Cambridge Capital LLC v. Ruby Has LLC
- Lewis Liman
- 1:20-cv-11118
- U.S. District Court · Southern District of New York
- 5
In Cambridge Capital v. Ruby Has, Judge Liman denied Ruby Has’s motion to stay discovery while dismissal motions remained pending.
Ruby Has LLC’s motion to pause discovery was denied, so discovery was not stayed; both parties were directed to address remaining discovery disputes through the court’s specified process.
What happened
In Cambridge Capital LLC v. Ruby Has LLC, Ruby Has asked the court to pause discovery until it ruled on both sides’ motions to dismiss. Ruby Has argued that its motion could eliminate most of Cambridge Capital’s claims and that Cambridge Capital’s motion against the counterclaims was weak.
The court denied the motion. It found that Ruby Has had not shown a strong likelihood that its dismissal motion would succeed, because the parties’ letter agreement differed from agreements in cases Ruby Has cited and the issue required further analysis.
The court also found that discovery on the complaint and counterclaims arose from the same facts and would likely overlap. Judge Lewis J. Liman directed the parties to discuss discovery issues and raise any remaining disputes through a letter motion rather than seeking a stay.
The detailed version
- Cambridge Capital LLC v. Ruby Has LLC · No. 1:20-cv-11118
- Lewis Liman
- June 10, 2021
Background
Ruby Has, the defendant and counterclaim-plaintiff, moved to stay discovery until the court ruled on the parties’ competing motions to dismiss. Cambridge Capital, the plaintiff and counterclaim-defendant, opposed the motion. Ruby Has sought dismissal of all but one count of the complaint and also sought to limit Count 1. Its dismissal argument focused on whether a letter of intent between the parties created a binding duty to negotiate in good faith. Cambridge Capital separately moved to dismiss Ruby Has’s counterclaims.
Legal standard
The court explained that filing a motion to dismiss ordinarily does not automatically stop discovery. A party seeking a discovery stay must show good cause. Courts consider the breadth of the requested discovery, possible prejudice, and the strength of the motion to dismiss. The relevant strength standard requires a strong showing that the claims are likely to be dismissed or are unmeritorious.
Analysis
The court held that Ruby Has had not made the required strong showing. It noted differences between the language of the parties’ letter agreement and the language of an agreement discussed in one of Ruby Has’s principal authorities. The court also stated that it was not clear whether another cited decision resolved the issues in this case. The court emphasized that it was not deciding the motions to dismiss, and that a motion to stay discovery could not be used to obtain an early ruling on those motions.
The court further found that Ruby Has conceded the counterclaims would require considerable discovery even if the complaint were dismissed. Ruby Has did not show that discovery on the counterclaims would be fundamentally different from discovery on the complaint, and the claims and counterclaims arose from the same operative facts. The court also found it was not clear that Cambridge Capital’s motion to dismiss the counterclaims would succeed. Allowing Ruby Has to prevent Cambridge Capital from taking discovery while preserving Ruby Has’s ability to conduct discovery later would not promote a just and speedy resolution.
The court stated that disputes about the scope of discovery and the parties’ discovery responses should be addressed under Federal Rule of Civil Procedure 26(b), rather than through a stay.
Disposition
The court denied Ruby Has’s motion to stay discovery. It directed the parties to meet and confer about discovery and to present any remaining issues through a discovery-related letter motion under the court’s individual practices.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.