Vahora v. Valley Diagnostics Laboratory, Inc.

          ORDER DENYING WITHOUT PREJUDICE DEFENDANT VALLEY DIAGNOSTICS LABORATORY, INC.'S MOTION TO STAY PROCEEDINGS TO ENFORCE THE JUDGMENT AND APPROVE BOND (DOC. 175)

          Sheila K. Oberto . UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         On August 30, 2019, Defendant Valley Diagnostics Laboratory, Inc. (“VDL”) filed a “Motion for a Stay of Proceedings to Enforce the Judgment/Approve Bond” pursuant to Rule 62 of the Federal Rules of Civil Procedure. (Doc. 175.)

         In the motion, VDL represents that it has secured a supersedeas bond in the amount of $197, 720, equivalent to approximately 125% of the judgment entered against VDL, and that VDL has deposited that amount in cash with a surety corporation. (Id. at 3.) The motion states Qarni's relatives provided the money to Qarni to deposit on behalf of VDL. (See id.) VDL requests that the Court stay proceedings to enforce the judgment against it during the pendency of any appeal of the judgment, and accept the supersedeas bond as security under Rule 62. (See generally id.)

         Plaintiff filed an opposition on September 18, 2019, and VDL filed a reply on September 25, 2019. (Docs. 177, 178.)

         Upon review of the motion and supporting documents, the Court deemed the matter suitable for decision without oral argument pursuant to Local Rule 230(g). Accordingly, the hearing on the motion set for October 2, 2019, was vacated. (Doc. 179.)

         II. LEGAL STANDARD

         Rule 62 of the Federal Rules of Civil Procedure provides:

(b) Stay by Bond or Other Security. At any time after judgment is entered, a party may obtain a stay by providing a bond or other security. The stay takes effect when the court approves the bond or other security and remains in effect for the time specified in the bond or other security.

Fed. R. Civ. P. 62(b). Rule 62(b) allows a party to stay execution of a judgment pending appeal by posting a supersedeas bond with the court. See Hardesty v. Sacramento Metropolitan Air Quality Management District, No. 2:10-cv-02414-KJM-KJN, 2019 WL 2715616, at *3 (E.D. Cal. June 28, 2019) (“Rule 62(d) [now Rule 62(b)] is a purely procedural mechanism to preserve the status quo during a stay pending appeal of a district court decision . . .”) (citing Vacation Vill., Inc. v. Clark Cty., Nev., 497 F.3d 902, 913-14 (9th Cir. 2007)). Under this rule, a party can “receive the stay ‘as a matter of right by posting a supersedeas bond acceptable to the court.'” Nat'l Grange of the Order of Patrons of Husbandry v. Cal. Guild, No. 2:14-cv-676 WBS DB, 2019 WL 2009533, at *2 (E.D. Cal. May 7, 2019) (quoting Matter of Combined Metals Reduction Co., 557 F.2d 179, 193 (9th Cir. 1977)).

         As to the amount of the bond, the district court has “inherent discretionary authority in setting supersedeas bonds.” Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1505 n.1 (9th Cir. 1987). “The purpose of the supersedeas bond is to secure the appellees from any loss resulting from the stay in execution of judgment.” Nat'l Grange, 2019 WL 2009533, at *2 (citing Pac. Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019, 1027 (9th Cir. 1991)). Local Rule 151 generally requires a bond in the amount of 125 percent of the judgment amount. E.D. Cal. L.R. 151(d) (citing Fed.R.Civ.P. 62).

         Local Rule 151 also provides that “[e]very security, bond, undertaking, or deposit instrument shall state the conditions of the obligation and shall contain a provision expressly subjecting it to all applicable federal law, ” and “[n]o security, bond, or undertaking with corporate surety shall be accepted unless the corporate surety is in compliance with the provisions of 31 U.S.C. §§ 9304-06[.]” E.D. Cal. L.R. 151(e), (f).

         III. DISCUSSION

         VDL seeks to stay proceedings to enforce the judgment during the pendency of an appeal of the judgment^[1] by posting a supersedeas bond with the Court in the amount of $197, 720- which represents approximately 125% of the $158, 175 judgment against VDL. (Doc. 175.) Plaintiff objects to the form of the bond, contending that the bond is not in compliance with Local Rule 151, because it does not (1) contain a provision expressly subjecting the bond to “all applicable federal law” or (2) establish that the corporate surety is in compliance with 31 U.S.C. §§ 9304-06. (Doc. 177 at 16.) Plaintiff also contends the Court should apply a four-factor test ...