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Biopharmaceuticals v. Roxane Laboratories

October 20, 2006

NABI BIOPHARMACEUTICALS, PLAINTIFF,
v.
ROXANE LABORATORIES, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Sargus

ORDER

On July 18, 2006, plaintiff Nabi Biopharmaceuticals filed a motion to dismiss the antitrust counterclaim which has been asserted by defendant Roxane Laboratories. As alternative relief to dismissing the counterclaim, Nabi asked the Court to sever the counterclaim and stay proceedings on it or to stay (or extend) the current discovery schedule by a number of months in order to accommodate discovery on the antitrust counterclaim. Roxane, in opposing the motion to dismiss, also briefly addressed the issue of a severance or stay, arguing that because of the substantial overlap between the discovery needed on the patent claims and the antitrust claims, there would be no beneficial purpose served by any type of stay. The matter was again briefly addressed in the reply memorandum in support of the motion to dismiss.

The motion to dismiss is still pending before Judge Sargus for decision. It will also be Judge Sargus' decision as to whether the antitrust counterclaim will be severed from the main action and then stayed pending resolution of the claims of patent infringement and of validity. However, in a recent telephone conference, the parties have requested the undersigned to determine whether discovery on the antitrust counterclaims should be stayed or should be permitted to proceed contemporaneously with discovery on the issues leading to the Markman hearing. For the following reasons, the Court concludes that no stay of discovery is appropriate.

A stay of discovery for any reason is a matter ordinarily committed to the sound discretion of the trial court. Chrysler Corp. v. Fedders Corp.. 643 F.2d 1229 (6th Cir. 1981). In ruling upon a motion for stay, the Court is required to weigh the burden of proceeding with discovery upon the party from whom discovery is sought against the hardship which would be worked by a denial of discovery. Additionally, the Court is required to take into account any societal interests which are implicated by either proceeding or postponing discovery. Marrese v. American Academy of Orthopedic Surgeons, 706 F.2d 1488, 1493 (7th Cir. 1983). When a stay, rather than a prohibition, of discovery is sought, the burden upon the party requesting the stay is less than if he were requesting a total freedom from discovery. Id.

However, one argument that is usually deemed insufficient to support a stay of discovery is that a party intends to file, or has already filed, a motion to dismiss for failure to state a claim under Rule 12(b)(6). As one court has observed,

The intention of a party to move for judgment on the pleadings is not ordinarily sufficient to justify a stay of discovery. 4 J. Moore, Federal Practice § 26.70[2], at 461. Had the Federal Rules contemplated that a motion to dismiss under Fed.R.Civ.Pro. 12(b)(6) would stay discovery, the Rules would contain a provision to that effect. In fact, such a notion is directly at odds with the need for expeditious resolution of litigation.... Since motions to dismiss are a frequent part of federal practice, this provision only makes sense if discovery is not to be stayed pending resolution of such motions. Furthermore, a stay of the type requested by defendants, where a party asserts that dismissal is likely, would require the court to make a preliminary finding of the likelihood of success on the motion to dismiss. This would circumvent the procedures for resolution of such a motion. Although it is conceivable that a stay might be appropriate where the complaint was utterly frivolous, or filed merely in order to conduct a "fishing expedition" or for settlement value, cf. Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 741, 95 S.Ct. 1917, 1928, 44 L.Ed.2d 539 (1975), this is not such a case.

Gray v. First Winthrop Corp., 133 F.R.D. 39, 40 (N. D. Cal. 1990). See also Turner Broadcasting System, Inc. v. Tracinda Corp., 175 F.R.D. 554, 556 (D. Nev. 1997) ("a pending Motion to Dismiss is not ordinarily a situation that in and of itself would warrant a stay of discovery...."). Thus, unless the motion raises an issue such as immunity from suit, which would be substantially vitiated absent a stay, or unless it is patent that the case lacks merit and will almost certainly be dismissed, a stay should not ordinarily be granted to a party who has filed a garden-variety Rule 12(b)(6) motion.

Turning first to the traditional method of analysis described above, the Court has reviewed the motion to dismiss the antitrust counterclaims and is not persuaded that the issues are so patently clear or that the arguments are so overwhelmingly in favor of dismissal that a stay of discovery is warranted because of a great likelihood of dismissal of the counterclaims. Further, the motion to dismiss does not raise a straightforward legal issue such as the statute of limitations or an immunity from suit in a way that success on the merits can easily be evaluated. Consequently, a stay is not appropriate simply based upon the pendency of the motion to dismiss.

Nabi has argued, however, that in this somewhat unique situation, courts have typically severed and stayed proceedings on antitrust counterclaims until it can be determined whether or not the patent is valid and whether the defendant has infringed it. As one of the authorities cited by Nabi has noted, "[i]t is a common practice in federal court to stay antitrust counterclaims until after the trial of the invalidity issue." Chip-Mender, Inc. v. Sherwin Williams Co., 2006 U.S. Dist LEXIS 2176, *38 (N.D. Cal. 2006). That observation, however, deals not with the issue of whether discovery should be stayed on an antitrust counterclaim pending a motion to dismiss, but whether courts generally sever antitrust counterclaims when the substantive predicate for the counterclaim would be eliminated if the patent were found to be valid and infringement was found to have occurred. Here, no severance or bifurcation of the claims has been ordered. If that does occur, the Court would be willing to revisit the issue of staying or postponing certain discovery to the extent that such a stay or postponement would not create an inefficiency. Given the current posture of the case, however, the Court concludes that the mere pendency of the motion to dismiss is not a reason to stay discovery, and the possibility that there is some overlap in issues currently subject to discovery between the patent claims and the antitrust counterclaims suggests that, for efficiency purposes, the parties ought to be free to explore the antitrust issues as well. Of course, if the parties elect to defer certain antitrust discovery until a later stage of the case, they may choose to do so as long as such deferment is either consistent with the case schedule as it exists, or as it may be modified.

Based upon the foregoing, only that portion of Nabi's motion of July 18, 2006 (#47) which deals with a request to stay discovery on the antitrust counterclaims is denied. The remainder of the motion remains pending for decision.

Any party may, within ten (10) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A), Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt. I., F., 5. The motion must specifically designate the order or part in question and the basis for any objection. Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law.

This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.4.

Terence P. Kemp United States ...


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