United States District Court, D. Nevada
CAM FERENBACH, Magistrate Judge.
This matter involves a trademark infringement action under the Lanham Trademark Act of 1946, 15 U.S.C. § 1114. Before the court is iBus Media's motion to stay (#31) discovery. iBus Media requests a stay of discovery pending the court's resolution of iBus Media's motion to dismiss or for four months, whichever occurs first. Best Odds opposed (#35); and iBus Media replied (#36). For the reasons stated below, iBus Media's motion is granted.
This is case about two poker websites. Plaintiff Best Odds is a Nevada corporation that provides "news and information via a global computer network in the field of gaming." (Compl. (#1) at ¶ 17). Defendant iBus Media is an Isle of Man corporation that provides "news and information via a global computer network in the field of gaming." ( Id. at ¶ 20). Best Odds uses the MacPoker® trademark and iBus Media also allegedly uses the MacPoker® trademark. ( Id. at ¶¶ 21-22). But, Best Odds owns the right to the MacPoker® trademark and iBus Media does not. ( Id. at ¶ 18).
On October 29, 2013, Best Odds filed suit under the Lanham Act to end iBus Media's alleged trademark infringement. Now, iBus Media moves for a stay of discovery, arguing, inter alia, that its pending motion to dismiss should "convince" the court that it does not have personal jurisdiction over iBus Media. (Def.'s Stay Mot. (#31) at 7). In response, Best Odds argues that "[i]t is frankly unfathomable" that iBus Media would not be subject to this court's personal jurisdiction. (Pl's. Opp'n (#19) at 6:14). Best Odds' contention that iBus Media is subject to this court's personal jurisdiction is primarily predicated on the following statement from iBus Media's media kit:
While the global site has the largest traffic reach, with significant U.S. presence, PokerNews is an international force with over 30 sub-domains, each with localized language and content. PokerNews sub-domains generate large traffic profiles of their own as demonstrated by NL.PokerNews.com, our site in the Netherlands.
( Id. ); ( see also Compl. (#1) at ¶ 9) (citing Exhibit 1 at 4) (emphasis added). Additionally, Best Odds argues that the court has personal jurisdiction over iBus Media because iBus Media (1) competes with Best Odds; (2) "engaged in wrongful acts" targeted at Best Odds; (3) provides news coverage that is accessible to U.S. consumers; (4) acts as the "official live [news] coverage partner" of U.S.-based companies; (5) provides "functionality by which site users may make hotel and other travel reservations in the United States"; and (6) should be subject to personal jurisdiction because it is a foreign entity not subject to courts of general jurisdiction in the U.S.
When evaluating a motion to stay discovery while a dispositive motion is pending, the court initially considers the goal of Federal Rule of Civil Procedure 1. The guiding premise of the Rules is that the Rules "should be construed and administered to secure the just, speedy, and inexpensive determination of every action." FED. R. CIV. P. 1. It needs no citation of authority to recognize that discovery is expensive. The Supreme Court has long mandated that trial courts should resolve civil matters fairly but without undue cost. Brown Shoe Co. v. United States, 370 U.S. 294, 306 (1962). This directive is echoed by Rule 26, which instructs the court to balance the expense of discovery against its likely benefit. See FED. R. CIV. P. 26(B)(2)(iii).
Consistent with the Supreme Court's mandate that trial courts should balance fairness and cost, the Rules do not provide for automatic or blanket stays of discovery when a potentially dispositive motion is pending. Skellerup Indus. Ltd. v. City of Los Angeles, 163 F.R.D. 598, 600-01 (C.D. Cal. 1995). Pursuant to Federal Rule of Civil Procedure 26(c)(1), "[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Whether to grant a stay is within the discretion of the court. Munoz-Santana v. U.S. I.N.S., 742 F.2d 561, 562 (9th Cir. 1984). The party seeking the protective order, however, has the burden "to show good cause' by demonstrating harm or prejudice that will result from the discovery." FED. R. CIV. P. 26(c)(1). Satisfying the "good cause" obligation is a challenging task. A party seeking "a stay of discovery carries the heavy burden of making a strong showing' why discovery should be denied." Gray v. First Winthrop Corp., 133 F.R.D. 39, 40 (N.D.Cal.1990) (citing Blankenship v. Hearst Corp. 519 F.2d 418, 429 (9th Cir. 1975)).
Generally, imposing a stay of discovery pending a motion to dismiss is permissible if there are no factual issues raised by the motion to dismiss, discovery is not required to address the issues raised by the motion to dismiss, and the court is "convinced" that the plaintiff is unable to state a claim for relief. Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984); White v. Am. Tobacco Co., 125 F.R.D. 508 (D. Nev. 1989) (citing Wood v. McEwen, 644 F.2d 797, 801 (9th Cir. 1981) cert. denied, 455 U.S. 942 (1982). Typical situations in which staying discovery pending a ruling on a dispositive motion are appropriate would be where the dispositive motion raises issues of jurisdiction, venue, or immunity. TradeBay, LLC v. Ebay, Inc., 278 F.R.D. 597, 600 (D. Nev. 2011).
Courts in the District of Nevada apply a two-part test when evaluating whether a discovery stay should be imposed. Id. (citations omitted). First, the pending motion must be potentially dispositive of the entire case or at least the issue on which discovery is sought. Id. Second, the court must determine whether the pending motion to dismiss can be decided without additional discovery. Id. When applying this test, the court must take a "preliminary peek" at the merits of the pending dispositive motion to assess whether a stay is warranted. Id. The purpose of the "preliminary peek" is not to prejudge the outcome of the motion to dismiss. Rather, the court's role is to evaluate the propriety of an order staying or limiting discovery with the goal of accomplishing the objectives of Rule 1.
iBus Media moves for a stay of discovery on several grounds, including the alleged lack of personal jurisdiction. For the reasons stated below, the court agrees with iBus Media that the District Court will most likely dismiss Best Odd's complaint for failure to assert personal jurisdiction over Defendants. Before discussing why Best Odd's complaint fails to confer personal jurisdiction over iBus Media, the court begins its analysis by reviewing the governing law.
I. The Law Governing Personal Jurisdiction
Federal Rule of Civil Procedure 12(b)(2) allows district courts to dismiss an action for lack of personal jurisdiction. The burden of proving jurisdiction rests on the party asserting jurisdiction, see McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83 (1936), and the U.S. Supreme Court has long directed lower courts to presume that they lack jurisdiction. Turner v. Bank of North Am., 4 U.S. 8, 11, 4 Dall. 8, 11 (1799); see also Dole Food Co. Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002) ("Where defendants move ...