United States District Court, D. Kansas
MEMORANDUM AND ORDER
TERESA J. JAMES, Magistrate Judge.
Plaintiffs, who represent a class of purchasers of outdoor railing products designed and sold by defendants Barrette Outdoor Living, Inc. and Home Depot USA, Inc., allege that the railing products included defective plastic brackets which harmed all members of the proposed class by causing them to pay more for the products than they were worth. This matter is presently before the Court on Defendants' Motion to Stay Pending Rule 23(f) Appeal (ECF No. 163). Defendants request an order, pursuant to Fed.R.Civ.P. 23(f), staying all proceedings in this case pending resolution by the Tenth Circuit Court of Appeals of Defendants' appeal of the order granting class certification. Plaintiffs agree that dissemination of notice to potential class members should be withheld until the appeal is resolved, but oppose a stay of further proceedings in this case unrelated to the dissemination of notice. As set forth below, the motion to stay the case in its entirety is granted.
I. Procedural History
By Memorandum and Order dated September 8, 2014 (ECF No. 157), District Judge Daniel D. Crabtree granted in part and denied in part Plaintiff Frederick Nieberding's Motion for Class Certification. Judge Crabtree judge found Plaintiff satisfied the requirements for certification of a Rule 23(b)(3) class action on the question of liability on the three class claims, but severed the request for damages for determination at a later date. The parties were ordered to submit a joint proposed order for providing notice to class members that complies with Rule 23(c)(B)(2) and to contact the undersigned Magistrate Judge to set a scheduling conference. On September 10, 2014, an order was entered setting a scheduling conference (ECF No. 158).
On September 23, 2014, Defendants filed their respective petitions for permission to appeal pursuant to Fed.R.Civ.P. 23(f) and Fed. R. App. P. 5. Defendants filed the instant Motion to Stay Pending Rule 23(f) Appeal on October 7, 2014. The Tenth Circuit Court of Appeals granted Defendants' petitions for permission to appeal on October 10, 2014.
II. Whether a Stay Under Fed.R.Civ.P. 23(f) is Appropriate
Defendants request a stay of all further proceedings in this case until the Tenth Circuit rules on their appeal of the class-certification order. They argue that proceeding with this case while their appeal is pending will require them to bear the significant burden and expense of providing class notice, conducting further discovery, and preparing for a class trial. They argue that these tasks will not only burden the parties; they also will require the expenditure of significant judicial resources, which could be unnecessary depending upon the outcome of the appeal. And, if the Tenth Circuit decertifies the class or alters the class definition in light of Defendants' appeal, Defendants argue that proceeding with this case will create substantial confusion among the class members.
Federal Rule of Civil Procedure 23(f) expressly provides that an appeal from an order granting or denying class-action certification "does not stay proceedings in the district court unless the district judge or the court of appeals so orders." Rule 23(f), however, does not set forth any factors or considerations to guide the district court's stay decision. Nor has the Supreme Court or the Tenth Circuit articulated a specific standard a district court should use in deciding whether to stay a case pending a Rule 23(f) appeal of a class-certification order. Courts that have addressed motions to stay pending a rule 23(f) appeal are nearly universal in looking to the four-factor test used in deciding a motion for preliminary injunction or motion to stay a case pending appeal. In the District of Kansas, at least one case has employed an analysis similar to that used in motions for preliminary injunctions or stays pending appeals of final judgments in determining whether a Rule 23(f) stay was warranted. The factors that regulate the issuance of a stay of a judgment or an order pending appeal are:
(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.
These same factors are required in applications for stay pending appeal filed with the Tenth Circuit Court of Appeals. These factors require individualized consideration and assessment in each case. In considering these factors, the Court is cognizant that a stay is not a matter of right, even if irreparable injury might otherwise result, but is instead "an exercise of judicial discretion, " and the propriety of its issuance is dependent upon the "circumstances of the particular case." The party requesting the stay bears the burden of showing that the circumstances justify an exercise of that discretion.
Accordingly, the Court will consider these factors to guide its determination of whether to stay further proceedings in this case until the Tenth Circuit resolves Defendants' Rule 23(f) appeal of the class-certification order.
A. Likelihood of Success on Appeal
Defendants contend that the first factor, whether they are likely to succeed on the merits of the appeal, weighs strongly in favor of a stay. They argue that the Tenth Circuit's decision to grant them permission to appeal leaves no doubt that neither the Court nor the parties should shoulder the unnecessary burdens imposed by preparing for a class-wide trial in this case, including merits discovery and pretrial proceedings, before the appeal is resolved.
For requests to stay a case pending a Rule 23(f) appeal, some district courts have found the substantial likelihood of success on appeal inquiry to have two layers. The first is whether the moving party will obtain permission to appeal. The second is whether, if permission to ...