Travelers Property Casualty Company of America v. Seirus Innovative Accessories, Inc.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 TRAVELERS PROPERTY Case No.: 19cv829-LAB (MDD) CASUALTY COMPANY OF 12 AMERICA ORDER DENYING MOTION TO 13 STAY CASE Plaintiff, 14 v. [Docket numbers 9, 13.] 15 SEIRUS INNOVATIVE 16 ACCESSORIES, INC., et al. 17 Defendants. 18 19 Plaintiff Travelers Property Casualty Company of America filed this action, 20 seeking a declaration that it had no obligation to defend the Defendants in a 21 separate case, and requesting reimbursement for its expenses in voluntarily 22 defending them thus far. The other action is pending as case 19cv137-SI, 23 Columbia Sportswear North America v. Seirus et al. in the District of Oregon. 24 According to the complaint, this dispute began as a patent infringement 25 claim. According to allegations, Columbia argued that Seirus Heat Wave products 26 infringed one of Columbia’s patents, and filed suit in the Western District of 27 Washington. Columbia then dismissed that action and filed the Oregon action, 28 alleging infringement of its Omni-Heat Reflective patents. As trial neared, Seirus 1 and the other Defendants allegedly arranged for another entity to initiate improper 2 inter partes proceedings, then improperly used them to attempt to stay the trial. 3 Eventually, Columbia says it prevailed, but only after delay and significant 4 expense. In case 19cv137, Columbia seeks relief against Defendants for this, 5 under various theories. 6 Seirus then notified Travelers of the complaint and requested a defense and 7 indemnification. Travelers told Seirus it did not think it was obligated to do so, but 8 agreed to provide a defense, subject to a reservation of rights. Among other things, 9 Travelers reserved the right to decline indemnity, to withdraw from the defense, to 10 seek reimbursement if it were determined to have no duty to defend or indemnify, 11 and to seek declaratory relief. It then filed this action. 12 Defendants moved to stay this entire action, until the underlying action is 13 resolved. They also filed an ex parte motion to stay the action temporarily, at least 14 until this motion could be decided. The ex parte motion is GRANTED, although 15 with the issuance of this order it will expire. 16 Discussion 17 Because the Court is sitting in diversity, it applies California substantive law, 18 and federal procedural law. The motion cites U.S. Fidelity & Guar. Co. v. Lee 19 Investments LLC, 641 F.3d 1126, 1133–34 (9th Cir. 2011) as holding that California 20 law governs motions to stay. This assertion is incorrect. Apparently the language 21 of the case is confusing, because it has been misinterpreted this way before. See 22 Scottsdale Ins. Co. v. Grant & Weber, 2016 WL 7469636, at *3 (C.D. Cal., Apr. 21, 23 2016). In fact, U.S. Fidelity quotes and applies Erie. Because a motion to stay is 24 procedural, the Court applies the factors set forth in Landis v. N. Am. Co., 299 U.S. 25 248 (1936), although the Court may look to California law to inform its analysis 26 under Landis. See Utd. Specialty Ins. Co. v. Bani Auto Group, Inc., 2018 WL 27 5291992, at *4 (N.D. Cal., Oct. 23, 2018). The abstention factors set forth in 28 Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942) do not apply here, because 1 their application is limited to actions seeking only declaratory relief. See Scotts Co. 2 LLC v. Seeds, Inc., 688 F.3d 1154, 1158 (9th Cir. 2012). 3 Legal Standard 4 Landis recognizes a court’s discretionary power to stay its own proceedings. 5 Lockyer v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005). In exercising this 6 discretion, the Court considers possible damage to the non-moving party, the 7 hardship or inequity weighing on the moving party if it is required to go forward, 8 and the orderly course of justice. CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 9 1962) (citing Landis, 299 U.S. at 254–55). “A trial court may, with propriety, find it 10 is efficient for its own docket and the fairest course for the parties to enter a stay 11 of an action before it, pending resolution of independent proceedings which bear 12 upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 13 1979). “Where it is proposed that a pending proceeding be stayed, the competing 14 interests which will be affected by the granting or refusal to grant a stay must be 15 weighed.” CMAX, 300 F.2d at 268. “The moving party ‘must make out a clear case 16 of hardship or inequity in being required to go forward, if there is even a fair 17 possibility that the stay for which he prays will work damage to someone else.’” Id. 18 (quoting Landis, 299 U.S. at 255). 19 Here, the parties’ arguments, and the issues are similar to those raised in 20 Zurich Am. Ins. Co. v. Omnicell, Inc., 2019 WL 570760, slip op. (N.D. Cal., Feb. 21 12, 2019) (Koh, J.), which granted the stay after a thorough and sound analysis. 22 Initially, the Court’s reasoning mirrored that of Judge Koh. Then on December 10, 23 several defendants in the underlying action, who represent three of the Defendants 24 in this case, filed an interlocutory appeal from an order denying the Defendants’ 25 anti-SLAPP motion. (Docket no. 165 in case 19cv137.) They also filed a motion to 26 stay the case and to certify the interlocutory appeal (Docket no. 182 in case 27 19cv137), which the court granted in part by staying the state law claims but 28 allowing the federal RICO claims to go forward. (See Docket no. 218 in case 1 || 19cv137.) This action likely, though not necessarily, means the RICO claims will 2 ||be resolved sooner than the others. While an appeal is still litigation, it typically 3 ||does not require parties to respond quickly or submit to discovery. But more 4 ||importantly, it means that final judgment in the case is far off, and the case in this 5 ||Court will grow old while the Court and parties await resolution of the underlying 6 ||case. The ends of justice are not served by long delays. See Fed. R. Civ. P. 1. 7 In light of developments in the underlying action, the Court has reevaluated 8 analysis and the motion to stay is DENIED WITHOUT PREJUDICE. lf 9 || Defendants believe new developments in the underlying proceedings change the 10 analysis, they may again seek a stay. 11 In the meantime, the parties are directed to contact the chambers of 12 || Magistrate Judge Mitchell Dembin to arrange for the scheduling of an Early Neutral 13 ||Evaluation Conference and, if the case is not settled, a Case Management 14 || Conference. (See Docket no. 19.) 15 16 IT IS SO ORDERED. 17 || Dated: March 9, 2020 18 / wit 4. ‘dg, WY 19 Honorable Larry Alan Burns 20 Chief United States District Judge 21 22 23 24 25 26 27 28