Laatz v. Zazzle, Inc. ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NICKY LAATZ, et al., Case No. 22-cv-04844-BLF 8 Plaintiffs, ORDER REGARDING DEFENDANTS’ MOTION TO BIFURCATE 9 v. DISCOVERY AND SUMMARY ADJUDICATION OF AFFIRMATIVE 10 ZAZZLE, INC., et al., DEFENSES Defendants. Re: ECF No. 161 11 12 13 Pending before the Court is Defendants Zazzle Inc. (“Zazzle”) and Mohamed Alkhatib’s 14 (“Alkhatib” and, with Zazzle, “Defendants”) Motion to Bifurcate Discovery and Summary 15 Adjudication of Affirmative Defenses (the “Motion”). See Mot., ECF No. 161. Plaintiff Nicky 16 Laatz (“Plaintiff”) opposes the Motion. See Opp’n, ECF No. 168. Defendants filed a reply on 17 December 15, 2023. See Reply, ECF No. 170. The Court finds the Motion suitable for 18 adjudication without a hearing. See Civil L.R. 7-1(b); see also Order, ECF No. 164. 19 I. BACKGROUND 20 Plaintiff brought this suit on August 24, 2022. See Compl., ECF No. 1. On February 1, 21 2023, the Court adopted the pre-trial schedule proposed by Zazzle in the parties’ jointly filed 22 scheduling proposals. See ECF Nos. 66, 71. There has been no modification to date of this 23 schedule. 24 Plaintiff filed the operative First Amended Complaint (“FAC”) on March 14, 2023. See 25 FAC, ECF No. 82. The FAC asserts claims for (1) fraudulent misrepresentation, (2) fraudulent 26 concealment, and (3) promissory fraud, all in violation of Cal. Civ. Code § 1572, as well as (4) 27 federal copyright infringement under 17 U.S.C. § 101, (5) federal trademark infringement under 1 Defendants filed a motion to dismiss the FAC on March 31, 2023. See ECF No. 86. In 2 that motion and the supporting reply brief, Defendants argued that Plaintiff was not properly a 3 party to the license contract at issue, and thereby lacked standing. See id. at 4, 15; see also ECF 4 No. 96, at 8–9. The Court denied Defendants’ motion to dismiss on July 17, 2023, holding that 5 Plaintiff had sufficiently pled her status as an original party to the contract. See ECF No. 124. 6 On April 7, 2023, while Defendants’ motion to dismiss was pending, Plaintiff filed a 7 Refiled Motion for Partial Summary Judgment (“Partial MSJ”), seeking judgment in her favor as 8 to all claims except federal trademark infringement. See ECF No. 89. Defendants opposed the 9 Partial MSJ, in part on the affirmative defense grounds that Plaintiff’s claims are all time-barred 10 and that Plaintiff lacks standing to bring her state law claims. See ECF No. 104, at 8–10. On 11 October 23, 2023, the Court granted in part the Partial MSJ as to the issue of whether Defendants 12 demonstrated mutual assent to certain document alleged to be part of the parties’ contract, and 13 otherwise denied the Partial MSJ. See ECF No. 155. The Court declined to consider Defendants’ 14 affirmative defense arguments in its ruling on Plaintiff’s Partial MSJ, finding that the evaluation of 15 the Partial MSJ “concern[ed] only the question of whether Plaintiff has shown that the undisputed 16 facts establish Plaintiff’s claims for breach of contract, fraudulent misrepresentation, fraudulent 17 concealment, promissory fraud, and copyright infringement.” See id. at 10. 18 Additionally, Defendants filed an answer to the FAC on August 30, 2023. See Answer, 19 ECF No. 144. The Answer includes affirmative defenses of standing and statute of limitations, 20 among others. See id. at 21. Appended to the Answer is Zazzle’s counterclaim against Plaintiff, 21 in which it seeks declaratory relief regarding the alleged invalidity of Plaintiff’s copyrights 22 regarding the Blooming Elegant Trio. See id. at 23–29. Plaintiff has filed a motion to dismiss 23 Zazzle’s counterclaim, which is set for hearing on February 29, 2024. See ECF No. 148. 24 Defendants filed the pending Motion to bifurcate discovery and summary adjudication on 25 November 28, 2023; it was fully briefed on December 15, 2023. See Mot.; Opp’n; Reply. 26 II. LEGAL STANDARD 27 “The district court is given broad discretion in supervising the pretrial phase of litigation.” 