The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
DEALER VSC, LTD.,
Plaintiff,
Case No. 2:21-cv-3880
v. Judge Sarah D. Morrison
Magistrate Judge Elizabeth P. Deavers
TRICOR AUTOMOTIVE GROUP-
US-INC., et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court on the Joint Motion to Stay Discovery (ECF No. 19) filed
by Defendants Tricor Automotive Group-US-Inc. (“Tricor”) and Allegiance Administrators,
LLC (“Allegiance”) (collectively, “Defendants”), Plaintiff Dealer VSC, Ltd.’s (“Dealer”)
Response (ECF No. 20), and Defendants’ Reply (ECF No. 21). Also before the Court are
Plaintiff’s Motion for Leave to File a Surreply (ECF No. 22) and Defendants’ Response in
Opposition (ECF No. 23). For the following reasons, Defendants’ Motion to Stay Discovery is
DENIED. The Motion for Leave to File a Surreply is DENIED as moot.
I.
Briefly, Plaintiff filed this action on June 29, 2021 (Verified Complaint, ECF No. 1),
alleging the following. The events relevant to the Complaint occurred on June 21, 2021. (Id. at
¶¶ 1-4.) Prior to these events, Defendant Tricor and Plaintiff had been the two members of
Defendant Allegiance. (Id. at ¶ 21.) On May 11, 2021, Tricor invoked the “Shotgun Clause” in
Allegiance’s Operating Agreement by making a written offer (the “Shotgun Offer”) to purchase
Plaintiff’s membership units (“Units”) in Allegiance. (Id. at ¶¶ 24, 25.) In response, the Shotgun
Clause permitted Plaintiff to counter with its own offer to purchase Tricor’s Units in Allegiance.
(Id. at ¶ 23.) On June 18, 2021, Plaintiff timely responded to Tricor’s Shotgun Offer and elected
to purchase Tricor’s Units. (Id. at ¶ 29].) Despite the Shotgun Clause’s requirement that Tricor
was deemed to accept Plaintiff’s counter-offer to buy Tricor’s Units, Tricor wrongly deemed
Plaintiff’s counter-offer to buy Tricor’s Units as an acceptance to sell Plaintiff’s own Units to
Tricor. (Id. at ¶¶ 31-32.) Plaintiff asserts claims for specific performance, conversion, Tricor’s
breach of fiduciary duty of good faith and fair dealing or, alternatively, its breach of the Shotgun
Clause, replevin, constructive trust, and declaratory judgment. (Id. at ⁋⁋ 38-84.)
By way of additional background, the current action is not the first filed in this Court
involving these parties. On January 28, 2020, Plaintiff, and its sole member Haytham ElZayn,
filed suit against multiple defendants, including Tricor and Allegiance. See ElZayn, et al. v.
Campbell, et al., Case No. 2:20-cv-00493, arising, in part, out of a Goodwill Agreement
executed between Mr. ElZayn and Allegiance. On March 11, 2020, the Court dismissed that
action without prejudice for lack of subject matter jurisdiction, concluding that there was no
diversity of citizenship among Dealer, Tricor, and Allegiance. (See Case No. 2:20-cv-00493 at
ECF No. 20.) Further, disputes between these parties are the subject of two additional lawsuits
filed in May 2020 in two separate forums. One, Dealer VSC Ltd., et al. v. Tricor Automotive
Group – US – Inc., et al., Case No. 20-cv-002998, was filed in the Franklin County, Ohio, Court
of Common Pleas and the other, Tricor Automotive Group v. Dealer VSC, Ltd., Haytham ElZayn,
and Allegiance Administrators, LLC, Case No. 29C01-2005-PL-332, was filed in the Hamilton
County, Indiana, Circuit Court.
Defendants assert that a stay is necessary because they have filed motions to dismiss
addressed to threshold issues of subject matter jurisdiction and abstention. Further, they contend
that discovery will be burdensome and duplicative of that undertaken in the other proceedings.
Finally, they contend that Plaintiff will not be prejudiced by any delay in discovery.
In response, Plaintiff argues that courts typically find pending dispositive motions to be
an insufficient basis for staying discovery and this case presents no circumstances for exception.
Further, Plaintiff argues that a stay will not alleviate Defendants’ discovery burden and likely
will only serve to delay a resolution of the issues presented by this case. According to Plaintiff,
because its current claims relate to events occurring on June 21, 2021, the discovery sought here
is unrelated to the discovery sought in any state court proceeding.
In reply, Defendants argue that the burden they face here is undue as a result of Plaintiff’s
evident forum shopping. Additionally, Defendants explain that “the parties are currently
expending an incredible amount of resources on discovery in the Ohio state court matter,”
including “more than one hundred written discovery requests,” “several depositions” and
“multiple additional depositions of Defendants’ employees [scheduled] in the next few weeks.”
