Yangtze Memory Technologies, Inc. v. Strand Consult

Background

Yangtze Memory Technologies Company, Ltd., and Yangtze Memory Technologies, Inc. sued Strand Consult and Roslyn Layton. The original complaint asserted trade-libel and California unfair-competition claims, alleging that defendants had made false statements about plaintiffs and their products since September 2020. Plaintiffs later amended the complaint, added DCI Group AZ, LLC as a defendant, added claims under the federal Lanham Act, and dropped the California state-law claims.

Defendants moved to stay discovery until resolution of their upcoming motion to strike and motion to dismiss. They argued that the case could be resolved on several grounds, including the anti-Strategic Lawsuit Against Public Participation statute, lack of subject-matter jurisdiction, lack of Article III standing, lack of personal jurisdiction, and failure to state a claim. Their subject-matter-jurisdiction argument focused on whether the original complaint established diversity jurisdiction and whether the amended complaint could cure an alleged jurisdictional defect.

Plaintiffs argued that the amended complaint made the stay request moot because the new Lanham Act claims created federal-question jurisdiction, prevented an anti-Strategic Lawsuit Against Public Participation motion, and did not require special damages.

Court’s analysis

Under Federal Rule of Civil Procedure 26(c), a court may stay discovery for good cause to protect against undue burden or expense. The court applied the district’s two-part test for staying discovery while a potentially case-dispositive motion is pending: the motion must potentially resolve the entire case or the issue targeted by discovery, and the motion must be capable of resolution without additional discovery. The court may take a preliminary look at the pending motion’s merits to decide whether a stay is warranted.

The court found that the subject-matter-jurisdiction issue was potentially dispositive of the entire case. It also found that the issue appeared to be a legal question that could be decided from the complaint’s allegations without further discovery. The court expressly stated that it was not deciding the merits of the upcoming motion to dismiss.

Disposition

The court GRANTED defendants’ motion to stay discovery. All discovery was STAYED pending a ruling on defendants’ upcoming motion to dismiss. The court also VACATED the March 13, 2025 hearing.