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Piping Rock Partners, Inc. v. David Lerner Associates, Inc.

United States District Court, Ninth Circuit

July 9, 2013

PIPING ROCK PARTNERS, INC., and CHRISTOPHER K. GERMAIN, Plaintiffs,
v.
DAVID LERNER ASSOCIATES, INC., DAVID LERNER, and GEORGE DOBBS Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO STAY; GRANTING PLAINTIFFS' LIMITED DISCOVERY REQUEST

SUSAN ILLSTON, District Judge.

Defendants have filed a motion to stay all proceedings in this case pending resolution of their appeal by the Ninth Circuit. Plaintiffs have filed an opposition to which defendants have replied. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and hereby VACATES the hearing currently scheduled for July 12, 2013. Having considered the parties' papers, and for good cause shown, the Court GRANTS defendants' motion to stay for the reasons discussed below.

BACKGROUND

On May 17, 2013, the Court denied defendants' special motion to strike plaintiffs' defamation claim pursuant to California Civil Code ยง 425.16 ("anti-SLAPP statute").[1] On May 31, 2013, defendants filed a notice with the U.S. Court of Appeals for the Ninth Circuit appealing the May 17, 2013 order denying their special motion to strike.[2] Defendants now move to stay the case asserting that such a stay is "automatic" as a matter of law.

DISCUSSION

Denial of an anti-SLAPP motion to strike constitutes a collateral order that is immediately appealable. Hilton v. Hallmark Cards, 599 F.3d 894, 900 (9th Cir. 2010). Notice of an appeal of such an order divests the lower court of "control over those aspects of the case involved in the appeal, " unless the lower court finds the appeal frivolous. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982). See also Chuman v. Wright, 960 F.2d 104, 105 (9th Cir. 1992) (finding "where a proper appeal from a denial of qualified immunity automatically divests the district court of jurisdiction... a frivolous or forfeited appeal does not automatically divest the district court of jurisdiction."). However, the standard for a frivolous appeal "is quite high, " and frivolity should be found in cases where the appeal is either "wholly without merit" or the outcome is "obvious." Moser v. Encore Capital Group, Inc., No. 04CV2085, 2007 U.S. Dist. LEXIS 22970, *7-8 (S.D. Cal. Mar. 29, 2007), citing United States v. Kitsap Physicians Service, 314 F.3d 995, 1003, n.3 (9th Cir. 2002).

Here, plaintiffs contend that defendants' appeal is frivolous because the defamatory internet posts at issue here are fact, not opinion, and because defendants have not met their burden on their asserted unclean hands defense. Plaintiffs' mere disagreement with the merits of defendants' motion, however, does not constitute frivolousness. Accordingly, the Court GRANTS defendants' motion to stay all proceedings pending their appeal.[3]

In their opposition to defendants' motion to stay, plaintiffs request that the Court permit limited discovery if the case is stayed. In particular, plaintiffs request the deposition of (1) DLA's person most knowledgeable and (2) of defendant George Dobbs. Both depositions would take place without requests for documents and without prejudice to ask follow-up questions at a later date. Plaintiffs argue limited discovery is proper because there is a risk that defendant Dobbs' memory will fade, particularly given that his former employer, defendant DLA, has allegedly destroyed Dobbs' computer hard-drive.

Pursuant to Federal Rule of Civil Procedure 27(b)(1), this Court "may, if an appeal has been taken or may still be taken, permit a party to depose a witness to perpetuate their testimony for use in the event of further proceedings in that court." The taking of such deposition is proper if the Court finds that "perpetrating the testimony may prevent a failure or delay of justice." Fed. R. of Civ. P. 27(b)(3). In light of the issues in this case, the Court finds that these limited depositions appropriate. The parties shall timely confer and schedule these two depositions, which will be taken without request for documents and without prejudice to ask questions at a later date.

CONCLUSION

For the reasons set forth above, the Court GRANTS defendants' motion to stay the case pending the resolution of defendants' appeal, with limited discovery permitted while the case is stayed, as described above.[4]

IT IS SO ORDERED.


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