D.L. Markham, DDS, 401(K) Plan v. Variable Annuity Life Ins. Co. ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 D.L. MARKHAM, DDS, MSD INC. No. 2:21-CV-07 TLN KJN 11 401(K) PLAN, et al., ORDER GRANTING DEFENDANTS’ 12 Plaintiffs, MOTION TO STAY DISCOVERY 13 v. (ECF No. 29.) 14 VARIABLE ANNUITY LIFE INSURANCE COMPANY, et al., 15 Defendants. 16 17 This case concerns allegations that defendants Variable Annuity Life Insurance Company 18 (“VALIC”), VALIC Financial Advisors (“VFA”), and VALIC Retirement Services Company 19 (“VRSCO”) knowingly participated in a prohibited transaction and engaged in self-dealing 20 related to plaintiffs’ 401k plan. (See ECF No. 1.) Defendants moved to dismiss all claims 21 against them, and plaintiffs opposed. (See ECF Nos. 19, 20, 23, 24.) On April 2, 2021, the 22 assigned district judge took the matters under submission without oral argument. (ECF No. 25.) 23 Currently before the Court is defendant VALIC’s Motion to Stay Discovery and plaintiffs’ 24 opposition. (ECF No. 29.) Defendant maintains that a stay should be imposed because the 25 pending motions are potentially dispositive of all claims, discovery is unnecessary to resolve the 26 motions to dismiss, and discovery will be unduly burdensome to defendants. Plaintiffs disagree, 27 arguing discovery should proceed because the motions to dismiss will not dispose of all claims, 28 discovery is relevant to the motions to dismiss, and defendants’ prejudice arguments are cursory 1 and unsubstantiated. (See Id.) 2 The Court finds that in the interest of judicial economy, a stay of discovery is appropriate. 3 See Fed. R. Civ. P. 26(c)(1). The undersigned has taken a preliminary peek at the motions 4 currently before the assigned district judge, and finds defendants’ arguments potentially 5 dispositive of the case. Particularly, the parties have argued to the district judge the applicability 6 of competing case law to the facts of the case. (Cf. ECF No. 20 with ECF No. 23.) Further, 7 despite plaintiffs’ contentions that the sought-after discovery is relevant to their opposition, 8 plaintiffs have not raised this issue with the district judge, who appears to have taken the motions 9 to dismiss under submission solely based on the allegations in the pleadings. Finally, as to the 10 prejudice to plaintiffs and burdens on defendants, the undersigned finds the latter outweighs the 11 former. Plaintiffs have propounded seven interrogatories and 78 requests for production on 12 VALIC. (See ECF No. 30.) Despite some concern as to defendants’ calculations on the number 13 of hours required to respond, it is facially evident that responding to these requests will require 14 significant effort on defendants’ part. This burden heavily outweighs the (likely) few more 15 months plaintiffs may need to wait for the district judge to resolve the motions to dismiss. 16 For these reasons, a stay of discovery is in line with the principles of judicial economy and 17 the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 26(c)(1); see also, e.g., Song Fi v 18 Google, 2016 WL 9185325 (N.D. Cal. April 27, 2016) (granting a stay of discovery prior to 19 resolution of a motion to dismiss). Accordingly, IT IS HEREBY ORDERED: 20 1. Defendant VALIC’s motion to stay discovery (ECF No. 29) is GRANTED; 21 2. The parties shall continue discussing their discovery obligations in case the district judge 22 finds some of plaintiffs’ claims can move forward, with or without amendment; and 23 //// 24 //// 25 //// 26 //// 27 //// 28 //// 1 3. After the district judge has ruled on the motions to dismiss, the parties shall file a brief 2 joint statement with the undersigned indicating their position on (a) whether the stay 3 should remain in place, (b) whether some limited discovery can proceed, or (c) whether 4 they require a follow-up hearing (formal or informal) before the magistrate judge. 5 || Dated: February 15, 2022 Foci) Aharon 7 KENDALL J. NE mark.7 UNITED STATES MAGISTRATE JUDGE 8 9 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28