Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 1 of 8
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEVADA
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`* * *
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`Allegiant Travel Company,
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`Plaintiffs,
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` v.
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`R2 Solutions LLC,
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`Defendant.
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`Case No. 2:22-cv-00828-CDS-BNW
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`ORDER
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`Before the Court is Defendant’s motion to stay discovery. ECF No. 44. Plaintiffs
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`responded (ECF No. 49-1), and Defendant replied (ECF No. 48). The Court held a hearing on
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`October 6, 2022. ECF No. 50.
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`I.
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`Background
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`Plaintiff is seeking a declaratory judgment of non-infringement of seven patents owned by
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`Defendant.
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`Defendant moves to stay discovery pending the resolution of its motion to dismiss by
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`relying on the “preliminary peek test” and the undue burden discovery would create. Defendant
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`argues that the motion to dismiss is dispositive, that it can be decided without additional
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`discovery, and that arguments from it motion to dismiss support its belief that the case will not
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`move forward. Specifically, its argues that the Court does not have subject matter or personal
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`jurisdiction over this case and that it should decline to exercise jurisdiction under the Declaratory
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`Judgment Act. Defendant relies on several District of Nevada cases for the proposition that, in
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`cases where the court’s jurisdiction is challenged, the court need not be “convinced” that its
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`motion to dismiss will be granted to stay discovery.
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`Defendant also argues that having to comply with the Local Patent Rules is wasteful and
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`runs contrary to its position that there is no justiciable dispute. That is because the Rules would
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`require it to “accuse Allegiant of infringement,” and thereby “create a dispute where none exists.”
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`ECF No. 44 at 1.
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 2 of 8
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`Plaintiff opposes the request. ECF No. 24. While Plaintiff agrees that Defendant’s motion
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`to dismiss may be dispositive and that no discovery is needed to decide it, it argues Defendant’s
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`motion has no merit. In addition, although Plaintiff argues Defendant waived any other good
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`cause it may have for the stay by not briefing it in its motion, Plaintiff takes the position no such
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`good cause exists.
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`Defendant’s reply focuses primarily on the existence of good cause to stay discovery.
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`II.
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`Legal Standard
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`The Federal Rules of Civil Procedure do not provide for automatic or blanket stays of
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`discovery because a potentially dispositive motion is pending. Skellerup Indus. Ltd. v. City of
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`L.A., 163 F.R.D. 598, 600-01 (C.D. Cal. 1995).
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`A court may, however, stay discovery under Federal Rule of Civil Procedure 26(c). Fed.
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`R. Civ. P. 26(c)(1); Clardy v. Gilmore, 773 F. App’x 958, 959 (9th Cir. 2019) (affirming stay of
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`discovery under Rule 26(c)). The standard for staying discovery under Rule 26(c) is good cause.
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`Fed. R. Civ. P. 26(c)(1) (the court “may, for good cause, issue an order to protect a party or
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`person from annoyance, embarrassment, oppression, or undue burden or expense,” including
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`forbidding discovery or specifying when it will occur).
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`The Ninth Circuit has not provided a rule or test that district courts must apply to
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`determine if good cause exists to stay discovery. Salazar v. Honest Tea, Inc., No.
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`213CV02318KJMEFB, 2015 WL 6537813, at *1 (E.D. Cal. Oct. 28, 2015) (“The Ninth Circuit
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`has not provided guidance on evaluating a motion to stay discovery pending resolution of a
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`potentially dispositive motion, other than affirming that district courts may grant such a motion
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`for good cause.”); Mlejnecky v. Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL
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`489743, at *6 (E.D. Cal. Feb. 7, 2011) (“The Ninth Circuit Court of Appeals has not announced a
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`clear standard against which to evaluate a request or motion to stay discovery in the face of a
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`pending, potentially dispositive motion.”).
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`The Ninth Circuit has, however, identified one scenario in which a district court may stay
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`discovery and one scenario in which a district court may not stay discovery. The Ninth Circuit has
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`held that a district court may stay discovery when it is convinced that the plaintiff will be unable
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`Page 2 of 8
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 3 of 8
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`to state a claim upon which relief can be granted. See Wood v. McEwen, 644 F.2d 797, 801 (9th
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`Cir. 1981) (“A district court may limit discovery ‘for good cause’, Rule 26(c)(4), Federal Rules of
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`Civil Procedure, and may continue to stay discovery when it is convinced that the plaintiff will be
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`unable to state a claim for relief.”); B.R.S. Land Invs. v. United States, 596 F.2d 353, 356 (9th Cir.