1 Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992)). This discretion includes modifying 2 scheduling orders not only with respect to discovery deadlines, but also to scheduling decisions 3 that may affect the presentation of legal issues at trial. See Bright v. Mercer Advisors Inc., 502 F. 4 App’x 710, 711 (“The district court did not abuse its discretion in modifying the scheduling order 5 to allow defendant to amend its answer because defendant showed good cause.”) (citation 6 omitted); Raybould v. Rushmore Loan Mgmt. Servs., LLC, 854 F. App’x 227, 227 (9th Cir. 2021) 7 (“The district court did not abuse its discretion in issuing its scheduling order, case management 8 order, or orders granting extensions of time.”) (citation omitted) (mem.); Penk v. Or. State Bd. of 9 Higher Educ., 816 F.2d 458, 466 (9th Cir. 1987) (“The court has broad discretion in fashioning 10 appropriate scheduling orders.”) (citation omitted). 11 A party requesting a scheduling modification must show “good cause.” See Fed. R. Civ. P. 12 16(b)(4) (“A schedule may be modified only for good cause and with the judge’s consent.”); see 13 also Zivkovic, 302 F.3d at 1087 (“In general, the pretrial scheduling order can only be modified 14 ‘upon a showing of good cause.’”) (quoting Johnson, 975 F.2d at 608). In the scheduling context, 15 and particularly where a party seeks to continue a deadline that has already passed, “good cause” 16 generally means that a party cannot meet its scheduling deadlines despite exercising reasonable 17 diligence. See, e.g., DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC, 870 F.3d 978, 989 18 (9th Cir. 2017) (“Where, as here, a party seeks leave to amend after the deadline set in the 19 scheduling order has passed, the party’s request is judged under Federal Rule of Civil Procedure 20 (“FRCP”) 16's “good cause” standard . . . [and] [t] central inquiry . . . is whether the requesting 21 party was diligent in seeking the amendment.”); Johnson, 975 F.2d at 609 (noting that “focus of 22 inquiry” in evaluating “belated motion to amend” was “upon the moving party’s reasons for 23 seeking modification”). 24 Further, in evaluating motions to bifurcate pre-trial proceedings, district courts have looked 25 to the standards for bifurcating trial set forth in Federal Rule of Civil Procedure 42(b), which 26 provides that a court may, “[f]or convenience, to avoid prejudice, or to expedite and economize . . 27 . order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third- 1 including separability of the issues, simplification of discovery and conservation of resources, and 2 prejudice to the parties.” McDermott v. Potter, No C 07–06300, 2010 WL 956808, at *1 (N.D. 3 Cal. Mar. 12, 2010) (citations omitted). The party seeking bifurcation bears the burden of 4 establishing that it is warranted in the case at hand, such as by promoting judicial economy or 5 avoiding inconvenience or prejudice to the parties. See McDermott, 2010 WL 956808, at *1 6 (citing Spectra–Physics Lasers, Inc. v. Uniphase Corp., 144 F.R.D. 99, 102 (N.D.Cal. 1992)); 7 Wixen Music Publ’g, Inc. v. Triller, Inc., No. 20-cv-10515, 2021 WL 4816627, at *1 (C.D. Cal. 8 Aug. 11, 2021) (citing Karpenski v. Am. Gen. Life Cos., 916 F. Supp. 2d 1188, 1190 (W.D. Wash. 9 2012)). 10 III. DISCUSSION 11 Defendants seek to bifurcate this action into two phases—(1) discovery and summary 12 adjudication of their affirmative defenses on the statute of limitations and standing issues, and (2) 13 all remaining claims and defenses, and Zazzle’s counterclaim—and to modify the scheduling 14 order accordingly. See Mot. 1, 9–10. Defendants argue that bifurcation would avoid significant 15 and extensive fact and expert discovery on various substantive issues because—they assert—all 16 six of Plaintiff’s claims are time-barred under the relevant statutes of limitation, and her four state 17 law claims for fraud and breach of contract fail for lack of standing. See id. at 4–8. They further 18 argue that bifurcation and the potential disposition of a large portion of this action on these 19 threshold issues is possible with minimal modification of the deadlines, so that there is good cause 20 to modify the scheduling order. See id. at 1, 9; see also Reply 2–3. 