Shaw v. Hornblower Cruises & Events, LLC

Background

Clyve Shaw and Kenardro Press brought a proposed class action against Hornblower Cruises & Events, LLC. They allege that Hornblower violated the federal Worker Adjustment and Retraining Notification Act, the New York State WARN Act, and the Illinois WARN Act by failing to provide required timely notices before closing a work site and conducting a mass layoff.

The case was referred to Magistrate Judge Ona T. Wang for general pretrial supervision, including discovery and non-dispositive pretrial motions. While Hornblower’s motion asking the district court to dismiss the Third Amended Complaint for failure to state a legally sufficient claim was pending, Judge Wang partially granted the plaintiffs’ motion to compel discovery. She ordered Hornblower to provide the number of people employed at its relevant California sites before the March 2020 layoffs. Judge Wang denied Hornblower’s request to pause discovery while Hornblower challenged that discovery order.

Hornblower filed two objections in the district court: one to the partial grant of the motion to compel and one to the denial of its request to pause discovery.

Legal standard

The district court explained that discovery disputes are generally non-dispositive pretrial matters that a magistrate judge may decide. Under Federal Rule of Civil Procedure 72(a), the district court could change or set aside Judge Wang’s orders only if they were clearly erroneous or contrary to law. The district court also considered the standards for pausing discovery while a dismissal motion is pending, including whether the defendant had strongly shown that the claims lacked merit, the scope and burden of the requested discovery, and possible unfair prejudice.

Analysis

The court held that Judge Wang did not abuse her discretion or clearly err by ordering Hornblower to provide the California employee totals. Hornblower argued that the request was premature because its dismissal motion was pending and that the Third Amended Complaint did not adequately allege that at least 33 percent of the employees at each California site had been terminated. The plaintiffs responded that they had alleged that fact based on information and belief because the relevant employee data was exclusively in Hornblower’s possession.

The court noted that it had previously found the plaintiffs’ claims plausible as to two sites in New York and Illinois. It had also previously identified the lack of an allegation about the 33-percent threshold as a defect in an earlier complaint concerning the California sites. The court had not yet decided whether the revised California allegations satisfied the pleading standard, but it found that Hornblower had not made a strong showing that those claims lacked merit. The court explained that facts may be alleged based on information and belief when they are particularly within the defendant’s possession and control.

The court further found that the discovery was specific, limited, relevant, and proportional to the needs of the case. Hornblower had already produced 4,444 pages in three production sets, and the court did not expect that providing the employee totals for four California sites would be substantially burdensome in comparison. The court also concluded that the order fell within the range of permissible decisions, particularly because Judge Wang had denied other portions of the plaintiffs’ discovery request.

The court applied substantially the same reasoning to Hornblower’s objection to the denial of a discovery stay. It found that Hornblower had not shown a substantial reason to pause discovery, including because the requested information was not shown to be privileged or confidential and was relevant and proportional.

Ruling

Judge Victor Marrero overruled Hornblower’s objection to Judge Wang’s January 30, 2023 discovery order and directed Hornblower to provide the number of people employed at the relevant California locations before the March 2020 layoffs. He also overruled Hornblower’s objection to Judge Wang’s February 3, 2023 order denying a stay of discovery.

The opinion did not decide Hornblower’s pending motion to dismiss or the merits of the plaintiffs’ WARN Act claims.