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In re Broiler Chicken Grower Litigation

United States District Court, E.D. Oklahoma

September 1, 2017

IN RE BROILER CHICKEN GROWER LITIGATION

          ORDER GRANTING DEFENDANTS' MOTION TO STAY DISCOVERY PENDING RESOLUTION OF MOTIONS TO DISMISS

          ROBERT J. SHELBY, United States District Judge

         Before the court in this consolidated action[1] is Defendants' Motion to Stay Discovery Pending Resolution of their Motions to Dismiss.[2] Plaintiffs oppose the Motion.[3] For the reasons discussed below, the court GRANTS Defendants' Motion.[4]

         Background

         This is a putative class action centering on antitrust claims that broiler chicken growers assert against poultry production companies. The six named Plaintiff growers[5] allege that beginning nearly a decade ago-“at least 2008, and likely earlier”-the twelve Defendant poultry companies[6] engaged in illicit anticompetitive activity in concert with others to artificially suppress grower compensation.[7] The growers contend the poultry companies met this goal by, among other means: 1) sharing detailed compensation and business data through a statistical and research firm called AgriStats, 2) allowing access to each other's production facilities, 3) permitting high-level employees to move to jobs at each other's companies without contractual restrictions, and 4) complying with a “no-poach” agreement under which the poultry companies agreed not to recruit or hire growers from each other.[8]

         Some growers initially filed suit in this District against the poultry companies in January 2017.[9] After other growers filed a second, substantially similar case in this District in March 2017.[10] the cases were consolidated.[11] Plaintiffs claim there are thousands of growers who may join them in this action.[12]

         After a June 9, 2017 case management hearing, and pursuant a subsequent June 14 order, [13] the grower Plaintiffs jointly filed the now-governing Consolidated Amended Complaint on July 10, 2017.[14] They assert two causes of action: 1) Agreement in Restraint of Trade in Violation of Section I of the Sherman Antitrust Act, 15 U.S.C. § 1; and 2) Unfair Practices in Violation of Section 202 of the Packers and Stockyards Acts of 1921, 7 U.S.C. § 192.[15]

         Under the court's June 14 order, the Defendant poultry companies have until September 8, 2017, to file their Motions to Dismiss.[16] The Plaintiffs must file any oppositions by October 23, 2017, and Defendants have until November 22, 2017 to file any reply memoranda.[17] Thus, unless the parties seek and the court permits an extension, briefing on initial Motions to Dismiss will be complete in three months.

         In its June 14 order, the court admonished the Defendants to, when possible in view of similar legal and factual positions, file joint submissions rather than individual motions.[18] The Defendants' Motion to Stay Discovery pending the court's determination of the anticipated Motion to Dismiss was filed jointly on July 24.

         Since the Defendants filed their Motion to Stay Discovery, Plaintiffs have given notice of their intent to issue preservation subpoenas to twenty-four third party poultry production companies.[19] Each subpoena identically sets forth thirty-three separate categories of requested documents-and some categories have up to ten sub-parts.[20] The subpoenas seek from these third parties documents on a broad range of subjects, including the third parties' own internal management teams; corporate policies; practices with regard to poultry growers-including compensation, economic evaluations, and contracts; use of AgriStats; and personnel information-including entire personnel files for any employee who may have attended a meeting wherein a poultry company discussed a topic relating to growers.[21]

         Analysis

         Defendants seek a stay of discovery pending the resolution of their anticipated Motions to Dismiss. Their anticipated Motions will be grounded in multiple “threshold” issues upon which this this complex antitrust case may be resolved for all or some of the dozen Defendants. Therefore, they argue the burden and expense that immediate discovery would inflict on the them, the court, and third parties far exceeds any prejudice the Plaintiffs may bear if required to wait until the Motions are resolved. Plaintiffs respond that the Defendants will not prevail on their Motions to Dismiss, and that delaying discovery will prejudice them but not the Defendants, the court, and third parties.