Finally, Defendants assert that Plaintiff’s counsel has not limited the scope of deposition
questions to the issues pending before the Ohio state court but has delved into “a wide range of
topics.” (ECF No. 21 at 4-5.)
II.
“A district court has the inherent power to stay proceedings based on its authority to
manage its docket efficiently.” Ferrell v. Wyeth-Ayerst Labs., Inc., No. 1:01-CV-447, 2005 WL
2709623, at *1 (S.D. Ohio Oct. 21, 2005) (citing In re Airline Pilots Ass’n v. Miller, 523 U.S.
866, 880 (1998) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936))). The Court,
however, “must tread carefully in granting a stay of proceedings since a party has a right to a
determination of its rights and liabilities without undue delay.” Ohio Envtl. Council v. U.S. Dist.
Ct., 565 F.2d 393, 396 (6th Cir. 1977) (citing Landis, 299 U.S. at 254–55).
In deciding whether to grant a stay, courts commonly consider the following factors: (1)
the stage of litigation; (2) whether the non-moving party will be unduly prejudiced or tactically
disadvantaged; (3) whether a stay simplifies the issues; and (4) whether the burden of litigation
on the parties and on the court is reduced. Grice Eng’g, Inc. v. JG Innovations, Inc., 691 F.
Supp. 2d 915, 920 (W.D. Wis. 2010) (citations omitted). The movant bears the burden of
showing both a need for delay and that “neither the other party nor the public will suffer harm
from entry of the order.” Ohio Envtl. Council, 565 F.2d at 396.
In exercising its discretion, the Court has found that filing a case-dispositive motion is
insufficient to grant a stay of discovery. Bowens v. Columbus Metro. Library Bd. of Trs., No.
2:10-CV-00219, 2010 WL 3719245, at *2 (S.D. Ohio Sept. 16, 2010) (citing Ohio Bell Tele. Co.,
Inc. v. Global NAPs Ohio, Inc., No. 2:06-CV-0549, 2008 WL 641252, at *1 (S.D. Ohio Mar. 4,
2008)) (denying the defendants’ motion to stay discovery despite their pending summary
judgment motion). Indeed, if a motion does not raise an issue “which would be substantially
vitiated absent a stay” and there is no showing that the case will “certainly be dismissed” then “a
stay should not ordinarily be granted to a party who has filed a garden-variety Rule 12(b)(6)
motion.” Williams v. New Day Farms, LLC, No. 2:10-CV-0394, 2010 WL 3522397, at *2 (S.D.
Ohio Sept 7, 2010).
Nevertheless, the United States Court of Appeals for the Sixth Circuit has recognized that
“[l]imitations on pretrial discovery are appropriate where claims may be dismissed ‘based on
legal determinations that could not have been altered by any further discovery.’” Gettings v.
Bldg. Laborers Local 310 Fringe Benefits Fund, 349 F.3d 300, 304 (6th Cir. 2003) (quoting
Muzquiz v. W.A. Foote Memorial Hosp., Inc., 70 F.3d 422, 430 (6th Cir. 1995)). This Court,
however, retains broad discretion in determining whether to “stay discovery until preliminary
questions which may dispose of the case are answered.” Bangas v. Potter, 145 F. App’x 139,
141 (6th Cir. 2005) (citing Hahn v. Star Bank, 190 F.3d 708, 719 (6th Cir. 1999)).
III.
Applying the above factors, the Court concludes that Defendants have not demonstrated
that a stay of discovery is justified here. This case does not present a question of immunity; nor
is the Complaint obviously frivolous such that the Court could conclude that the motions to
dismiss are likely to be granted. Rather, as noted, Defendants argue that discovery should be
stayed for two reasons: (1) their motions to dismiss are addressed to threshold issues of subject
matter jurisdiction or abstention and (2) the request is burdensome given the history of litigation
in this Court and the related litigation underway in two additional forums, particularly the Ohio
state court action. Despite these circumstances, Defendants’ arguments are not well-taken.
Initially, that Defendants’ motions to dismiss turn on threshold issues does not
necessarily weigh in favor of granting a stay. Rather, as the parties acknowledge, where the
issues raised in a potentially dispositive motion reasonably can be characterized as fairly
debatable, the Court routinely has declined to grant a stay. See e.g., Ohio Bell Telephone, 2008
WL 641252 at *2 (refusing to stay discovery during the pendency of a motion to dismiss where
the jurisdictional issue raised was “fairly debatable”). Without expressing any opinion as to the
merits of the Defendants’ dispositive motions, a cursory review of the parties’ briefing reveals
that the issues are fairly debatable. Cases cited by Defendants, including Ohio Power Co. v.
Frontier N., Inc., No. 2:14-cv-341, 2014 WL 12586318 (S.D. Ohio Oct. 30, 2014), Novel v.
