Prescott v. Nestle USA, Inc

Background

Steven Prescott and Linda Cheslow brought a proposed class action against Nestle USA, Inc. The plaintiffs alleged that Nestlé’s marketing of “Nestlé’s Toll House’s Premier White Morsels” violated California’s Unfair Competition Law, Consumers Legal Remedies Act, and False Advertising Law because the product allegedly did not contain white chocolate.

The plaintiffs had amended their complaint after the court dismissed their first amended complaint with leave to amend. After the plaintiffs filed a second amended complaint, Nestlé moved to dismiss it. Nestlé’s motion relied heavily on rulings in a related proposed class action involving similar allegations about white baking chips. An appeal was pending in that related case, and the plaintiffs asked the court to stay this case until the appeal was resolved.

Legal standard

The court explained that district courts have discretionary authority to pause proceedings to manage their dockets efficiently. It considered three factors: possible harm from the stay, hardship to a party required to continue litigating, and whether a stay would promote the orderly administration of justice by simplifying issues and conserving resources. The party seeking a stay bears the burden of showing that it is needed.

Reasoning

The court found no concrete prejudice to Nestlé from delaying the case. Although the stay would delay resolution, the related appeal could resolve or clarify issues central to Nestlé’s motion to dismiss.

The court also found that the plaintiffs would face hardship without a stay because Nestlé’s motion relied extensively on the related case, which involved nearly identical issues. Continuing immediately could require the plaintiffs to spend resources litigating issues that might be clarified by the appeal.

Finally, the court concluded that a stay would promote judicial economy. The related appeal could provide guidance concerning the effect of consumer surveys and ingredient lists on the plaintiffs’ labeling claims. To avoid an indefinite delay, the court limited the stay to one year and allowed the plaintiffs to request an extension if the appeal remained unresolved.

Order

The plaintiffs’ motion for a stay was granted through November 22, 2021, or until resolution of the related appeal, whichever occurred first. The plaintiffs could seek an extension if the appeal was not resolved by that date.

Nestlé’s pending motion to dismiss was terminated without prejudice to renewal, if appropriate, after the stay was lifted. The December 17, 2020 hearing was vacated. The clerk was directed to administratively close the case, which the order stated would not affect the parties’ substantive rights. The parties could request that the case be reopened when appropriate after the stay ended.

The order did not decide the merits of Nestlé’s motion to dismiss or the plaintiffs’ underlying labeling claims.