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`1979) (“A district court may properly exercise its discretion to deny discovery where, as here, it is
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`convinced that the plaintiff will be unable to state a claim upon which relief can be granted.”).1
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`The Ninth Circuit has also held that a district court may not stay discovery when discovery is
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`needed to litigate the dispositive motion. Alaska Cargo Transp., Inc. v. Alaska R.R. Corp., 5 F.3d
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`378, 383 (9th Cir. 1993) (district court would have abused its discretion in staying discovery if
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`the discovery was necessary to decide the dispositive motion); Kamm v. Cal. City Dev. Co., 509
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`F.2d 205, 210 (9th Cir. 1975) (same).
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`Based on this Ninth Circuit law, district courts in the District of Nevada typically apply a
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`three-part test to determine when discovery may be stayed.2 See, e.g., Kor Media Group, LLC v.
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`Green, 294 F.R.D. 579 (D. Nev. 2013). This Court will refer to this test as the “preliminary peek
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`test.” The preliminary peek test asks whether (1) the pending motion is potentially dispositive, (2)
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`the potentially dispositive motion can be decided without additional discovery, and (3) after the
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`court takes a “preliminary peek” at the merits of the potentially dispositive motion, it is
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`“convinced” that the plaintiff cannot state a claim for relief. Id. at 581. If all three questions are
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`answered affirmatively, the Court may stay discovery. Id. The point of the preliminary peek test
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`is to “evaluate the propriety of an order staying or limiting discovery with the goal of
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`accomplishing the objectives of Rule 1.” Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603 (D.
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`Nev. 2011). Rule 1 provides that the Federal Rules of Civil Procedure should be construed “to
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`secure the just, speedy, and inexpensive determination of every” case. Fed. R. Civ. P. 1.
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`1 The Court interprets both these Ninth Circuit cases as providing one scenario in which it is appropriate to stay
`discovery but not the only scenario. See also Jarvis v. Regan, 833 F.2d 149, 155 (9th Cir. 1987) (affirming stay of
`discovery without discussing whether court was convinced plaintiff could not state a claim before entering stay); Rae
`v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984) (same); Clardy v. Gilmore, 773 F. App’x 958, 959 (9th Cir. 2019)
`(same).
`2 The Court notes that these District of Nevada cases are persuasive authority, and the Court is not bound by them.
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 4 of 8
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`This Court, however, has found the preliminary peek test to be problematic because it is
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`often inaccurate and inefficient.
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`First, applying the preliminary peek test does not always lead to “accurate results” in
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`which the cases that will ultimately be dismissed are stayed and vice versa. This is so for two
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`primary reasons. In the District of Nevada, a magistrate judge applies the preliminary peek test
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`and decides whether discovery should be stayed; however, a district judge decides the dispositive
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`motion. These judges sometimes have different views on the merits of the dispositive motion,
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`leading to discovery being stayed in some cases it should not have been stayed in and vice versa.
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`See also Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to Stay
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`Discovery When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71, 97 (2012)
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`(identifying same issue). Additionally, the test requires the magistrate judge to take a
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`“preliminary peek” (i.e., a superficial look) at the dispositive motion and be convinced that the
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`plaintiff cannot state a claim for relief before staying discovery. Kor Media, 294 F.R.D. at 583-84
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`(discovery stay inappropriate when there is only “a possibility” defendant will succeed on its
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`dispositive motion; “[g]enerally, there must be no question in the court’s mind that the dispositive
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`motion will prevail . . . .”). When the preliminary peek test is applied as written, it leads to
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`discovery being stayed in only the simplest, legally baseless cases. For most cases, and certainly
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`complex cases, it is impossible for the Court to do a “preliminary peek” and be convinced that the
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`plaintiff cannot state a claim. This is problematic because complex cases, in which discovery will
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`be extremely costly, are the types of cases where discovery stays may be particularly appropriate
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`while a dispositive motion is pending (to accomplish the goals of Rule 1). Nevertheless, the
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`preliminary peek test, applied as written, leads to most motions to stay discovery being denied.