21 Plaintiff opposes bifurcation and modification of the scheduling order, arguing that 22 Defendants cannot show good cause because (1) they have not been diligent in bringing this 23 motion nearly 10 months after the entry of the scheduling order, see Opp’n 6–7; (2) the proposed 24 bifurcation will not streamline this case, and would in fact result in further inefficiencies by 25 delaying all substantive discovery, see id. at 7–9; and (3) the bifurcation is at bottom an attempt to 26 evade Defendants’ present discovery obligations, see id. at 9–10. 27 Having reviewed the parties’ arguments and evaluated its own docket, the Court will not 1 Defendants have failed to raise the issue of bifurcation at any point prior to filing the present 2 Motion, despite having repeatedly raised the issue of their affirmative defenses in other contexts. 3 See supra, at Part I. It appears that substantial discovery is well underway covering all issues in 4 this action, see Decl. of Casey Matthews ¶¶ 2–10, ECF No. 168-1, and although the Court does 5 not find the motion to be untimely, the effect of the schedule modification would place a hardship 6 on Plaintiff. Defendants’ request would reduce Plaintiff’s time to conduct discovery and allow 7 Defendants to sideline already propounded discovery that Plaintiff needs to prosecute her 8 claims. Moreover, it is the Court’s experience that phased discovery leads to inefficient disputes 9 regarding whether a particular discovery request belongs in the first phase or the second 10 phase. And finally, it appears that Defendants have actively gathered evidence that they need to 11 support their affirmative defenses. That said, the Court recognizes that its standing order limiting 12 each side to one summary judgment motion may impede early resolution of these affirmative 13 defenses. Thus, as an alternative, relief from that portion of the standing order is a far more 14 efficient way to handle Defendants’ legitimate desire to resolve potentially case-dispositive issues 15 early in the proceedings. 16 To that end, the Court will permit Defendants to file two motions for summary 17 adjudication, with the first addressing the affirmative defense issues. The Court accordingly 18 encourages the parties to prioritize discovery to address the issues that may be brought in an initial 19 motion for summary adjudication. The Court will not reserve an additional hearing date until 14 20 days before a motion is filed, and advises Defendants that (1) hearings dates are generally 21 scheduled to occur about five months after the filing date and (2) the Court will not approve an 22 order shortening time. Should Defendants choose to divide the issues into two separate motions, 23 the two motions shall not together exceed more than 25 pages. Similarly, the oppositions to the 24 two motions must not together exceed 25 pages, and the supporting replies must not together 25 exceed 15 pages. Each motion must comply with the requirements for a motion under the local 26 rules, including the requirement that the notice of motion must be contained within the 27 memorandum of points and authorities. See Civil L.R. 7-2(b)(2). 1 |} IV. ORDER 2 For the foregoing reasons, it is hereby ORDERED that: 3 1. Defendants’ motion to bifurcate discovery is DENIED; 4 2. Defendants’ motion to modify the case schedule is DENIED; 5 3. Defendants may file a total of two motions for summary adjudication over the life 6 of this case, but no party will receive additional pages for summary judgment 7 briefing across the two motions beyond the limits set forth in the Court’s standing 8 orders, see Standing Order Re Civil Cases § IV(A)(1); and 9 4. The Court will not reserve an additional hearing date at this point and will not 10 shorten time in connection with an initial motion for summary adjudication. 11 12 IT IS SO ORDERED. 5 13 Dated: December 21, 2023 feiliidacnan 15 eth Labson Freeman United States District Judge 16 18 19 20 21 22 23 24 25 26 27 28