Greystone Select Holdings LLC v. Computershare Trust Company, N.A.

Background

Greystone Select Holdings LLC and the Trustee Defendants—Computershare Trust Company, N.A. and Wells Fargo Bank, N.A.—jointly requested a partial stay of discovery under Federal Rule of Civil Procedure 26(c)(1). The request sought to pause discovery while the court considered the Trustee Defendants’ pending motion to dismiss Greystone’s amended complaint.

The dispute concerns the interpretation of two indentures executed in 2007. The parties said that, if the case proceeded beyond the motion-to-dismiss stage, discovery would likely involve old communications, draft agreements, other contemporaneous evidence, and expert disclosures concerning the parties’ expectations about the permanent end of the London Interbank Offered Rate, or LIBOR, in 2007. The amended complaint was filed on April 9, 2024, and the Trustee Defendants had not yet filed an answer.

The parties’ initial proposed stay allowed discovery from nonparties for the limited purpose of identifying parties with an economic interest in the junior subordinated bonds at issue. The opinion does not state a docket number for the case.

Court’s Analysis

Rule 26(c)(1) permits a court to protect a party from undue burden or expense by limiting or staying discovery when good cause exists. The court considered the parties’ agreement, the likely burden of discovery, the fact that the defendants had not answered, the recent filing of the amended complaint, and the potentially dispositive nature of the motion to dismiss.

The court found that all parties agreed that a stay would not prejudice them. It also found that beginning broad discovery before the court ruled on the motion to dismiss could be inefficient because the parties did not yet know which factual allegations would remain disputed, what defenses might be asserted, or whether counterclaims would be filed. The court further determined that the likely search for evidence more than 15 years old could be burdensome and that the motion to dismiss appeared sufficiently grounded in law to support a stay, without the court needing to predict the motion’s outcome.

Ruling

Judge Vernon S. Broderick granted the parties’ joint request for a partial stay of discovery. The parties were directed to submit a revised case-management plan and scheduling order when the court issues its decision on the motion to dismiss. The order did not decide the motion to dismiss or the underlying dispute over the indentures.

Practical Effect

Discovery is generally paused while the motion to dismiss is pending, subject to the limited nonparty discovery described in the parties’ proposal. The opinion does not state when the court will decide the motion to dismiss.