Lowe, 2014 WL 559088 (S.D. Ohio Feb. 11, 2014) and CareToLive. v. von Eschenbach, No.
2:07-CV-729, 2007 WL 3232454 (S.D. Ohio Nov. 1, 2007) do not alter this analysis. For
example, In Ohio Power, this Court found that the “highly technical nature of the issues in
dispute,” which were within the jurisdiction of PUCO and likely would lead to costly and time-
consuming discovery, weighed in favor of a stay. Novel, involving a pro se plaintiff, is readily
distinguishable in terms of the debate reflected in the parties’ arguments. Further, CaretoLive
involved claims brought under the Administrative Procedures Act and a qualified immunity
defense had been asserted. In short, contrary to Defendants’ characterization that these cases
represent the routine granting of stays of discovery, they more accurately are circumstance-
limited departures from the general preference that discovery proceed.
Further, Defendants have not demonstrated that discovery will be overly burdensome in
this case. To be sure, Defendants question the motives underlying Plaintiff’s litigation efforts.
Further, they contend that discovery in this matter will likely be duplicative of the allegedly
extensive discovery undertaken in the Ohio state action. The Court is not at all unmindful of
Defendants’ concerns here. But, this argument, to the extent it is directed to anticipated
discovery, relies largely on speculation. (See ECF 19 at 4; ECF No. 21 at 5.) For example, it
assumes that, absent a stay, during the pendency of the dispositive motions, depositions will be
undertaken and experts will need to be retained.
More concretely, Defendants also object to the initial discovery requests Plaintiff served
in advance of the preliminary pretrial conference which they contend are wholly merits-based
with “no bearing on the pending dispositive motions.” (ECF Nos. 19 at 4; 19-1.) As explained
below, the merits-based nature of the discovery requests is not determinative here. Further, to
the extent this objection may rely on Defendants’ implication that discovery in the Ohio action
has been overly broad, this Court has no control over those proceedings. Moreover, and
significantly, for purposes of the current action, the Federal Rules of Civil Procedure provide
other options for addressing Defendants’ concerns short of a complete stay.
Further, even if Defendants’ motions to dismiss on jurisdictional or abstention grounds
are successful, the particular claims asserted in the current Complaint will remain and will
proceed somewhere or at some point. Accordingly, a stay of merits-based discovery under this
circumstance would “not really save ... any resources in the long run, but would delay the
ultimate resolution of the case in this Court, should it remain here, and might have a similar
effect on any other court” where the claims may be pursued. Ohio Valley Bank Co. v. MetaBank,
No. 2:19-CV-191, 2019 WL 2170681, at *3 (S.D. Ohio May 20, 2019) (citing Charvat v. NMP,
LLC, 2:09-cv-209, 2009 WL 3210379, at *2 (S.D. Ohio Sept. 30, 2009)). In this regard, the
scenario here does not differ significantly from that in Seattle House LLC v. City of Delaware,
Ohio, No. 2:20-cv-03284, 2020 WL 7253309 (S.D. Ohio Dec. 10, 2020) or DSM Desotech, Inc.
v. Momentive Specialty Chem., Inc., No, 2:15-cv-70, 2015 WL 7450893 (S.D. Ohio Nov. 24,
2015), where the Court found this factor to weigh against a stay.
Notably, Defendants do little to meaningfully demonstrate that a stay of discovery will be
of no consequence to Plaintiff. Of course, Defendants cite the early stage of this case and their
agreement to a reasonable case schedule that contemplates a stay of discovery. Further, they
suggest that Plaintiff either has or may obtain discovery relevant here through the other
proceedings. (See, e.g., ECF No. 21 at 5 “… Plaintiff’s counsel has not limited the
scope of his deposition questions to the issues that are currently pending before the Ohio state
court, instead inquiring into a wide range of topics including those that are not expressly detailed
in the operative pleadings in the state court action.”) However, even assuming these
circumstances to be accurate, when balanced against the above, they do not support the Court’s
exercise of discretion in favor of a stay here.
IV.
For the foregoing reasons, the Court finds that Defendants have not carried their burden
to show that a stay of discovery is warranted. The Court, therefore, exercises its discretion to
conclude that a stay of discovery is not appropriate in this case. Accordingly, the Motion to
Stay Discovery is DENIED. (ECF No. 19.) The Motion for Leave to File a Surreply (ECF No.
22) is DENIED as moot. Defendants are ORDERED to respond to Plaintiff’s outstanding
discovery requests by FEBRUARY 18, 2022, unless the parties agree to a different date. The
Court will reconvene the parties to establish a pretrial schedule.
IT IS SO ORDERED.
Date: January 21, 2022 /s/ Elizabeth A. Preston Deavers .
ELIZABETH A. PRESTON DEAVERS
UNITED STATES MAGISTRATE JUDGE