Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 1 of 6
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`Joseph R. Ganley (5643)
`Brenoch R. Wirthlin (10282)
`HUTCHISON & STEFFEN, PLLC
`Peccole Professional Park
`10080 West Alta Drive, Suite 200
`Las Vegas, Nevada 89145
`Telephone: (702) 385-2500
`Facsimile: (702) 385-2086
`jganley@hutchlegal.com
`bwirthlin@hutchlegal.com
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`Edward R. Nelson III
`Christopher G. Granaghan
`John P. Murphy
`Carder W. Brooks
`NELSON BUMGARDNER CONROY PC
`3131 West 7th Street, Suite 300
`Fort Worth, TX 76107
`Telephone: (817) 377-9111
`ed@nelbum.com
`chris@nelbum.com
`murphy@nelbum.com
`carder@nelbum.com
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`Attorneys for Defendant R2 Solutions LLC
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEVADA
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`Case No. 2:22-cv-00828-CDS-BNW
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`R2 SOLUTIONS LLC’S REPLY IN
`SUPPORT OF ITS MOTION TO STAY
`DISCOVERY PENDING RESOLUTION
`OF MOTION TO DISMISS
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`ALLEGIANT TRAVEL COMPANY,
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`Plaintiff,
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`v.
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`R2 SOLUTIONS LLC,
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`Defendant.
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`REPLY IN SUPPORT OF
`MOTION TO STAY DISCOVERY
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`CASE NO: 2:22-CV-00828-CDS-BNW
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`Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 2 of 6
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`As it did in its response to R2’s motion to dismiss, Allegiant relies on invective instead of law. In
`just eight pages of briefing, Allegiant calls R2 a “patent troll” five times, accuses R2 of contriving a “cat-
`and-mouse scheme,” asserts that R2 is “shirk[ing] its discovery obligations,” and refers to R2’s positions
`as “fanciful” and “disingenuous.” See ECF 46 at 1, 4, 5, and 7. None of this has anything to do with the
`merits, which plainly suggest that proceeding with discovery while R2’s motion to dismiss is pending
`makes little sense.
`STAYING DISCOVERY IS WARRANTED.
`I.
`Allegiant misrepresents R2’s position regarding the “preliminary peek test.” R2 has not argued
`that the test “does not apply to motions to dismiss based on jurisdiction, venue, or service of process.”
`ECF 46 at 3. Rather, R2 pointed to decisions from this District that have applied a relaxed standard with
`respect to the third prong of the test when the dispositive motion before the court raises challenges to
`jurisdiction. See ECF 44 at 2-3, n. 1. In this scenario, courts have taken a “preliminary peek” at the
`underlying motion to “assess whether a stay is warranted” in view of the likelihood of dismissal, as
`opposed to fully vetting the motion to dismiss to determine if the Court is “convinced” that the movant
`will prevail on the merits. St. Clair v. Ienergizer, Inc., Case No. 2:20-cv-01880-GMN-VCF, 2021 U.S.
`Dist. LEXIS 36899, at *4 (D. Nev. Jan. 22, 2021); see also ECF 44 at 2-3, n.1. R2’s position, then, is that
`the Court need only review R2’s motion to dismiss—which raises serious questions of subject matter and
`personal jurisdiction—to assess whether a stay is warranted, not to first convince itself that R2 should
`prevail on the merits. See ECF 44 at 3-5.
`In any event, even if the Court is inclined to apply a more stringent version of the “preliminary
`peek test,” it still favors a stay. Allegiant concedes that prongs one and two of the test are met. Thus, only
`the third prong of the test directed to the merits of R2’s motion to dismiss requires attention. See ECF 46
`at 4. Relative to the third prong, R2’s motion to dismiss shows, convincingly, that R2 should prevail on
`the merits. The Court lacks both subject-matter jurisdiction over the lawsuit and personal jurisdiction
`over R2 because of Allegiant’s unequivocal, and essentially admitted, misuse of R2’s Confidential
`Information as the basis for its lawsuit. See, e.g., ECF 28 at p. 1, ls. 12-18; p. 6, l. 26 – p. 7, l. 5; p. 14, ls.
