PALLADINO v. JPMORGAN CHASE CO (2024)

MEMORANDUM AND ORDER

For the reasons set forth below, the Court GRANTS Defendants’ motion to stay discovery until their motion to dismiss is resolved.

I. Relevant Background

On December 30, 2022, Plaintiffs—purported California Visa and Mastercard credit and debit cardholders—commenced this action by filing a Complaint in the Superior Court of the State of California for the County of San Francisco. See Dkt No. 1 ¶ 5; Dkt. No. 1-1. On January 11, 2023, Plaintiffs filed an Amended Complaint. See Dkt. No. 1 ¶ 7; Dkt. No. 1-3. Plaintiffs seek “damages and injunctive relief for violation by Visa and Mastercard and ten major banks, each of whom does business in California, of California's Cartwright Antitrust Act and Unfair Competition law (UCL).” Dkt. No. 66.

On January 30, 2023, Defendants Visa Inc., Visa U.S.A. Inc., and Visa International Service Association (collectively “Visa Defendants”) removed this action to the United States District Court for the Northern District of California. See Dkt. No. 1. On February 10, 2023, the United States Judicial Panel on Multidistrict Litigation conditionally transferred this matter to the Eastern District of New York in connection with the In Re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (Brodie, Ch. J.) multidistrict litigation. See Dkt. No. 9. The case was formally transferred to the Eastern District of New York on February 15, 2023. See Dkt. No. 10. On the same date, the Visa Defendants answered the Complaint. See Dkt. No. 11.

On March 1, 2023, Plaintiffs moved to remand this case to the Superior Court of the State of California in and for the City and County of San Francisco. See Dkt. No. 15. On March 17, 2023, Defendants opposed Plaintiffs’ motion to remand to state court. See Dkt. No. 28. On June 15, 2023, the Court issued a memorandum and order denying Plaintiff's motion to remand this action to state court. See Dkt. No. 51. Plaintiffs appealed the Court's June 15, 2023 decision. See Dkt. No. 53. On December 5, 2023, the United States Court of Appeals for the Second Circuit granted Defendants’ motion to dismiss the appeal and issued the mandate returning the case to this Court. See Dkt. No. 60.

Defendants intend to move to dismiss the Amended Complaint and to compel arbitration.¹ See Dkt. No. 62. Further, Defendants seek a stay of all discovery pending the motion to dismiss. See id. Plaintiffs oppose Defendants’ anticipated dispositive motions as well as Defendants’ motion to stay and motion to compel arbitration. See Dkt. No. 64.

II. Discussion

A. Legal Standard

“ ‘[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.’ ” Salese v. JP Morgan Chase & Co., No. 23-CV-153 (GRB) (JMW), 2023 WL 5047890, at *1 (E.D.N.Y. Aug. 8, 2023) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936)). “The filing of a dispositive motion in and of itself does not halt discovery obligations.” Salese, 2023 WL 5047890, at *1. Instead, Fed. R. Civ. P. 26(c)(1) allows a court “for good cause, [to] issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense[.]” Gross v. Madison Square Garden Ent. Corp., No. 23-CV-3380 (LAK) (JLC), 2023 WL 6815052, at *1 (S.D.N.Y. Oct. 17, 2023) (citations omitted). To that end, upon a showing of good cause, “a district court has considerable discretion to stay discovery pursuant to Rule 26(c).” Id. (citations and quotation marks omitted).

“[A] court determining whether to grant a stay of discovery pending a motion must look to the particular circumstances and posture of each case.” Alford v. City of New York, No. 11-CV-622 (ERK) (MDG), 2012 WL 947498, at *1 (E.D.N.Y. Mar. 20, 2012) (citation omitted). “In evaluating whether a stay of discovery pending resolution of a motion to dismiss is appropriate, courts typically consider: (1) whether the Defendants has made a strong showing that the plaintiff's claim is unmeritorious; (2) the breadth of discovery and the burden of responding to it; and (3) the risk of unfair prejudice to the party opposing the stay.” Amron v. 3M Minnsota Miniting & Manufacturing Company, No. 23-CV-8959 (PKC) (JMW), 2024 WL 263010, at *2 (E.D.N.Y. Jan. 24, 2024) (citation and quotation marks omitted); see also Republic of Turkey v. Christie's, Inc., 316 F. Supp. 3d 675, 677 (S.D.N.Y. 2018) (“Courts should consider multiple factors, including the breadth of discovery sought, the burden of responding to it, the prejudice that would result to the party opposing the stay, and the strength of the pending motion forming the basis of the request for stay.”).

While various district courts debate which of the three factors is the most important, “there can be little doubt that simplification of the issues and prejudice to the opposing party are more important than the case's state of completion.” OV Loop, Inc. v. Mastercard Inc., No. 23-CV-1773 (CS), 2023 WL 7905690, at *2 (S.D.N.Y. Nov. 16, 2023) (citation omitted). “These three factors are nonexclusive, and ultimately the overarching consideration of the circumstances in their totality governs.” Id. (citations and quotation marks omitted). “The burden is on the movant to establish that a stay is warranted.” Nike, Inc. v. Lululemon USA Inc., No. 22-CV-00082 (RA) (OTW), 2023 WL 2214884, at *1 (S.D.N.Y. Feb. 24, 2023) (citation omitted).

B. The Circumstances Here Warrant A Stay

Having reviewed the parties’ submissions and after holding oral argument regarding Defendants’ motion, the Court finds that each of the three factors here weigh in favor of a stay.

