United States District Court, N.D. California
ORDER DENYING MOTION TO STAY DISCOVERY WITHOUT
PREJUDICE AND VACATING CASE MANAGEMENT CONFERENCE Re Dkt. No.
PHYLLIS J. HAMILTON United States District Judge
the court is defendants' motion to stay discovery pending
the resolution of a number of motions to dismiss the
complaint. Dkt. 63. The matter is fully briefed and suitable
for decision without oral argument. Having read the
parties' papers and carefully considered their arguments
and the relevant legal authority, the court hereby DENIES the
motion as premature, without prejudice.
putative class action was filed on February 7, 2017 by
plaintiffs Mohammed Azad and Danielle Buckley. Dkt. 1
(“Compl.”). Plaintiffs make claims against Tokio
Marine HCC - Medical Insurance Services Group
(“HCC”), a seller of short-term medical
insurance, and other entities who allegedly worked with HCC.
Also named as defendants are HCC Life Insurance Company
(“HCC Life Insurance”), a subsidiary of Tokio
Marine Holdings, LLC; Health Insurance Innovation, Inc.
(“HII”); and Consumer Benefits of America
(“CBA”). Compl. ¶¶ 5-7.
contracted with plaintiffs to provide them short-term medical
insurance policies (“STMs”). Compl. ¶¶
8-9. HCC Life Insurance was the underwriter on the polices.
Compl. ¶ 16. HII is allegedly a “close
affiliate” of HCC that works with HCC “in the
sale, administration, and/or servicing” of the
policies. Compl. ¶ 17. CBA provides discounts and other
benefits to its members, and allegedly “works
with” the other defendants to provide HCC policies to
consumers. Compl. ¶¶ 7, 57.
brief, plaintiffs allege that HCC falsely represented that
their policies provided comprehensive coverage and fair claim
processing. In reality, plaintiffs allege that HCC misled
policyholders about the scope of the coverage and made it
unreasonably difficult to make a claim. Plaintiffs further
allege that HCC had a common policy and practice of marketing
their polices in a misleading manner, delaying and refusing
to pay claims, providing deliberately unhelpful customer
service, and generally obstructing policyholders' claims
in bad faith.
the complaint is devoted to the experiences of the putative
class representatives, who allegedly were told to submit
burdensome documentation and had the payment of their claims
delayed and denied in bad faith. Compl. ¶¶ 19-38.
The complaint then reviews the aspects of HCC's marketing
materials, policies, and application forms that plaintiffs
allege are misleading. Compl. ¶¶ 39-57. Finally,
plaintiffs allege that HCC trains its customer service
representatives to obstruct policyholders and give them the
“runaround, ” refusing to help and referring
claimants to a “highly confusing” website. Compl.
assert claims for (1) violations of the California Unfair
Competition Law (the “UCL”); (2) violations of
the California False Advertising Law (“FAL”); (3)
breach of contract; (4) breach of the implied duty of good
faith and fair dealing; and (5) unjust enrichment. The
putative class is all “individuals who have purchased
HCC health insurance policies from Defendants in the State of
California, and/or all California residents for whom HCC
denied their insurance claim, since a date to be ascertained
through discovery.” Compl. ¶ 82.
April 13 and 14, 2017, the defendants separately filed
motions to dismiss the complaint and/or strike its
allegations, which are all noticed for hearing on June 14,
2017. Dkt. 48, 49, 58, 60. Currently, the initial case
management conference is scheduled for the following day,
June 15, 2017. Dkt. 65.
April 20, 2017, defendants filed a motion to stay discovery
pending resolution of the motions to dismiss. Dkt. 63. This
matter is fully briefed and ripe for decision.
courts have “broad discretion” to stay discovery
pending the disposition of a dispositive motion. See Hall
v. Tilton, No. C 07-3233 RMW (PR), 2010 WL 539679, at *2
(N.D. Cal. Feb. 9, 2010). In particular, a district court may
“stay discovery when it is convinced that the plaintiff
will be unable to state a claim for relief.” Wenger
v. Monroe, 282 F.3d 1068, 1077 (9th Cir. 2002)
discovery stay requires a protective order, the moving party
must show “good cause.” Mlejnecky v. Olympus
Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 489743, at
*5 (E.D. Cal. Feb. 7, 2011); Fed.R.Civ.P. 26(c)(1). In
general, the party seeking a stay of discovery carries a
“heavy burden” to make a “strong
showing” why discovery should be denied. Gray v.