Leonidas Ortega Trujillo v. Banco Central Del Ecu , 221 F.3d 1262 ( 2000 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 11, 2000
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THOMAS K. KAHN
No. 99-10389 CLERK
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D. C. Docket No. 98-00373-CV-JLK
LEONIDAS ORTEGA TRUJILLO,
JAIME ORTEGA TRUJILLO,
LUIS ALBERTO ORTEGA TRUJILLO,
Plaintiffs-Appellees,
versus
CONOVER & COMPANY COMMUNICATIONS,
INC., BANCO CENTRAL DEL ECUADOR,
Defendants-Appellants,
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Appeals from the United States District Court
for the Southern District of Florida
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(August 11, 2000)
Before EDMONDSON, BARKETT and KRAVITCH, Circuit Judges.
PER CURIAM:
The district court stayed further proceedings in this case pending the resolution
of a related case in the Bahamas. Defendants appeal the district court stay. We vacate
the stay and remand.
I.
The facts underlying this case arose during the litigation of another case –
involving some of the same parties – in the Bahamas. In 1996, Banco Central del
Ecuador brought suit in a Bahamian court against several members of the Ortega
family and several companies associated with the Ortegas. The bank alleged in that
suit that the Ortegas – through the use of fraudulent loan transfers – misappropriated
funds from the bank. That case still is pending in a Bahamian court.
In connection with the Bahamian case, the bank – through its public relations
firm, Conover & Co. Communications – issued a press release accusing the Ortegas
of perpetrating a “massive fraud scheme.” The Ortegas (“Plaintiffs”) then brought this
suit in federal district court against the bank and Conover (“Defendants”). Plaintiffs
alleged that Defendants’ press release was defamatory and damaged Plaintiffs’
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reputations as honest and law-abiding businessmen. Defendants pleaded several
defenses to the defamation claim, including the truth of the press release.1
The district court – acting sua sponte – then stayed further proceedings in this
case pending the resolution of the Bahamian case. The district court explained:
[L]itigation relating to the issues raised in these proceedings is currently
pending in the courts of the Bahamas . . . . The Bahamian Litigation pre-
dates these proceedings by over one year. It has been represented to this
Court (at oral argument preceding the Order) that a trial date in the
Bahamian Litigation has already been set. As the issues addressed by the
Bahamian Litigation directly relate to those raised [in this case], the
Court will stay the above-styled matter until such time as the Bahamian
Courts conclude their review.
The district court directed the parties to submit status reports – reporting on the
progress of the Bahamian case – every three months. Defendants moved the district
court to reconsider the stay; the district court denied Defendants’ motion for
reconsideration.
II.
1
The bank also brought several counterclaims in this case against Plaintiffs. The district
court, however, dismissed the bank’s counterclaims. The dismissal of the counterclaims is not at
issue in this appeal.
3
Defendants contend that the district court erred in staying further proceedings
in this case pending the resolution of the Bahamian case. We agree.2 We accordingly
vacate the district court’s stay and remand.
A variety of circumstances may justify a district court stay pending the
resolution of a related case in another court. A stay sometimes is authorized simply
as a means of controlling the district court’s docket and of managing cases before the
district court. See, e.g., Clinton v. Jones, 117 S. Ct. 1636, 1650 (1997) (discussing
district court’s “broad discretion to stay proceedings as an incident to its power to
control its own docket”). And, in some cases, a stay might be authorized also by
principles of abstention. See, e.g., Quackenbush v. Allstate Ins. Co., 116 S. Ct. 1712,
1722 (1996) (noting that abstention principles may require district court to stay case
pending resolution of related proceedings). In this case, however, we think that
neither ground upholds the stay that the district court ordered.
When a district court exercises its discretion to stay a case pending the
resolution of related proceedings in another forum, the district court must limit
properly the scope of the stay. A stay must not be “immoderate.” CTI-Container
Leasing Corp. v. Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982). In
2
We review the district court’s issuance of a stay pending the resolution of related
proceedings in another forum for abuse of discretion. See CTI-Container Leasing Corp. v.
Uiterwyk Corp., 685 F.2d 1284, 1288 (11th Cir. 1982).
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considering whether a stay is “immoderate,” we examine both the scope of the stay
(including its potential duration) and the reasons cited by the district court for the stay.