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`Accordingly, the preliminary peek test is not well-suited for sorting which cases will be dismissed
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`(and thus should have discovery stayed) from those cases that will proceed (and thus should not
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`have discovery stayed).
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`Second, the preliminary peek test is inefficient. As just explained, if the preliminary peek
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`test is applied as written (i.e., the Court must be convinced after a superficial look at the
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`dispositive motion that the plaintiff cannot state a claim), it often fails to accurately sort those
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 5 of 8
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`cases that will be dismissed (and should have discovery stayed) from those cases that will proceed
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`(and should not have discovery stayed). To improve the accuracy of the preliminary peek test
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`(and allow discovery stays in cases in which this Court believes the dispositive motion will be
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`granted), this Court has in the past engaged in a full analysis of the dispositive motion. This takes
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`considerable time and delays providing the parties with a decision on the motion to stay
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`discovery.3 It is also an inefficient use of judicial resources because both the magistrate judge and
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`the district judge fully analyze the same dispositive motion. And, even after all this effort, the
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`magistrate judge and district judge may still have different views on the merits of the dispositive
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`motion. See also Kevin J. Lynch, When Staying Discovery Stays Justice: Analyzing Motions to
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`Stay Discovery When A Motion to Dismiss Is Pending, 47 Wake Forest L. Rev. 71, 101 (2012)
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`(noting that having two different judges decide the dispositive motion and the motion to stay
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`discovery introduces burden and error into the preliminary peek test). In short, doing a full
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`analysis of the dispositive motion may improve the accuracy of the preliminary peek test but it
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`takes significant time, duplicates effort, delays providing the parties a decision on whether
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`discovery is stayed, and may still lead to discovery being inappropriate stayed or allowed to
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`proceed.
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`This Court believes a better analytical framework exists for determining when motions to
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`stay should be granted. As the Court previously discussed, the Court may grant motions to stay
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`discovery when a dispositive motion is pending if (1) the dispositive motion can be decided
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`without further discovery; and (2) good cause exists to stay discovery. See Alaska Cargo Transp.,
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`5 F.3d at 383 (district court would have abused its discretion in staying discovery if
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`the discovery was necessary to decide the dispositive motion); Kamm, 509 F.2d at 210 (same);
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`Fed. R. Civ. P. 26(c)(1) (the Court “may, for good cause, issue an order to protect a party or
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`person from annoyance, embarrassment, oppression, or undue burden or expense,” including
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`forbidding discovery or specifying when it will occur). “The burden is upon the party seeking the
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`order to ‘show good cause’ by demonstrating harm or prejudice that will result from the
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`discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). As the Court will
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`3 This delay often also creates a de facto stay of discovery, which is problematic in and of itself.
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 6 of 8
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`discuss in more detail below, good cause may be established using the preliminary peek test, but
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`it may also be established by other factors, not related to the merits of the dispositive motion.
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`The Ninth Circuit has held that good cause to stay discovery may exist when the movant
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`can convince the Court that plaintiff cannot state a claim. See Wood, 644 F.2d at 801 (district
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`court may stay discovery when it is convinced that plaintiff will be unable to state a claim); B.R.S.
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`Land Invs., 596 F.2d at 356 (same). These cases remain valid authority, and litigants may still
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`move for a discovery stay under the preliminary peek test. However, as previously discussed, this
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`will only result in discovery stays in the simplest, legally baseless cases.
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`That said, good cause may exist based on other factors unrelated to the merits of the
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`dispositive motion. In many cases, the movant seeks a stay of discovery to prevent “undue burden
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`or expense.” See Fed. R. Civ. P. 26(c)(1). Accordingly, the movant must establish what undue
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`burden or expense will result from discovery proceeding when a dispositive motion is pending.