First, with respect to the strength of Defendants’ anticipated motion, the party “seeking a stay must present substantial arguments for dismissal.” O'Sullivan v. Deutsche Bank AG, No. 17-CV-8709 (LTS) (GWG), 2018 WL 1989585, at *4 (S.D.N.Y. Apr. 26, 2018). Here, Defendants contend that Plaintiffs lack antitrust standing to assert claims under the Cartwright Act pursuant to a decision from this Court in Salveson v. JP Morgan Chase & Co., No. 14-CV-3529 (JG), 2014 WL 12770235 (E.D.N.Y. Nov. 26, 2014) (“Salveson I”), on reconsideration in part, 166 F. Supp. 3d 242 (E.D.N.Y. 2016) (Brodie, C.J.) (“Salveson II”), and aff'd, 663 F. App'x 71 (2d Cir. 2016). See Dkt. No. 64. Defendants further contend that Plaintiffs fail the “efficient enforcers” test set forth by the Supreme Court in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). See Dkt. No. 64 (citing Schwab Short-Term Bond Mkt. Fund v. Lloyds Banking Grp. PLC, 22 F.4th 103, 115, 120 (2d Cir. 2021) (Sullivan, C.J.), cert. denied, ––– U.S. ––––, 142 S. Ct. 2852, 213 L.Ed.2d 1079 (2022)).

Defendants also argue that the Court lacks personal jurisdiction over Defendants PNC Bank, N.A., and PNC Financial Services (“PNC Defendants”), as they are not subject to general jurisdiction in California merely by operating there. See id. (citing Daimler AG v. Bauman, 571 U.S. 117, 139 n.20, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014)). Further, Defendants contend that multiple arbitration agreements between plaintiffs and some bank defendants will narrow the scope of claims in this action. See id.² Defendants argue that Plaintiffs “are estopped from avoiding their arbitration agreements and applicable class waivers by bringing class claims against purported co-conspirators of the bank defendants with whom they have arbitration agreements for the card transactions at issue.” Dkt. No. 66 (citing In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237, 265 (S.D.N.Y. 2005)). While Plaintiffs take issue with each of these assertions, Defendants do indeed “raise substantial issues with regard to ․ all[ ] of the causes of action alleged in the complaint” which is sufficient to warrant a stay.” Chesney v. Valley Stream Union Free Sch. Dist. No. 24, 236 F.R.D. 113, 115 (E.D.N.Y. 2006).

Next, the breadth of discovery here would pose a significant burden on defendants. Plaintiffs seek “the depositions of the CEOs, Chairmen, and persons most knowledgeable first from VISA; and then from the bank defendants and Mastercard as to defendants’ Interchange Fee policies together with their respective contracts and practices related thereto over the four years previous to the filing of the plaintiffs’ Complaint,” as well as “[s]tatistics related to the Interchange Fees.” Dkt. No. 66. At the January 26, 2024 conference, Plaintiffs’ counsel clarified that at least one of the anticipated depositions would be taken pursuant to Fed. R. Civ. P. 30(b)(6).³ Although Plaintiff couches this discovery as “limited,” (id.), the requested discovery would be significant, especially the depositions of Defendants’ senior executives. Plaintiffs further stated at the conference that they would likely seek “very limited” jurisdictional discovery, including interrogatories and one deposition, related to Defendants’ claims that the Court lacks jurisdiction over the PNC defendants. The Court agrees with Defendants that “[P]laintiffs have not articulated any compelling reason why [such discovery] needs to be produced while the motion to dismiss is pending.” Dkt. No. 64 (citing Gross, 2023 WL 6815052, at *2).

Finally, given the timetable for Defendants’ anticipated motion, Plaintiffs have not established that any delay in discovery would prejudice Plaintiffs in any way. Indeed, under the parties’ proposed briefing schedule, which the Court approved at the January 26, 2024 conference, the parties’ briefing will be complete in two months. See Jan. 26, 2024 Minute Entry. Moreover, while there has already been significant motion practice in this case—all of which has been advanced by Plaintiffs—this case is still in early stages. See Cohen v. Saraya USA, Inc., No. 23-CV-8079 (NJC) (JMW), 2024 WL 198405, at *3 (E.D.N.Y. Jan. 18, 2024) (granting a motion to stay discovery and noting that “this case is still in its early stages—a discovery schedule has not been set, discovery has not occurred, and depositions have not been taken.”).

Accordingly, weighing each of the relevant factors, the Court finds that a stay of discovery pending the outcome of Defendant's anticipated dispositive motion is warranted.

III. Conclusion

For the reasons set forth above, Defendants’ motion for a stay of discovery pending disposition of Defendants’ motions to dismiss is granted.

SO ORDERED.

FOOTNOTES

1.   Visa Defendants intend to file a Fed. R. Civ. P. 12(c) motion.

2.   As noted at the January 26, 2024 conference, Defendants will include their motion to compel arbitration with their anticipated motion to dismiss. See Jan. 26, 2024 Minute Entry.

3.   Defendants’ counsel indicated that Defendants anticipate raising the apex doctrine in response to such depositions. “Pursuant to the apex doctrine, ‘unless the executive has unique evidence, personal knowledge of the claims at issue, and other witnesses are incapable of providing testimony about the conduct alleged, executives are safeguarded from depositions.’ ” Amaya v. Ballyshear LLC, No. 17-CV-1596 (DRH) (AKT), 2021 WL 12101052, at *2 (E.D.N.Y. Sept. 30, 2021) (quoting Harapeti v. CBS Television Stations Inc., No. 21-MISC.-680 (PAE), 2021 WL 3932424, at *2 (S.D.N.Y. Sept. 2, 2021)).

JOSEPH A. MARUTOLLO, United States Magistrate Judge: