PlayUp, Inc. v. Mintas

635 F.Supp.3d 1087

PLAYUP, INC., Plaintiff(s), v. Laila MINTAS, Defendant(s).

Case No. 2:21-cv-02129-GMN-NJK

United States District Court, D. Nevada

Signed October 18, 2022

Michael Popok, Pro Hac Vice, Zumpano Patricios Popok & Helsten, New York, NY, Amanda Brookhyser, Zumpano Patricios Popok & Helsten, Las Vegas, NV, Jennifer K. Hostetler, Lewis Roca Rothgerber Christie LLP, Las Vegas, NV, Douglas B. Tumminello, Lewis Roca Rothgerber Christie LLP, Denver, CO, for Plaintiff(s).

Benjamin Bradwell Gordon, Jennifer L. Braster, Meredith L. Markwell, Naylor & Braster Attorneys at Law, PLLC, Las Vegas, NV, for Defendant(s).

Order

[Docket No. 221]

Nancy J. Koppe, United States Magistrate Judge

"No one said it would be easy/ But no one said it'd be this hard." Sheryl Crow, No One Said It Would Be Easy (A&M Records 1993). Despite the fact that discovery should involve minimal judicial involvement and that counsel have an overriding obligation to engage in discovery with a spirit of cooperation, see Cardoza v. Bloomin' Brands, Inc., 141 F. Supp. 3d 1137, 1145 (D. Nev. 2015), the Court now addresses the umpteenth discovery dispute arising in this case. In the latest dispute, Counter-Defendants Daniel Simic and PlayUp Ltd. ask the Court to put on hold its order that they must participate in discovery while they seek review of that order from the assigned district judge. Docket No. 221 (motion to stay magistrate judge order); see also Docket No. 222 (objection to order). The motion to stay magistrate judge order was filed on an emergency basis, see Docket No. 221 at 1 n.1, so the Court shortened the briefing schedule, Docket No. 224. Counter-Plaintiff Laila Mintas filed a response in opposition. Docket No. 225. Counter-Defendants filed a reply. Docket No. 227. The motion is properly resolved without a hearing. See Local Rule 78-1. For the reasons discussed more fully below, Counter-Defendants' motion to stay magistrate judge order is DENIED.

I. BACKGROUND

PlayUp is an online sports betting platform. Docket No. 134 at ¶ 21. Mintas was the Chief Executive Officer of PlayUp's American entity. See id. at ¶ 27. That employment ended on November 30, 2021. Id. at ¶ 95. The parties have drastically different accounts as to how that employment ended. Plaintiff brought suit alleging contractual and tort claims against Mintas.

Mintas responded with her own contractual and tort counterclaims. The counterclaims were brought not only against PlayUp's American entity (PlayUp Inc.), but also against its Australian parent company (PlayUp Ltd.) and the Director of PlayUp and its subsidiaries (Simic). Docket No. 52 (amended counterclaims). Counter-Defendants PlayUp Ltd. and Simic filed motions to dismiss for lack of personal jurisdiction. See Docket Nos. 143, 144; see also Docket No. 152 (corrected image). Although they did not file a motion to stay discovery, Counter-Defendants refused to participate in the discovery process based on the pendency of these motions to dismiss. See, e.g., Docket No. 203-7. That stance prompted Counter-Plaintiff to file a motion to compel Counter-Defendants to provide responses to the discovery that had been served. Docket No. 203. Counter-Defendants then filed a motion to stay discovery pending resolution of the motions to dismiss. Docket No. 213.

On September 29, 2022, the Court denied the motion to stay discovery and granted the motion to compel discovery. Docket No. 220. That ruling was predicated on the fact that the motions to dismiss for lack of personal jurisdiction were not sufficiently meritorious to warrant a stay of discovery. With respect to Simic, the Court noted that the allegations and evidence that he made defamatory statements within Nevada made it "appear[ ] obvious" (in the words of controlling Ninth Circuit authority) that the first two prongs of the personal jurisdiction test were satisfied. See id. at 3-4 (discussing Freestream Aircraft (Bermuda) Ltd. v. Aero Law Grp., 905 F.3d 597, 600, 603 (9th Cir. 2018)). The Court also found that the exercise of personal jurisdiction over Simic appeared to not be unreasonable. See Docket No. 220 at 4 n.5. With respect to PlayUp Ltd., the Court noted that Counter-Plaintiff's employment contract includes a forum selection clause identifying Nevada as the forum for any legal actions related to her employment. Id. at 4-5. The Court noted further that Counter-Plaintiff's responsibilities as described in that agreement explicitly include work for PlayUp Ltd. and Simic appears to have signed the agreement as a PlayUp Ltd. officer, which make it likely that PlayUp Ltd. is subject to the Court's personal jurisdiction. See id. Given that a stay of discovery was not warranted, the Court ordered Counter-Defendants to participate in discovery by granting Counter-Plaintiff's motion to compel.

The parties are now before the Court on Counter-Defendants' request to stay the operation of that order.

II. STANDARDS

Pursuant to Rule 72(a) of the Federal Rules of Civil Procedure, a magistrate judge may decide a non-dispositive pretrial matter. Fed. R. Civ. P. 72(a). A magistrate judge's non-dispositive ruling is subject to review by the district judge if a party files an objection within 14 days. Id. When a timely objection is filed, the district judge may modify or set aside a magistrate judge's non-dispositive order if it is clearly erroneous or contrary to law. Id.

"We begin with the basic proposition that all orders and judgments of courts must be complied with promptly. If a person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but, absent a stay, he must comply promptly with the order pending appeal." Maness v. Meyers, 419 U.S. 449, 458, 95 S.Ct. 584, 42 L.Ed.2d 574 (1975). "It is well-established law that the filing of an objection to a magistrate judge's order on a non-dispositive motion does not automatically stay that order's operation." Castelan-Gutierrez v. Bodega Latina Corp., No. 2:17-cv-01877-JAD-NJK, 2018 WL 4050493, at *1 (D. Nev. Mar. 30, 2018); accord Ignite Spirits, Inc. v. Consulting by AR, LLC, No. 2:21-cv-01590-JCM-EJY, 2022 WL 4112222, at *2 (D. Nev. Aug. 22, 2022); U.S. Commodity Futures Trading Comm'n v. Banc De Binary, Ltd., No. 2:13-cv-992-MMD-VCF, 2015 WL 3454412, at *1 (D. Nev. June 1, 2015); Garity v. Donahoe, No. 2:11-cv-01805-RFB-CWH, 2014 WL 4402499, at *2 (D. Nev. Sept. 5, 2014); Morales v. Allied Building Crafts, Inc., No. CV-S-04-1365-LRH-LRL, 2005 WL 8161664, at *2 (D. Nev. Oct. 6, 2005).¹ It is also axiomatic that the filing of a motion to stay does not impact the obligation to proceed; only an order granting such relief imposes a stay. E.g., Willemijn Houdstermaatschaapij BV v. Apollo Comput. Inc., 707 F. Supp. 1429, 1441 (D. Del. 1989) ("Defendant's argument assumes that the moment it has filed a motion to stay discovery on the damages issue, it need no longer obey basic discovery rules. Defendant is in effect granting itself a stay of discovery. Simple logic teaches that defendant has put the presumption on the wrong side: unless and until it is granted a stay, defendant should be required to conduct discovery as if no motion had been filed at all").

While a stay is not available as a matter of right, federal courts possess the inherent authority to impose stays pending challenges to their orders in appropriate circumstances. See Nken v. Holder, 556 U.S. 418, 426, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009). Litigants may seek relief from the operation of a magistrate judge's non-dispositive order by filing a motion to stay that order. See Esparza, 200 F.R.D. at 657.² "In considering whether to stay a magistrate judge's order pending Rule 72 objections, courts typically apply the same four-factor test used for a stay pending appeal." Pablovich v. Rooms to Go La. Corp., Civ. No. 20-617, 2021 WL 928030, at *2 (E.D. La. Mar. 11, 2021) (collecting cases). As such, courts adjudicate motions to stay a magistrate judge's non-dispositive order by analyzing: (1) whether the movant is likely to succeed on its objection; (2) whether the movant will suffer irreparable injury in the absence of a stay; (3) whether the other parties will be substantially injured by a stay; and (4) where the public interest lies. E.g., Trs. of N. Nev. Operating Eng'rs Health & Welfare Tr. Fund v. Mach 4 Constr., LLC, No. 3:08-cv-00578-LRH-RAM, 2009 WL 1940087, at *2 (D. Nev. July 7, 2009).³ The first two factors are the most critical. Nken, 556 U.S. at 434, 129 S.Ct. 1749. Courts exercise their discretion in deciding whether to impose such a stay based on the circumstances of the particular case. Great-West Life & Annuity Ins. Co. v. Am. Econ. Ins. Co., No. 2:11-cv-02082-APG-CWH, 2013 WL 5954470, at *2 (D. Nev. Nov. 6, 2013) (quoting Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 2012)).

Imposing a stay is an intrusion into the ordinary processes of administration and judicial review. Nken, 556 U.S. at 427, 129 S.Ct. 1749. "A stay of a magistrate judge's discovery order should be granted sparingly." Granato v. City & Cnty. of Denver, No. 11-cv-0304-MSK-BNB, 2011 WL 1335854, at *2 (D. Colo. Apr. 7, 2011). The party requesting a stay bears the burden of showing the circumstances justify an exercise of the Court's discretion. Nken, 556 U.S. at 433-34, 129 S.Ct. 1749. In the context of a request to stay a magistrate judge's non-dispositive discovery order, this burden is a steep hill to climb because, as discussed more fully below, it is difficult to establish a sufficient likelihood of success given the deferential standard of district judge review and irreparable harm is generally not established based on the burden or expense of providing discovery. See, e.g., Castelan-Gutierrez, 2018 WL 4050493, at *3-4 & n.3. Because "[t]hese are difficult hurdles to clear, [ ] federal courts often deny motions to stay a magistrate judge's discovery orders." Montgomery v. Risen, No. 15-20782-CIV, 2015 WL 5167628, at *2 (S.D. Fla. Sept. 3, 2015...