Laatz v. Zazzle, Inc.

Background

Nicky Laatz sued Zazzle, Inc. and Mohamed Alkhatib. Her amended complaint asserted claims for fraudulent misrepresentation, fraudulent concealment, promissory fraud, copyright infringement, trademark infringement, breach of contract, and other claims identified in the operative pleading. The defendants answered and asserted affirmative defenses including standing and the statute of limitations. Zazzle also filed a counterclaim seeking a declaration concerning the alleged invalidity of Laatz’s copyrights regarding the Blooming Elegant Trio.

The court had previously adopted a pretrial schedule, which had not been modified. It had also previously denied Defendants’ motion to dismiss after finding that Laatz sufficiently alleged she was an original party to the contract. In an earlier partial summary-judgment ruling, the court granted relief in part concerning mutual assent to a document alleged to be part of the parties’ contract and otherwise denied the motion. The court did not decide Defendants’ affirmative-defense arguments in that ruling.

The Motion

Defendants asked to bifurcate, meaning to divide, discovery and summary adjudication into two phases. The first phase would address their statute-of-limitations and standing defenses; the second would address the remaining claims and defenses and Zazzle’s counterclaim. Defendants also sought to modify the case schedule.

Defendants argued that all six of Laatz’s claims were time-barred and that four state-law claims failed for lack of standing. They maintained that resolving those issues first could avoid significant factual and expert discovery and that only limited schedule changes would be needed.

Laatz opposed the motion. She argued that Defendants had not shown good cause because they waited nearly ten months after the scheduling order was entered, that phased discovery would cause inefficiency and delay, and that the motion was an attempt to avoid current discovery obligations.

Court’s Analysis

Under Federal Rule of Civil Procedure 16(b)(4), a scheduling order may be modified only for good cause and with the judge’s consent. In this context, good cause generally requires showing that the party could not meet the schedule despite reasonable diligence. Courts evaluating bifurcation also consider whether separate phases would promote efficiency, simplify discovery, conserve resources, or avoid prejudice.

The court found that Defendants had not raised bifurcation before filing the motion, even though they had raised their affirmative defenses in other settings. The court noted that substantial discovery was already underway, that changing the schedule would reduce Laatz’s time for discovery and interfere with discovery she needed to pursue her claims, and that phased discovery could create disputes about which requests belonged in which phase. The court also observed that Defendants appeared to have gathered evidence supporting their affirmative defenses.

The court recognized that its standing order limiting each side to one summary-judgment motion could make early resolution of the affirmative defenses more difficult. It concluded, however, that allowing Defendants two summary-adjudication motions was a more efficient alternative than bifurcating discovery and changing the schedule.

Order

The court ordered that:

The order did not decide whether Defendants’ standing or statute-of-limitations defenses succeed.