“The district 14 court should avoid needless determination of state law issues; it should discourage litigants 15 from filing declaratory actions as a means of forum shopping; and it should avoid 16 duplicative litigation.” (citation omitted)
How later courts described this case
- “The district 14 court should avoid needless determination of state law issues; it should discourage litigants 15 from filing declaratory actions as a means of forum shopping; and it should avoid 16 duplicative litigation.” (citation omitted)
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
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11 SODEXO MANAGEMENT, INC., Case No.: 20-cv-1517-WQH-BGS
12 Plaintiff,
ORDER
13 v.
14 OLD REPUBLIC INSURANCE
COMPANY; and DOES 1-100, inclusive,
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Defendants.
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OLD REPUBLIC INSURANCE
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COMPANY,
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Counter Claimant,
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v.
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SODEXO MANAGEMENT, INC.,
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Counter Defendant.
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HAYES, Judge:
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The matter before the Court is the Joint Motion to Stay Action, filed by both parties.
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(ECF No. 75).
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1 I. BACKGROUND
2 In this action, Plaintiff Sodexo Management, Inc. (“Sodexo”) filed a Complaint
3 against Defendant Old Republic Insurance Company (“Old Republic”). (ECF No. 1-2).
4 Sodexo alleges that pursuant to a contract with Cargill Meat Solutions Corporation
5 (“Cargill”), Sodexo is an additional insured on an insurance policy issued to Cargill by Old
6 Republic. Sodexo alleges that the insurance policy requires Old Republic to defend and
7 indemnify Sodexo in eight actions against Sodexo filed “in connection with an illness
8 allegedly caused by the ingestion of ground beef manufactured by Cargill and prepared by
9 Sodexo in October 2017” (the “Underlying Actions”1). (Id. ¶ 10). Sodexo alleges that Old
10 Republic denied Sodexo’s requests for coverage, breaching the terms of the insurance
11 policy. Sodexo brings the following claims: (1) declaratory relief (duty to defend); (2)
12 declaratory relief (duty to indemnify); (3) breach of contract (failure to defend); (4) breach
13 of contract (failure to indemnify); and (5) breach of the duty of good faith and fair dealing.
14 Sodexo seeks declaratory relief, compensatory and punitive damages, and attorneys’ fees
15 and costs.
16 On March 25, 2021, Old Republic filed an Answer and Counterclaim against
17 Sodexo. (ECF No. 28). Old Republic alleges that Sodexo is not an insured under the
18 insurance policy issued to Cargill and that the terms of the policy preclude coverage. Old
19 Republic brings one claim against Sodexo for declaratory judgment (duty to defend). Old
20 Republic seeks a declaration “that Old Republic does not now and never had any obligation
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1 As relevant to the pending motion, the eight Underlying Actions are: Grano v. Sodexo Mgmt. Inc., et al.,
25 No. 3:18-cv-1818-LL-BLM (S.D. Cal. 2018); Anderson v. Sodexo Mgmt., Inc., et al., No. 3:19-cv-1903-
LL-BLM (S.D. Cal. 2019); Baker v. Sodexo Mgmt., Inc., et al., No. 3:19-cv-1904-LL-BLM (S.D. Cal.
26 2019); Browning v. Sodexo Mgmt., Inc., et al., No. 3:19-cv-1905-LL-BLM (S.D. Cal. 2019); Evers v.
Sodexo Mgmt., Inc., et al., No. 3:19-cv-1907-LL-BLM (S.D. Cal. 2019); Lader v. Sodexo Mgmt., Inc., et
27 al., No. 3:19-cv-1908-LL-BLM (S.D. Cal. 2019); Miller v. Sodexo Mgmt., Inc., et al., No. 3:19-cv-1909-
LL-BLM (S.D. Cal. 2019); Abbott v. Sodexo Mgmt., Inc., et al., No. 3:19-cv-1917-LL-BLM (S.D. Cal.
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1 under the Cargill Policy to defend Sodexo in connection with the Underlying Actions.” (Id.
2 at 15).
3 On March 4, 2022, the parties filed the Joint Motion to Stay Action. (ECF No. 75).
4 The parties request that the Court stay this action pending resolution of the Underlying
5 Actions or until such time as the parties jointly move to lift the stay.
6 II. DISCUSSION
7 “[T]he power to stay proceedings is incidental to the power inherent in every court
8 to control disposition of the causes on its docket with economy of time and effort for itself,
9 for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). “A trial
10 court may ... find it efficient for its own docket and the fairest course for the parties to enter
11 a stay of an action before it, pending resolution of independent proceedings which bear
12 upon the case.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979);
13 see also Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir. 1998) (“The district
14 court should avoid needless determination of state law issues; it should discourage litigants
15 from filing declaratory actions as a means of forum shopping; and it should avoid
16 duplicative litigation.” (citation omitted)). Under California law, “[t]o eliminate the risk of
17 inconsistent factual determinations that could prejudice the insured, a stay of the
18 declaratory relief action pending resolution of the third party suit is appropriate when the
19 coverage question turns on facts to be litigated in the underlying action.” Montrose, 6 Cal.
20 4th at 301-02 (citations omitted); see also Admiral Ins. Co. v. Shah & Assocs., Inc., No.
21 13-CV-44-WQH-JMA, 2013 WL 3831331, at *7 (S.D. Cal. July 23, 2013) (“Federal courts
22 in California have followed the Montrose rule.” (citations omitted)).
23 The parties contend:
24 [T]his Court should not make a determination as to coverage under the
additional insured endorsement here, since doing so may very well require
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this Court to adjudicate critical and central factual issues that are concurrently
26 being adjudicated in the Underlying Actions. This case must be stayed to
avoid adjudicating the same issues multiple times, as well as to avoid
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potentially inconsistent rulings. It must also be stayed pursuant to Montrose
28 given that Old Republic’s defenses require it to take positions and develop
1 evidence that is potentially harmful to the very entity for which it is providing
7 a defense.
3 ||(ECF No. 75 at 10-11).
4 As identified by the parties, many of the underlying factual and legal issues in this
5 are the same as those at issue in the Underlying Actions. If possible, a “district court
6 ||... should avoid duplicative litigation.” Dizol, 133 F.3d at 1225 (citation omitted). Without
7 stay, there is a “risk of inconsistent factual determinations that could prejudice the
8 |{insured.” Montrose, 6 Cal. 4th at 301. The Court concludes that the relevant factors weigh
9 favor of staying this action pending resolution of the Underlying Actions.
10 Hr. CONCLUSION
11 IT IS HEREBY ORDERED that the Joint Motion to Stay Action (ECF No. 75) is
12 || granted. This action is stayed until further order of the Court. The Clerk of the Court shall
13 ||administratively close this action. The pending Objection to the Magistrate Judge’s
14 || Discovery Order (ECF No. 76) is denied without prejudice to refile after the stay is lifted.
15 || Either party may file a motion requesting the Court to lift the stay and reopen this action
16 |} when the Underlying Actions are resolved or for other good cause. For so long as this
17 action remains stayed, the parties shall file a status report as to the progress of the
18 || Underlying Actions no later than September 16, 2022, and every 180 days thereafter.
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20 || Dated: March 15, 2022 itt Z. A a
21 Hon. William Q. Hayes
United States District Court
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