`7-11; see also ECF 33 at p. 1, ls. 10-13; p. 2, ls. 12-23; see also R2 Solutions LLC v. Allegiant Travel
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`REPLY IN SUPPORT OF
`MOTION TO STAY DISCOVERY
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`CASE NO: 2:22-CV-00828-CDS-BNW
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`Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 3 of 6
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`Company, Case No. 4:22-cv-00537, ECF 19 at 4 n. 1 (E.D. Tex. Sep. 16, 2022). Indeed, the gravamen of
`Allegiant’s justification for its actions is its assertion that the parties’ Agreement was intended only to
`“protect confidential licensing information.” See ECF 46 at 5. But this characterization offends and belies
`the Agreement’s explicit terms. Moreover, Allegiant’s suggestion that R2 is treating “the NDA as if it
`were a one-way litigation standstill agreement” (id.) is false. R2 does not contest Allegiant’s right to file
`a lawsuit. R2 contests Allegiant’s right to use R2’s Confidential Information to file a lawsuit. Such action
`runs afoul of both the law and public policy.
`GOOD CAUSE EXISTS TO STAY DISCOVERY.
`II.
`Allegiant wrongly asserts that R2 has failed to establish good cause to stay discovery “based on
`factors unrelated to the merits of a pending dispositive motion.” ECF 46 at 6. While the merits of R2’s
`motion to dismiss provide good cause under the preliminary peek test, R2’s motion also demonstrates
`good cause by articulating undeniable harm and prejudice that would result from requiring R2 to
`participate in discovery at this juncture. See, e.g., ECF 44 at 3-5; see Schrader v. Wynn Las Vegas, LLC,
`No. 2:19-cv-02159-JCM-BNW, 2021 U.S. Dist. LEXIS 198974, at *10-13 (D. Nev. Oct. 14, 2021)
`(holding that, while the merits of a dispositive motion may provide good cause for staying discovery,
`“good cause may exist based on other factors unrelated to the merits of the dispositive motion”). Indeed,
`as explained in R2’s motion, requiring R2 to serve infringement contentions forces R2 to create the very
`“case or controversy” that R2 argues does not exist and, by extension, forces R2 to manufacture
`jurisdiction to its own detriment. And if personal jurisdiction is improper, forcing R2 to participate
`further in a lawsuit in a jurisdiction with which it has no contacts is also prejudicial and unfair. Such
`threatened harm and prejudice constitute good cause to stay discovery.
`Moreover, the undue burden and expense that R2 would bear during discovery is plain. Allegiant
`has instituted seven different non-infringement claims on seven different patents, which raises a plethora
`of extremely complex legal and technical issues. If discovery is not stayed, then in just a few short weeks,
`R2 will be required to expend enormous time and effort to create infringement contentions for seven
`different patents, three of which have never before been asserted in litigation. And for those patents that
`have been asserted, this does little to alleviate R2’s burden—R2 must exercise the same level of diligence
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`REPLY IN SUPPORT OF
`MOTION TO STAY DISCOVERY
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`CASE NO: 2:22-CV-00828-CDS-BNW
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`Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 4 of 6
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`for a new infringement read that it would for a newly-asserted patent. The accompanying document
`production would also be burdensome, likely requiring R2 to provide, for example, chain of title
`documents, invalidity contentions from other cases, license agreements, notice letters, patents and file
`histories, and all other manner of relevant documents (including for those three patents that have never
`before been litigated). Thus, the “realistically anticipated costs of discovery” are very high,
`demonstrating why there is good cause to stay discovery until the motion to dismiss is decided. Schrader,
`2021 U.S. Dist. LEXIS 198974 at *12.
`Allegiant’s arguments on this point are unpersuasive. Allegiant alleges that “R2 waived
`arguments for staying discovery that are not related to the merits (or lack thereof) of the motion to
`dismiss.” ECF 46 at 7. This is wrong. The last paragraph of R2’s motion to stay discovery details how R2
`would be harmed if discovery is not stayed. See ECF 44 at 5. Allegiant also argues that “R2 has not
`asserted that it would bear an undue burden from discovery because, as a patent troll, it has no business
`operations other than suing companies and pursuing litigation settlements.” ECF 46 at 7. This is
`nonsensical, because as stated above, R2 would be forced to create infringement contentions and produce
`thousands upon thousands of pages of records if discovery is not stayed, regardless of the nature of its
`business operations. Allegiant’s aspersions are also contrary to the record, which shows that R2 engages
`in substantial business activities, “including the management and licensing of its substantial patent
`portfolio of over 2,500 U.S. patents (and 5,000 patents worldwide).” ECF 28 at 2; see also ECF 28.1.
