LAURA DEVLIN v. EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

Background

Laura Devlin, the lead plaintiff in a proposed class action, asked the court to partially lift the automatic discovery stay imposed by the Private Securities Litigation Reform Act. A discovery stay temporarily prevents the parties from collecting evidence. The stay generally applies while a defendant’s motion to dismiss is pending. Devlin sought investigative materials that Equitable Financial Life Insurance Company had produced to the Securities and Exchange Commission during the agency’s fraud investigation.

The parties treated their pre-motion letters as a fully briefed motion and agreed that the court could decide the request based on those letters. Equitable opposed the request, arguing that discovery should remain stayed until the court resolves its forthcoming motion to dismiss.

Parties’ Arguments

Devlin argued that her request was sufficiently specific because it covered only the documents Equitable had produced to the Securities and Exchange Commission. She also argued that she would suffer unfair harm because she could not make informed decisions about litigation strategy without those documents. Equitable did not dispute that the request was specific but argued that Devlin had not shown the required unfair harm.

Court’s Analysis

The court explained that the statute requires discovery to remain stayed during a motion to dismiss unless specific discovery is necessary to preserve evidence or prevent unfair harm. Courts have sometimes lifted the stay when defendants might otherwise avoid liability, or when plaintiffs need core documents to make informed litigation or settlement decisions. But ordinary delay in collecting evidence or developing litigation positions is not enough because such delay is inherent in a discovery stay.

The court found that Devlin had not identified circumstances justifying an exception. Equitable had settled with the Securities and Exchange Commission on July 18, 2022, nearly two years before Devlin filed this proposed class action. Devlin identified no competing litigation that might impair her ability to obtain relief, and the court found no indication that Equitable’s financial condition threatened to limit any recovery.

Ruling

Judge Victor Marrero denied Devlin’s letter motion to partially lift the Private Securities Litigation Reform Act discovery stay. The opinion did not decide Equitable’s forthcoming motion to dismiss or the underlying securities claims.

Disposition

Devlin’s motion to partially lift the discovery stay was DENIED.