         The Federal Rules of Civil Procedure are meant to “secure the just, speedy, and inexpensive determination of every action . . . .”[22] The Rules do not provide for discovery stays like the one Defendants seek as a matter of course pending the resolution of dispositive motions.[23] But within this court's discretion to control discovery[24] and its own docket lies the ability to stay discovery.[25] Analogously, Rule 26(c) allows the court to issue an order protecting a party from discovery that will cause “annoyance, embarrassment, oppression, or undue burden or expense . . . .”[26] “The ‘good cause' standard of Rule 26(c) is highly flexible, having been designed to accommodate all relevant interests as they arise.”[27] Thus, while blanket discovery stays pending resolution of dispositive motions are rarely appropriate, [28] and it is not this court's general practice to halt discovery simply because a motion has been filed, particular circumstances may warrant a discovery stay for a period time.

         The Tenth Circuit instructs that the determination of whether such circumstances warrant a discovery stay calls “for balancing the competing interests on both sides.”[29] Defendants, as the parties seeking a stay, bear the burden to make out a “clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which [they] pray[] will work damage to someone else.”[30] In balancing the parties' claimed hardships, some district courts in this circuit specifically evaluate the following factors: “(1) plaintiff's interests in proceeding expeditiously with the civil action and the potential prejudice to plaintiff of a delay; (2) the burden on the defendants; (3) the convenience to the court; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.”[31] Under these guiding principles, the court concludes that Defendants have established that a general discovery stay is warranted until the court has resolved the anticipated Motions to Dismiss.

         1. The Defendants' Anticipated Motions to Dismiss

         The court preliminarily reviews the nature of the anticipated Motions to Dismiss as Defendants have generally described in their briefing. This is relevant to the court's analysis because if they seek dismissal of all claims against all or some of the Defendants, then subjecting those Defendants to discovery they might otherwise wholly avoid seems less inviting. Though Defendants have yet to file their Motions, in their briefing they represent that they will move to dismiss the Consolidated Amended Complaint with prejudice on at least the following grounds:

1) All Defendants will argue the Consolidated Amended Complaint should be dismissed in its entirety because it fails plausibly to allege conspiracy allegations, and Plaintiffs are unlikely to be able to cure this deficiency;
2) Some Defendants will move to dismiss for lack of jurisdiction and/or improper venue;
3) Some Defendants will seek to compel arbitration based on clauses set forth in contracts with growers and to dismiss the claims against them in this action; and
4) One Defendant will seek to enjoin or dismiss litigation against it based on a confirmation order entered by the U.S. Bankruptcy Court for the Northern District of Texas.[32]

         Accordingly, all Defendants will seek dismissal of this action in its entirety, and some Defendants will seek dismissal of all claims against them on the basis of “threshold” issues, including jurisdiction and venue.

         The parties spend a good part of their briefing discussing the nature and merits of the Defendants' anticipated Motions to Dismiss. In evaluating whether to stay discovery pending resolution of a dispositive motion, courts often discuss the nature of the defenses asserted in the motion, as this court has done based on Defendants' representations in the briefing on this Motion.[33] Some courts also some delve into a motion's likelihood of success.[34] This court determines in the context of this case that it need not delay a decision on the discovery stay issue until it can evaluate in detail the actual Motions to Dismiss and engage in an in-depth legal analysis-akin almost to a preliminary or advisory ruling on the Motions. The court finds it sufficient that the parties appear to have a significant dispute on the defenses Defendants intend to assert. The court next turns its attention to the balancing of the competing interests.

         2. Plaintiffs' Interests

         The court first evaluates Plaintiffs' interests in avoiding a stay, including whether a delay will prejudice or “work damage” to them. After careful review, it appears that any prejudice to Plaintiffs resulting from a relatively brief discovery stay will be minimal in the context of this case and does not weigh strongly against the imposition of a stay.

         Like most litigants, Plaintiffs are eager to proceed with their case. Along these lines, they contend that Defendants' proposed discovery stay will harm them by prolonging the damage to their livelihoods occasioned by “Defendants' anticompetitive conduct” and “because pre- judgment interest is rarely granted, [therefore] a stay offers Defendants an unearned windfall.”[35]They also point out that a delay ...


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