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`Movants are encouraged to be specific about the realistically anticipated costs of discovery (based
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`on factors such as the complexity of the claim(s) at issue, the number of claims asserted, the
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`number of parties involved in the litigation, the number of witnesses including experts, the
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`volume of documents at issue, etc.). Non-movants opposing a stay of discovery should discuss
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`their position on these same factors. Additionally, though parties opposing a motion to stay
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`discovery carry no burden to show harm or prejudice if discovery is stayed, they are encouraged
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`to discuss any specific reasons why a discovery stay would be harmful (e.g., the case is old and
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`evidence is getting stale, a witness is sick and may die before discovery begins, the public has an
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`interest in the speedy resolution of the issues presented, the claimant’s resources and ability to
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`wait for a judgment, etc.). Ultimately, guided by Rule 1 of the Federal Rules of Civil Procedure,
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`the Court is trying to determine “whether it is more just to speed the parties along in discovery
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`and other proceedings while a dispositive motion is pending, or whether it is more just to delay or
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`limit discovery and other proceedings to accomplish the inexpensive determination of the case.”
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`Tradebay, 278 F.R.D. at 603.
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`Page 6 of 8
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 7 of 8
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`III. Analysis
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`The Court will not provide an in-depth analysis of its evaluation of the motion to dismiss
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`in this case.
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`The district judge will decide the dispositive motion and may have a different view
`of the merits of the underlying motion. Thus, this court’s “preliminary peek” at the
`merits of the underlying motion is not intended to prejudge its outcome. Rather,
`this court’s role
`is
`to evaluate
`the propriety of an order staying or
`limiting discovery . . . .
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`Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597 (D. Nev. 2011).
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`Here, a “preliminary peek” at Defendant’s motion to dismiss does not convince the Court
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`that it lacks subject matter jurisdiction over this case.4 First, the Court is not convinced that
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`Plaintiff will be unable to meet the standard articulated in MedImmune, Inc. v. Genentech, 549
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`U.S. 118 (2007), given the factors that need to be considered to determine if there is a substantial
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`controversy between the parties. Nor is the Court convinced that exercising jurisdiction pursuant
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`to the Declaratory Judgment Act would be improper here. Lastly, the Court is not convinced it
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`lacks personal jurisdiction (although this largely depends on whether the Court considers the post-
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`agreement communications).
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`Next, the Court addresses Defendant’s argument that, in cases where a party seeks to stay
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`discovery based on an underlying challenge to the Court’s jurisdiction, the preliminary peek test
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`does not require that the court be “convinced” the moving party’s dispositive motion will be
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`granted. Even applying a more relaxed standard,5 the Court does not find that the “likelihood of
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`dismissal” in this case is such that it outweighs the considerations embedded in Rule 1, as
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`discussed more fully below. As a result, the application of a more relaxed standard does not make
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`any difference in this case.
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`4 The Court addresses the “preliminary peek test” given the extent to which the parties relied on it for their respective
`arguments.
`5 Defendant cites to St. Clair v. iEnergizer, Inc., No. 220CV01880GMNVCF, 2021 WL 725158 (D. Nev. Jan. 22,
`2021), for the application of this more relaxed standard.
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`Case 2:22-cv-00828-CDS-BNW Document 52 Filed 10/13/22 Page 8 of 8
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`Additionally, the Court finds that Defendant has not otherwise met its burden to show
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`good cause to stay discovery.6 First, it is not clear to the Court what undue burden Defendant will
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`face, especially considering Plaintiff’s (unchallenged) position that claim charts have already
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`been provided to Plaintiff during preliminary discussions between the parties.
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`Next, the Court disagrees with the notion that engaging in discovery would “create a
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`dispute where none exists.” If Defendant truly believed no dispute exists, then it would simply
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`agree to the declaratory relief Plaintiff seeks. Otherwise, Defendant should provide Plaintiff with
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`the needed information so this case can proceed. At bottom, engaging in the discovery process
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`will not create a dispute. It will, instead, force Defendant to take a position on the matter. And, in
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`this case, that is more just than waiting while a dispositive motion is pending.
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`IV. Conclusion
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`IT IS THEREFORE ORDERED that Defendant’s motion to stay discovery (ECF No.
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`44) is DENIED.
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`DATED: October 13, 2022
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`BRENDA WEKSLER
`UNITED STATES MAGISTRATE JUDGE
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`6 The Court finds that Defendant did not waive arguments regarding good cause to stay discovery, as it sufficiently
`preserved it in its moving papers. In addition, the Court allowed Plaintiff an opportunity during the hearing to contest
`the position that Defendant took in its reply brief.
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`Page 8 of 8
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