See Hines v. D’Artois, 531 F.2d 726, 733 (5th Cir. 1976). As the Supreme Court has
explained, “[a] stay is immoderate and hence unlawful unless so framed in its
inception that its force will be spent within reasonable limits, so far at least as they are
susceptible of prevision and description.” Landis v. North American Co., 57 S. Ct.
163, 167 (1936). We conclude that the stay ordered by the district court in this case
is immoderate and, therefore, an abuse of discretion.
The scope of the stay ordered by the district court seems indefinite. The stay,
by its own terms, remains in effect until the “Bahamian Courts conclude their review.”
The stay appears to expire only after a trial of the Bahamian case and the exhaustion
of appeals in that case. In addition, contrary to the district court’s assessment of the
Bahamian litigation, the record indicates that the Bahamian case is not progressing
quickly. We conclude, therefore, that the stay is indefinite in scope.3 Cf. American
3
Plaintiffs argue that the stay is not indefinite because the district court ordered the parties to
submit status reports on the Bahamian litigation every three months. This requirement, however,
does not make the scope of the stay less indefinite. The district court’s requirement of status
reports does not guarantee that the district court will reassess the propriety of the stay every three
months. The district court could do nothing when status reports are filed, and the stay would
continue in effect until the Bahamian litigation concluded. As the Supreme Court explained in
Landis, “an order which is to continue by its terms for an immoderate stretch of time is not to be
upheld as moderate because conceivably the court that made it may be persuaded at a later time
to undo what it has done.” 57 S. Ct. at 167.
5
Manuf. Mut. Ins. Co. v. Edward D. Stone, Jr. & Assoc., 743 F.2d 1519, 1524 (11th
Cir. 1984) (finding stay of federal court proceedings pending conclusion of state court
proceedings indefinite where state proceedings had been pending for 18 months and
no trial date had been set in state court); CTI-Container, 685 F.2d at 1288 (vacating
district court stay where duration of stay could “safely be described as an indefinite
period”).
We can see from the district court’s order no reason sufficient to justify the
indefinite stay that the district court ordered. The stay order does not explain in detail
the district court’s reasoning in staying further proceedings in this case. The order
does mention three considerations that the district court found important: (1) that the
Bahamian case and this case involve related issues; (2) that the Bahamian case
predates this case by more than one year; and (3) “that a trial date in the Bahamian
Litigation has already been set.”4 From the district court’s mention of these three
factors, the parties suggest two possible reasons for the district court’s stay: (1) that
the district court, pursuant to its inherent power to control its own docket, stayed this
case for the sake of judicial economy; and (2) that the district court stayed this case
4
On appeal, the parties agree that the third consideration noted by the district court – that a
trial date had been set in the Bahamian case – had no basis in fact: when the district court issued
the stay, no trial date had been set. Because we conclude that we must vacate the stay in any
event, we do not reach Defendants’ argument that this apparent misapprehension of fact by the
district court automatically renders the stay an abuse of discretion.
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under the doctrine of international abstention. We cannot justify the stay that the
district court ordered on either ground. The case law illustrates that, in a case like this
one, the interests of judicial economy alone are insufficient to justify such an
indefinite stay. See Landis, 57 S. Ct. at 167 (vacating similar stay in like
circumstances). And, we will not attempt to justify the district court’s stay on
abstention grounds. The district court never mentions “abstention” in its order. The
district court’s order cites no cases related to international abstention. And, the
district court’s order mentions only a few of the many factors that a district court
must examine in considering an international abstention question. See Turner
Entertainment Co. v. Degeto Film, 25 F.3d 1512, 1519-22 (11th Cir. 1994) (discussing
factors relevant to international abstention). Abstention is the exception instead of the
rule, see id. at 1518; and “courts regularly permit parallel proceedings in an American
court and a foreign court.” Id. at 1521. Abstention, therefore, is not to be undertaken
lightly. So, we – when the district court did not mention abstention at all – decline to
presume that abstention motivated the district court’s exercise of its discretion to stay
this case. We, therefore, do not decide today whether international abstention might
justify the stay that the district court ordered.
III.
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The stay ordered by the district court is “immoderate” and, therefore, an abuse
of discretion. We accordingly VACATE the district court stay and REMAND for
further proceedings consistent with this opinion.
VACATED AND REMANDED.
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