United States District Court, D. Connecticut
THE STANLEY WORKS ISRAEL LTD. f/k/a ZAG INDUSTRIES, LTD., Plaintiff,
500 GROUP, INC. and PAOLO TIRAMANI, Defendants.
RULING ON PENDING DISCOVERY MOTIONS
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT
Stanley Works Israel Ltd., f/k/a ZAG Industries, Ltd.
("Plaintiff"), an Israeli limited liability
company, brings this diversity action against Defendants 500
Group, Inc, a New York corporation, and Paolo Tiramani, a
citizen of the state of Nevada (collectively,
"Defendants"). Plaintiff and Defendant 500 Group
were parties to certain product license agreements that
related generally to patent rights owned by 500 Group.
Plaintiff's claims against Defendants arise from a
dispute over monies paid pursuant to a settlement agreement
between the parties. Pending before the Court is
Defendants' Motion for a Protective Order, which seeks a
stay of all discovery until the resolution of Defendants'
Motion to Dismiss the Amended Complaint. Also pending is
Plaintiff's Motion to Compel responses to its
interrogatories and requests for production. Both motions are
opposed, and are ripe for consideration. This Ruling resolves
commenced this action on October 20, 2017. Complaint, Doc. 1.
Attorneys on behalf of Defendants filed Notices of
Appearances on December 4, 2017, and on December 5, 2017, the
matter was transferred to the undersigned. The parties filed
their Form 26(f) Report of Parties' Planning Meeting on
January 2, 2018, Doc. 30, and the Court entered a Scheduling
Order that same day. Doc. 21. On February 13, 2018, Plaintiff
filed an Amended Complaint. Doc. 24.
to the facts alleged in Plaintiff's Amended Complaint,
Plaintiff and Defendant 500 Group had previously been engaged
in various disputes related to license agreements; the
disputes resulted in a demand for arbitration. Doc. 24
¶¶7-11. The disputes were then negotiated and the
parties ultimately reached a settlement. Id.
¶11. Plaintiff and Defendant 500 Group entered into a
Settlement Agreement on March 31, 2017, which provided, among
other things, that Plaintiff would pay a sum of ten million
dollars to Defendant 500 Group. Id.
¶¶11-12. Plaintiff contends that the parties agreed
that Plaintiff was to retain $600, 000 from the total payment
to fulfill Defendant 500 Group's tax obligations and
other arrangements with the Israeli tax authority.
Id. ¶21. However, Plaintiff alleges that it
mistakenly failed to deduct the $600, 000 from the total when
it wired the settlement funds, and when it requested that 500
Group return the $600, 000, Defendants ultimately refused.
Id. ¶¶ 25-32. Plaintiff's Amended
Complaint raises counts sounding in breach of contract,
unjust enrichment, unfair trade practices, conversion, and
February 27, 2018, Defendants filed a motion to dismiss the
Amended Complaint, Doc. 26. In the motion, Defendants argue,
inter alia, that the parties' settlement
agreement contains no reference to the withholding of any
portion of the payment, and there is no writing signed by
both parties, as contemplated by the settlement
agreement's merger clause, that would show that the
agreement was modified. Doc. 27 at 12-22. Defendants also
argue that Plaintiff's quasi-contract and tort claims
fail given the existence of a written, express contract
governing the subject matter of the Amended Complaint.
Id. at 27-36.
March 2, 2018, Defendants filed a Motion for a Protective
Order, seeking to stay discovery pending resolution of the
motion to dismiss. Doc. 28. On March 9, 2018, Plaintiff filed
a motion to compel responses to its discovery requests. The
Court will address the pending discovery-related motions in
STANDARD OF REVIEW
26(c) of the Federal Rules of Civil Procedure provides, in
relevant part: "The court may, for good cause, issue an
order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense,
including . . . forbidding the disclosure or
discovery[.]" Fed.R.Civ.P. 26(c)(1)(A). A request for a
stay of discovery is treated as a request for a protective
order under Rule 26(c). See, e.g.,
Morien v. Munich Reins. Am., Inc., 270 F.R.D. 65, 66
(D. Conn. 2010); Transunion Corp. v. PepsiCo, Inc.,
811 F.2d 127, 130 (2d Cir. 1987). "[T]he power to stay
proceedings is incidental to the power inherent in every
court to control the disposition of the causes on its docket
with economy of time and effort for itself, for counsel, and
for litigants." Landis v. N. Am. Co., 299 U.S.
248, 254 (1936). Thus, a "request for a stay of
discovery, pursuant to Rule 26(c) is committed to the sound
discretion of the court based on a showing of good
cause." ITT Corp. v. Travelers Cas. & Sur.
Co., No. 3:12-CV-0038(RNC), 2012 WL 2944357, at *2 (D.
Conn. July 19, 2012) (quotation marks and citation omitted).
The party seeking the stay bears the burden of showing that
good cause exists for its request. Morien, 270
F.R.D. at 66-67.
party seeks a stay of discovery pending resolution of a
dispositive motion, the Court considers "(1) the
strength of the dispositive motion; (2) the breadth of the
discovery sought; and (3) the prejudice a stay would have on
the non-moving party." Lithgow v. Edelmann, 247
F.R.D. 61, 62 (D. Conn. 2007) (citation omitted).
"[W]hile discovery may in a proper case be stayed
pending the outcome of a motion to dismiss, the issuance of a
stay is by no means automatic." Spencer Trask
Software & Info. Servs., LLC v. RPost Int'l
Ltd., 206 F.R.D. 367, 368 (S.D.N.Y. 2002) (quotation
marks and citation omitted) (collecting cases).
Motion to Stay
contend that good cause exists to stay discovery pending the
resolution of the motion to dismiss. Defendants assert that
the dispositive motion has substantial merit and may dispose
of the case in its entirety. Further, Defendants anticipate
that any discovery will create an undue burden and expense,
and claim that no prejudice will result to Plaintiff if a
stay of discovery is imposed.
opposing Defendants' motion, Plaintiff responds that a
stay of discovery is unnecessary and would be prejudicial.
Plaintiff argues that Defendants could have requested a stay
at the parties' Rule 26(f) planning conference, but they
instead waited, thereby prejudicing Plaintiff and the Court
as a scheduling order is now in place. Plaintiff contends
that the motion to dismiss is "devoid of legal merit,
" Doc. 30 at 2, and therefore does not justify a stay.
Finally, Plaintiff argues that as the dispute resolves around
a single ...