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Bailey v. AffinityLifestyles.Com, Inc.

United States District Court, D. Nevada

June 27, 2017

AFFINITYLIFESTYLES.COM, INC. dba REAL ALKALIZED WATER, a Nevada Corporation; DOES I-X; and ROE BUSINESS ENTITIES I-X, inclusive, 1 through 10 inclusive, Defendants.



         Before the Court is Defendant, Inc. dba Real Alkalized Water's (“Real Water's”) Motion to Stay Pending the Court's Decision on Defendants' Motion to Compel Arbitration (ECF No. 24). Plaintiff Lisa Marie Bailey filed a Response (ECF No. 25) and Real Water filed a Reply (ECF No. 26).

         I. Background

         On November 22, 2016, Bailey filed her Complaint alleging that Real Water, as Bailey's employer, discriminated against her based on her religion, disability, gender, and age. See ECF No. 1 at 2. Real Water answered the complaint on January 17, 2017. See ECF No. 9. On February 3, 2017, the parties submitted a joint proposed discovery plan and scheduling order, which this Court approved three days later. See ECF Nos. 11, 12.

         Real Water filed a motion to compel arbitration on April 10, 2017. See ECF No. 17. The parties filed a stipulation to stay discovery for 30 days on May 9, 2017, pending a decision on Real Water's motion to compel arbitration. See ECF Nos. 21; 24 at Ex. A. The parties sought a brief stay “so that neither the parties nor the Court will be required to spend time and resources conducting discovery which may ultimately be the responsibility of an arbitrator.” Id. This Court approved the parties' stipulation, but construed the stipulation to stay discovery as a stipulation to extend discovery. See ECF No. 22. On May 31, 2017, Real Water filed its motion to stay pending the court's decision on defendants' motion to compel arbitration. See ECF No. 24.

         II. Discussion

         A. Arguments

         Real Water asks this Court to stay all pre-trial obligations, including discovery, pending a decision on its motion to compel arbitration (ECF No. 17). Real Water argues that a stay is warranted, because “[o]nce presented with a motion to compel arbitration, the Court's jurisdiction and, in turn, any discovery or other pre-trial obligations, is limited only to determining whether the dispute is arbitrable.” See ECF No. 24 at 2. Real Water asserts that courts in the Ninth Circuit regularly stay discovery in similar situations “to ensure that parties seeking to enforce an arbitration agreement are not irreparably harmed by the loss of the advantages of arbitration - speed and efficiency - while the arbitration agreement is still being litigated.” Id. A brief stay, according to Real Water, will neither harm, nor prejudice either party. Id.

         Bailey responds that, under the factors articulated in Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691 (9th Cir. 1986), Real Water waived its right to compel arbitration by “actively participating” in the discovery process for months. See ECF No. 25 at 3, 6-7. Bailey claims that Real Water was on notice of an existing right to arbitration from the beginning of this case because it had already been involved in a similar matter (Echevarria-Hernandez v., Inc., No. 2:16-cv-00943-GMN-VCF, 2017 WL 1160571, at *1 (D. Nev. Mar. 27, 2017)). Id. at 7. Bailey asserts that Real Water engaged in acts that are inconsistent with its right to arbitrate. In particular, Bailey notes that Real Water (1) “filed an Answer without asserting any affirmative defenses related to a desire to arbitrate Plaintiff's claims” and “actually conceded that this Court has proper jurisdiction and venue to address Plaintiff's Complaint”; (2) “has gone through over half the entire discovery period, including noticing its own depositions and written discovery requests to Plaintiff”; and (3) “attended the Early Neutral Evaluation (which is only required for cases properly before the District of Nevada) … without mentioning that it felt this case should be in arbitration.” See ECF Nos. 25 at 4, 7-8; 25-1. Bailey asserts under the third and final Fisher factor that she is prejudiced due to Real Water's inconsistent acts. Id. at 8. Bailey argues that she “has planned out her entire litigation strategy and discovery methods based on Defendant's undisputed indications that this case is properly before the Court and not suitable for arbitration.” Id. at 9. According to Bailey, Real Water “should not be able to benefit in the discovery process by exhausting Plaintiff's memory via written discovery requests, and then expect Plaintiff to hold off for months, and potentially a year, before she can conduct depositions that will also exhaust the memories of members of Defendant's company” which will “inevitably fade.” Id. at 11. “Granting a stay of discovery at this late stage, ” Bailey claims, would only prejudice her; not Real Water. Id. at 3, 9, 11.

         Real Water replies that discovery is not nearly complete. See ECF No. 26 at 2. Real Water asserts that “each party has propounded written discovery requests, and Real Water has issued basic subpoenas for records from Plaintiff's prior employers and the Nevada Equal Rights Commission, ” but no depositions have been conducted in this case. Id. According to Real Water, “there is far more discovery remaining than discovery that has been completed, ” including at least seven depositions, probable subpoenas, any remaining written discovery, potential discovery motions, and briefing summary judgment motions. Id. at 3. Real Water argues that failure to grant a stay could result in “serious and irreparable” prejudice, including the loss of the advantages of arbitration-the inexpensive and expeditious means by which the parties had agreed to resolve their disputes. See ECF Nos. 26 at 5, 11; 24 at 2, 5. Real Water also notes that it “is in the interest of conserving the resources of the parties and the Court to stay discovery in this action pending a determination of Real Water's Motion to Compel.” See ECF No. 26. At 9.

         B. Legal Standards

         A district court has discretionary power to stay proceedings in its own court. See Landis v. N.A. Co., 299 U.S. 248, 254-255 (1936) (“[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”); see also Leyva v. Certified Grocers of California, Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979) (“A trial court may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it …”); 7C Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure, § 1838 (3d ed. 2010) (“[W]hether to grant a stay in a particular case is a matter addressed to the sound discretion of the district court.”).

         When evaluating a motion to stay discovery while an allegedly dispositive motion is pending, the Court initially considers the goal of Federal Rule of Civil Procedure 1: The Rules “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.” See Fed. R. Civ. P. 1; see also 4 Wright et al., supra, § 1029 (“There probably is no provision in the federal rules that is more important than this mandate. It reflects the spirit in which the rules were conceived and written, and in which they should be interpreted.”). Discovery is not “a free form exercise conducted in a free for all spirit”; it's expensive. See, e.g., In re Convergent Techs. Sec. Litig., 108 F.R.D. 328, 331 (N.D. Cal. 1985). Courts have a duty to resolve civil matters fairly, but without undue cost or delay. See Fed. R. Civ. P. 1 advisory committee notes, 1993 Amendments (explaining that the purpose of the 1993 amendment “is to recognize the affirmative duty of the court to exercise the authority conferred by these rules to ensure that civil litigation is resolved not only fairly, but also without undue cost or delay.”); see also 4 Wright et al., supra, § 1011.[1]This directive is echoed by Rule 26, which instructs the Court to balance the expense of discovery against its likely benefit.

         While a Court is determining the issue of whether an action should be stayed and the parties compelled to arbitrate, “a federal court may consider only issues relating to the making and performance of the agreement to arbitrate.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967); see also Sparking v. Hoffman Construction Co., 864 F.2d 635, 638 (9th Cir. 1988). “[D]iscovery and a full trial in connection with a motion to compel arbitration” is permitted under 9 U.S.C. § 4 only if “the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue.” See id.; see also 9 U.S.C ยง 4. To require the parties to proceed with the action pending a ruling on the motion to compel arbitration and any appeal thereof would cause the party ...

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