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Irish v. United States

United States District Court, District of Nevada

February 10, 2015

LORI J. IRISH, et al., Plaintiffs,
v.
UNITED STATES OF AMERICA, et al., Defendants.

ORDER

CAM FERENBACH, UNITED STATES MAGISTRATE JUDGE

This matter involves pro se Plaintiffs’ Federal Tort Claim Act (“FTCA”) claims action against the United States of America (“United States”) and the National Labor Relations Board (“NLRB”). Before the court is Defendants’ unopposed Motion to Stay Discovery pending resolution of Defendants’ Motion to Dismiss. (#11[1]). For the reasons stated below, Defendants’ motion is granted.

BACKGROUND

In 2007, the NLRB issued a decision and order against various business entities. “Board Order, ” reported at 351 NLRB 1208. Plaintiffs consist of a manager and holders of interests in those entities. The order directed the business entities to make whole 16 discriminatees for losses resulting from violations of the National Labor Relations Act. In furtherance of this order, the Ninth Circuit issued a Protective Restraining Order (“PRO”) against Plaintiffs. NLRB v. Advanced Architectural Metals, Inc. et al., Case No. 08-70352, Case No. 08-70352 (9th Cir., Mar. 6, 2008), Dkt. # 12. The PRO enjoins Plaintiffs from disposing of assets belonging to the business entities until they furnished $921, 391 to the NLRB. There were several exceptions and conditions to this general prohibition. The relevant passage for this matter is Paragraph 3 of the PRO, which states, “disposition of the Company’s assets may be applied to bona fide current operating expenses (such as salaries of employees, rent, utilities, maintenance, insurance, legal fees and federal, state, county and local taxes)…”

Litigation between these parties continued through 2010, as the NLRB Board issued supplemental orders against Plaintiffs. Plaintiffs argue that the PRO required Defendants to pay Plaintiffs’ taxes, legal fees, and operational expenses during the investigation and hearing proceedings. (#1). Defendants did not pay these expenses.

On August 19, 2014, Plaintiffs filed a Complaint against Defendants. (#1). Plaintiffs alleged causes of actions generally under the Federal Tort Claims Act (“FTCA”) and specifically under 28 U.S.C. § 2680(h) for abuse of process and interference with contract rights based on Defendants’ violation of the PRO.

On November 25, 2014, Defendants moved to dismiss the Complaint for lack of jurisdiction. (#6). Defendants argued that the United States had not waived sovereign immunity for violating a PRO under the FTCA, because the FTCA creates liability for torts, violations of some duty imposed by state law. 28 U.S.C. § 2680(h) retains immunity for the United States in cases of abuse of process and interference with contract rights except in cases involving an “investigative or law enforcement officer…empowered by law to execute searches, to seize evidence, or to make arrests for violations of Federal law.” Defendants also argued that the NLRB is not a proper defendant, because agencies of the United States cannot be sued under the FTCA. (#6). Lastly, the Defendants argue that the Complaint fails to state a claim upon which relief can be granted and should be dismissed under Federal Rule of Civil Procedure 12(b)(6). This is based on Defendants’ previous argument of the duty element of tort law and of their reading of the PRO. Defendants argue that it merely allows Plaintiffs to make certain expenditures and does not place a duty on Defendants to do so.

A Response was filed on January 5, 2015. (#12). The Plaintiffs conceded all but one cause of action against one Defendant, the United States. Plaintiffs conceded that the NLRB is not a proper defendant. Further, the Plaintiffs conceded that claims for abuse of process and contractual interference under 28 U.S.C. § 2680(h) against the United States cannot survive. Plaintiffs did not concede their claim under the FTCA against the United States. Plaintiffs state that the NLRB’s violation of the PRO, a valid court order, puts them in contempt of Nevada law and satisfies the duty element necessary to actions under the FTCA. Plaintiffs also dispute Defendants’ reading of the PRO. Plaintiffs asked for the Motion to be denied or for leave to amend as necessary.

A Reply was filed on January 15, 2015. (#13). Defendants argue that contempt is not a basis for a private tort claim. Further, since the PRO was issued by a federal court, no state court would have jurisdiction to find Defendants in contempt of the PRO.

Defendants moved to stay discovery on January 2, 2015. (#11). Plaintiffs have not filed a response with this court, and it is now past the 14 days specified in Local Rule 7-2(b) for filing a response.

LEGAL STANDARD

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 ...


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