United States District Court, E.D. California
UNITED STATES OF AMERICA, et al., ex rel. LOYD F. SCHMUCKLEY, JR., Plaintiffs,
RITE AID CORPORATION, Defendants.
STATUS (PRETRIAL SCHEDULING) ORDER
initial scheduling conference was held in this case on March
23, 2018. Wm. Paul Lawrence and Charles Siegel appeared for
plaintiff Loyd F. Schmuckley; Emmanuel Salazar, Vincent
DiCarlo and Bernice Yew appeared for Intervenor Plaintiff
State of California; Eric Sitarchuk and Tera Heintz appeared
reviewed the parties' Joint Status Report filed on March
16, 2018, and discussed a schedule for the case with counsel
at the hearing, the court makes the following orders:
SERVICE OF PROCESS
defendant has waived service of summons for the complaints of
both plaintiffs. Service of any amended complaints or
responsive pleadings shall comply with the applicable Federal
Rules of Civil Procedure.
the court's ruling on defendant's pending motion to
dismiss, plaintiffs may file amended complaints. In its order
on the motion to dismiss the court will provide further
direction regarding the timing of such filings. As a general
rule, the Federal Rules of Civil Procedure will govern the
filing of pleadings and any amendments to pleadings.
is predicated upon 28 U.S.C. § 1367 and 31 U.S.C. §
3732(B). Jurisdiction and venue are not disputed.
Aid has moved to stay discovery as to plaintiff until the
court resolves the pending motion to dismiss plaintiff's
fraud-based claims. Stay Mot., ECF No. 112; Dismissal Mot.,
ECF No. 100.
fraud-based allegations are that Rite Aid submitted false
reimbursement claims for “Code 1” drug
prescriptions. First Am. Compl. (“FAC”), ECF No.
101, ¶¶ 3, 21. Specifically, plaintiff alleges Rite
Aid violated California regulations that “explicitly
state that the pharmacist must have documentation of the
patient's diagnosis, in order for Medi-Cal to reimburse
the prescription.” Id. ¶ 24. The State of
California has intervened under the California False Claims
Act and alleged that Rite Aid failed to comply with
“Code 1 restrictions.” Complaint-in-Intervention,
ECF No. 101, ¶¶ 4, 6. Plaintiff has incorporated by
reference California's allegations. FAC ¶¶ 2,
37, 40, 43, 47, 50. After Rite Aid filed its motion to stay,
Rite Aid and California filed a stipulation to stay
discovery. ECF No. 108. Plaintiff, however, opposes the stay.
Stay Opp'n, ECF No. 118. Plaintiff also confirmed at
hearing that he would not join the stipulation. See
Tr., ECF No. 126, 32-33.
courts have broad discretion to grant or deny requests to
stay discovery to avoid “annoyance, embarrassment,
oppression, or undue burden or expense” pending
dispositive motions. See Fed. R. Civ. P. 26(c);
see, e.g., Jarvis v. Regan, 833 F.2d 149,
155 (9th Cir. 1987). Rite Aid argues courts “in
California and across the country have consistently
ruled” to stay discovery by relators until those
relators can sufficiently plead a False Claims Act claim
under Federal Rule of Civil Procedure 9(b). Stay Mot. at 8.
In exercising this broad discretion, however, courts must
weigh the possible damage that could result from granting a
stay against the hardship or inequity a party may suffer in
being required to go forward. See CMAX, Inc. v.
Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing
Landis v. N. Am. Co., 299 U.S. 248, 254-255 (1936)).
“[I]f there is even a fair possibility that the stay
for which he prays will work damage to someone else, ”
the moving party “must make out a clear case of
hardship or inequity in being required to go forward.”
Landis, 299 U.S. at 255 (verbatim quote). “The
proponent of a stay bears the burden of establishing its
need.” Clinton v. Jones, 520 U.S. 681, 708
(1997) (citing Landis, 299 U.S. at 255).
the possible damage a stay may cause outweighs the hardship
or inequity Rite Aid may suffer if required to go forward.
Specifically, as discussed at hearing, the court is concerned
about data preservation during the proposed stay, which may
affect third parties. See Tr. at 35-37. Counsel for
California noted at hearing that according to its
investigation, providers already are beginning to destroy
relevant documents because providers' duty to preserve
ends after seven years from the date of service. See
Tr. at 36-37. This potential preservation issue constitutes a
“fair possibility” that the stay could be
damaging in a way that undermines the interests of justice.
Rite Aid has not met its burden to state “a clear case
of hardship or inequity in being required to go
forward.” Landis, 299 U.S. at 255l;
Clinton, 520 U.S. at 708 (proponent of a stay must
establish its need). This is particularly true considering
plaintiff's discovery request to date is limited to a
seven-paragraph request for production seeking “basic
documents.” Tr. at 31.
the balancing of interests here weighs against a stay. The
court DENIES both the motion and the proposed stipulation
that would otherwise effect a stay of discovery. This
resolves ECF Nos. 108 and 112.
court adopts the parties' request to conduct discovery in
phases as set forth below.
First Stage of Discovery - ...