52]

         In the Motion to Stay, Rota seeks an order from the Court “confirming that the entire underlying case is stayed pending the Notice of Appeal [#49] filed on January 9, 2019.” [#52] at 1. In short, Rota contends that the Court is required to stay this case while the appeal is pending because “filing the notice of appeal of the denial of the TCPA Motion was a jurisdictionally significant act” and “divested the Court of jurisdiction to proceed with any part of the action against [Rota].” Id. at 4. In opposition to the stay, Plaintiff argues that the Court's jurisdiction remains intact because the order denying the ...