United States District Court, N.D. California, San Jose Division
ORDER DENYING MOTION TO PARTIALLY LIFT THE STAY [RE:
LABSON FREEMAN United States District Judge
allegedly been deceived into investing in a partnership in
exchange for an immigrant visa, Plaintiff Saied Mohebbi
brings suit against Defendants for fraud and other causes of
action. Second Am. Compl. (“SAC”), ECF 66. The
Court previously granted Defendants' motion to compel
arbitration and stay remaining claims. Presently before the
Court is Defendant Stacey Conti's motion to lift the
stay. Having reviewed the papers and oral argument of the
parties, the Court DENIES Defendant Stacey Conti's motion
to partially lift the stay for the reasons set forth below.
to the SAC, Plaintiff Saied Mohebbi (“Mohebbi”)
is a Farsi-speaking Iranian citizen who, in 2012, was
interested in obtaining permanent residency in the United
States through the EB-5 Immigrant Investor Visa Program. SAC
¶ 26. This program allows foreign nationals to obtain a
green card if they invest a certain amount of money
(generally $500, 000 or $1 million, depending on certain
factors) in the United States. Id. While living in
Iran, he learned about Defendant U.S. Immigration Investment
Center LLC (“USIIC”) through an online
Farsi-language video, and, in April 2012, met with its CEO,
Ms. Khazen, in Los Angeles during a trip to the United
States. Id. ¶ 30. In this meeting, Khazen and
Mohebbi discussed ways in which Mohebbi could invest money
with USIIC so as to qualify for an EB-5 visa. Id.
¶ 29-30. Plaintiff contends that at the time USIIC
advertised itself on its website as the “only EB-5
Regional Center organization with its foundation in United
States banking, ” despite the fact that USIIC had not
been approved by United States Citizenship and Immigration
Services (“USCIS”) to serve as an EB-5 Regional
Center. Id. ¶ 26.
returning to Iran, Mohebbi received correspondence from
Khazen via email regarding the terms of an investment.
Id. ¶ 31. After several exchanges between
Mohebbi and certain Defendants, Mohebbi agreed to invest over
$1 million into a partnership in exchange for Defendants'
assistance in helping him qualify for the federal EB-5
immigrant visa program. Id. ¶¶ 32-36.
Mohebbi now asserts twenty-two causes of action against
Defendants in the SAC for fraudulently inducing his
investment among other claims.
Defendant Stacey Conti (“Conti”), Mohebbi alleges
that Conti was the Chief Banking Officer of USIIC, and
exercised control over USIIC, including the editing and
publication of USIIC's website and promotional materials.
Id. ¶¶ 16, 20, 54, 65, 145, 163, 214, 217.
According to Mohebbi, Conti along with other Defendants, also
prepared and supervised the preparation of the agreement
signed by Mohebbi. Id. ¶ 85.
the Court granted in part Defendants' motions to compel
arbitration certain causes of action and denied in part as to
false and misleading advertising in count 13 and violation of
§ 17500 of the California Business and Professions Code
as part of count 14 of the SAC. ECF 81. For claims that were
not ordered to be arbitrated, this Court also granted
Defendants' motion to stay litigation of those claims.
initiating arbitration, Mohebbi elected not to name Conti as
a respondent. Mot. 1, ECF 86-1. However, Conti remains a
defendant in the claims of false and misleading advertising
and violation of California Business and Professions Code
§ 17500 in this case. The arbitration was originally
scheduled to start on March 20, 2017 but the parties
represented at the hearing that it was postponed to June
2017. Heller Decl. ¶ 2; Opp'n 2, ECF 88. Conti now
moves to lift the stay of litigation so she can conduct
discovery and bring a dispositive motion. Mot. 1.
claims that the stay should be lifted for claims asserted
against her because being a defendant in this case
jeopardizes her career in the banking and finance industry
and other professional or personal pursuits. Mot. 2. Conti
avers that while she was a non-signatory to the agreement
containing the arbitration clause, she joined other
Defendants in moving to compel arbitration. Id. at
3. Nonetheless, she was not named as a respondent in the
arbitration and thus “remains in limbo” without a
means to defend herself. Id.; Reply 1, ECR 89. Conti
also asserts that the claims against her - Lanham Act and
California Business and Professions Code § 17500 - are
meritless. Mot. 4. Conti then urges this Court to lift the
stay so that she could conduct limited written discovery and
bring a dispositive motion to establish her lack of
liability. Id. at 3, 5 (citing GEA Group AG v.
Flex-N-Gate Corp., 740 F.3d 411 (7th Cir. 2014)).
Furthermore, given that she is not a respondent in the
arbitration proceeding, Conti contends that the outcome of
the arbitration would not govern the pending claims against
her in this case. Reply 1.
opposes this motion, arguing first that Conti provides no
reasonable basis to lift the stay given that Conti requested
the stay in the first place and the arbitration will soon be
completed. Opp'n 2-3. Mohebbi also underscores that Conti
was in charge of advertising and promotion of USIIC, which
contained false statements, so the stayed claims against her
are not meritless. Id. at 3-5.
to the Federal Arbitration Act, when a court determines that
some claims are arbitrable while some are not, the claims
that are not arbitrable must be stayed pending the completion
of arbitration. 9 U.S.C. § 3 (“[The Court, ] on
application of one of the parties [must] stay the trial of
the action until such arbitration has been held in accordance
with the terms of the agreement.”).
from the requirement to stay non-arbitrable claims,
“the power to grant a stay in pending litigation is
incidental to the power inherent in every court to control
the disposition of the cases on its docket.” Landis
v. North Am. Co., 299 U.S. 248, 254-55 (1936).
Accordingly, federal district courts have broad discretion to
stay discovery in the interests of justice. Little v.
City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988).
recognizing that being a defendant in this action may hinder
certain activities Conti wants to pursue, the Court finds
that lifting the stay against her at this stage is not in the
interests of justice. First, Conti, together with other
Defendants, requested the stay in the first place, which the
Court granted. Only afterwards, more than two years later,
does Conti realize the disadvantages to staying the
litigation despite the fact that the current stay is of
Conti's own choosing. Lifting the stay as to Conti would
also put different Defendants on different schedules, with
the risk of creating potential estoppel and prejudice to
other Defendants. Lifting the stay thus would not only be
contrary to the mandate of the Federal Arbitration Act but
would also prejudice other Defendants. Second, the parties
did not dispute at the hearing that the arbitration will
proceed in June 2017 and thus draw to a close shortly
thereafter. Given that the stay was instituted more ...