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Karoun Dairies, Inc. v. Karlacti, Inc.

United States District Court, Ninth Circuit

September 3, 2013

KAROUN DAIRIES, INC., a California corporation, Plaintiff,
v.
KARLACTI, INC., a Delaware corporation, et al., Defendants.

ORDER GRANTING MOTION TO STAY TRIAL PROCEEDINGS PENDING DECISION BY THE NINTH CIRCUIT COURT OF APPEAL IN A RELATED CASE AND REQUIRING THE PARTIES TO SUBMIT A JOINT STATUS REPORT IN 60 DAYS (Doc. No. 261)

ANTHONY J. BATTAGLIA, District Judge.

Before the Court is Defendants' Motion to Stay Trial Proceedings Pending a Related Decision by the Ninth Circuit Court of Appeal. (Doc. No. 261.) For the reasons set forth below, Defendants' motion is GRANTED, and this action is hereby STAYED pending the Ninth Circuit's decision.

PROCEDURAL BACKGROUND[1]

On November 24, 2011, Plaintiff sought leave to file a Third Amended Complaint in order to add a new claim for breach of an alleged oral contract, among other things.[2] With regard to the proposed breach of oral contract claim, Plaintiff claimed Defendant Ara Baghdassarian ("Ara") had breached an oral agreement with his brother Anto Baghdassarian ("Anto") in addition to breaching a written agreement already raised as a claim in this action. On June 24, 2011, the Court denied Plaintiff's request to add a breach of oral contract claim in this matter.[3] (Doc. No. 208.)

Five months after this Court's ruling, Anto filed a breach of oral contract claim based on similar facts against Ara in the Superior Court of the State of California for the County of Los Angeles, North Central Division on November 14, 2011.[4] Ara subsequently removed the case to the Central District of California (the "Central District") and filed a Notice of Pendency of Other Proceedings.[5] Ara then moved to dismiss the Central District action, or in the alternative, to transfer it to the Southern District.[6] Anto moved to remand the case to state court. On February 16, 2012, the Central District: (1) denied Anto's motion for remand, finding diversity jurisdiction under 28 U.S.C. ยง 1332;[7] and (2) granted Ara's motion to dismiss with prejudice, holding Anto's breach of oral contract claim time-barred.[8] The Central District ruled that Anto's "claim for breach of oral contract is clearly barred" by the statute of limitations as Anto became aware of the "alleged breach of the Oral Agreement in 2006 when [Ara's] counsel notified him that [Ara] intended to apply for the Karoun trademark."[9]

On August 20, 2012, Anto appealed the Central District's ruling regarding the oral contract claim's statute of limitations and the denial of the motion to remand to the Ninth Circuit Court of Appeal.[10] On October 3, 2012, Ara filed his responsive brief, arguing that: (a) the district court properly exercised diversity jurisdiction; (b) removal was proper; (c) the court also has federal question jurisdiction; (d) Anto's duplicative lawsuit in the Central District is barred because it violates the rule against claim splitting; (e) the Central District correctly dismissed Anto's complaint because his claim was barred by the statute of limitations; (f) the dismissal was also proper because the alleged oral agreement is void against California's law and public policy prohibiting restraint of trade; and (g) dismissal was proper because the alleged oral agreement is invalid under Lebanese law because it does not comply with Lebanon's statute of frauds.[11] On November 5, 2012, Anto filed his reply.[12] Anto and Ara are currently awaiting the Ninth Circuit's decision in Antranik Baghdassarian v. Ara Baghdassarian, 11-cv-10385 SVW(JCx) (C.D. Cal. 2012), appeal docketed, No. 12-55458 (9th Cir. Mar. 9, 2012).

On June 28, 2013, Ara and the other Defendants in this action filed the instant Motion to Stay Trial Proceedings Pending a Related Decision by the Ninth Circuit Court of Appeal regarding the alleged oral contract between Anto and Ara.[13] Plaintiff filed an opposition to Defendants' motion on July 12, 2013.[14] On July 19, 2013, Defendants filed their reply.[15]

LEGAL STANDARD

A court's power to stay proceedings is incidental to its inherent power to control the disposition of its cases in the interests of efficiency and fairness to the court, counsel, and litigants. Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936); see also Clinton v. Jones, 520 U.S. 681, 706-07 (1997); Single Chip Sys. Corp. v. Intermec IP Corp., 495 F.Supp.2d 1052, 1057 (S.D. Cal. 2007). For the sake of judicial economy, such a stay may be granted pending the outcome of other legal proceedings related to the case. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979). Such discretion is appropriately used when the resolution of another matter will have a direct impact on the issues before the court, substantially simplifying issues presented. Mediterranean Enters. v. Ssangyong Corp., 708 F.2d 1458 (9th Cir. Cal. 1983); San Diego Padres Baseball P'ship v. United States, 2001 WL 710601, at *1 (S.D. Cal. May 10, 2001).

The district court's determination of whether a stay is appropriate, "must weigh competing interests and maintain an even balance." Landis, 299 U.S. at 254-55. The Ninth Circuit has noted that these competing interests include:

the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.

CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). However, "if there is even a fair possibility that the stay... will work damage to someone else, ' the stay may be inappropriate absent a showing by the moving party of hardship or inequity.'" Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007)(citing Landis, 299 U.S. at 255). "If a stay is especially long or its term is indefinite, we require a greater showing to justify it." Young v. I.N.S., 208 F.3d 1116, 1119 (9th Cir. 2000) (reversing stay imposed until the resolution of an appeal that might be lengthy). "[A] stay should not be granted unless it appears likely the other proceedings will be concluded within a reasonable time." Dependable Highway, 498 F.3d at 1066 (quoting Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979)).

DISCUSSION

Based on the above factors, the Court finds a stay of proceedings is appropriate in this case ...


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