`Allegiant’s claimed harm if discovery does not proceed is also tenuous, at best. The “cloud of
`litigation” that Allegiant seeks to clear is of its own making—there would be no litigation but for
`Allegiant’s own conduct and disregard for its contractual obligations. ECF 46 at 8. Further, while
`Allegiant claims that it could “minimize any damage by performing a redesign,” this is disingenuous.
`ECF 46 at 8. If Allegiant were truly concerned with redesigning to minimize its liability, it would have
`done so prior to forcing this litigation. There is good cause to stay discovery, and the harm that would
`befall R2 if it is forced to participate in discovery at this stage far outweighs Allegiant’s claimed injury.
`III. CONCLUSION
`At bottom, “the Court is trying to determine ‘whether it is more just to speed the parties along in
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`CASE NO: 2:22-CV-00828-CDS-BNW
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`Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 5 of 6
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`discovery and other proceedings while a dispositive motion is pending, or whether it is more just to delay
`or limit discovery and other proceedings to accomplish the inexpensive determination of the case.’”
`Schrader, 2021 U.S. Dist. LEXIS 198974 at *13. In this situation, it is more just to delay discovery. R2
`raises serious questions of subject matter and personal jurisdiction in its motion to dismiss, and further
`offers substantial evidence that Allegiant has engaged in questionable conduct that favors discretionary
`denial under the Declaratory Judgment Act. Forcing R2 to participate in discovery that is antithetical to
`the heart of its motion to dismiss is harmful and prejudicial. The Court should thus stay discovery,
`including deadlines imposed by the Local Patent Rules, pending resolution of R2’s motion to dismiss.
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`Dated: September 27, 2022
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`Respectfully submitted,
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`/s/ Edward R. Nelson III
`Joseph R. Ganley (5643)
`Brenoch R. Wirthlin (10282)
`HUTCHISON & STEFFEN, PLLC
`Peccole Professional Park
`10080 West Alta Drive, Suite 200
`Las Vegas, Nevada 89145
`jganley@hutchlegal.com
`bwirthlin@hutchlegal.com
`
`Edward R. Nelson III
`Christopher G. Granaghan
`John P. Murphy
`Carder W. Brooks
`NELSON BUMGARDNER CONROY PC
`3131 West 7th Street, Suite 300
`Fort Worth, TX 76107
`Telephone: (817) 377-9111
`ed@nelbum.com
`chris@nelbum.com
`murphy@nelbum.com
`carder@nelbum.com
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`ATTORNEYS FOR DEFENDANT
`R2 SOLUTIONS LLC
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`REPLY IN SUPPORT OF
`MOTION TO STAY DISCOVERY
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`CASE NO: 2:22-CV-00828-CDS-BNW
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`Case 2:22-cv-00828-CDS-BNW Document 48 Filed 09/27/22 Page 6 of 6
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`CERTIFICATE OF SERVICE
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`I hereby certify that on September 27, 2022, I caused a true and correct copy of the foregoing R2
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`SOLUTIONS LLC’S REPLY IN SUPPORT OF ITS MOTION TO STAY DISCOVERY PENDING
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`RESOLUTION OF MOTION TO DISMISS to be submitted electronically for filing and service with the
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`United States District Court for the District of Nevada via the Electronic Filing System to the following:
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`Patrick H. Hicks (4632)
`Kelsey E. Stegall (14279)
`LITTLER MENDELSON, P.C.
`3960 Howard Hughes Parkway, #300
`Las Vegas, Nevada 89169
`phicks@littler.com
`kstegall@littler.com
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`Michael A. Oblon
`JONES DAY
`51 Louisiana Avenue, N.W.
`Washington, D.C. 20001
`moblon@jonesday.com
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`Keith Davis
`JONES DAY
`2727 North Harwood
`Dallas, Texas 75201
`kbdavis@jonesday.com
`H. Albert Liou
`JONES DAY
`717 Texas Avenue, Suite 3300
`Houston, Texas 77002
`aliou@jonesday.com
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`Attorneys for plaintiff
`Allegiant Travel Company
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`/s/ Edward R. Nelson III
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`REPLY IN SUPPORT OF
`MOTION TO STAY DISCOVERY
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`CASE NO: 2:22-CV-00828-CDS-BNW
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