United States District Court, E.D. North Carolina, Western Division
BILL REMY, MICHELE BENNETT, DAN SULLIVAN, and KEN KOENEMANN, Plaintiffs,
LUBBOCK NATIONAL BANK, Defendant. LUBBOCK NATIONAL BANK, Counter Claimant,
BILL REMY, MICHELE BENNETT, and DAN SULLIVAN, Counter Defendants. LUBBOCK NATIONAL BANK, Third-Party Plaintiff,
TBM CONSULTING GROUP, INC. EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE; ANAND SHARMA 2009 GRAT TRUST; ANAND SHARMA; ROBERT DEAN; STEPHEN SMITH; RON WINCE; MELVIN R. HAUGHT; JOHN DOES 1-15; WILLIAM SCHWARTZ; TBM CONSULTING GROUP, INC.; LOTUS ONE LLC; MARK GOTTFREDSON; and STOUT RISIUS ROSS, LLC f/k/a/ Stout Risius Ross, Inc., Third-Party Defendants.
W. FLANAGAN United States District Judge.
matter is before the court on joint motion to stay discovery
(DE 79) filed by third-party defendant Stout Risius Ross, LLC
f/k/a Stout Risius Ross, Inc. (“Stout”),
third-party defendants Anand Sharma, Anand Sharma 2009 GRAT
Trust, and Lotus One LLC (“Sharma parties”), and
defendant, counter claimant, and third-party plaintiff
Lubbock National Bank (“Lubbock”) (collectively,
“moving parties”). The matters have been fully
briefed, and in this posture the issue raised are ripe for
ruling. For the reasons that follow, the court grants the
moving parties' motion to stay.
Consulting Group, Inc. (“TBM”) and four of its
officers filed this action against Lubbock, a former trustee
of the TBM Consulting Group, Inc. Employee Stock Ownership
Plan (the “ESOP”), on September 11, 2017, seeking
relief for Lubbock's alleged breaches of fiduciary duty
under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., arising
out of a 2011 transaction (the “2011
transaction”) in which, among other things, the ESOP
purchased stock from the Sharma parties. In connection with
the 2011 transaction, Lubbock engaged Stout, an independent
advisory firm, to perform a valuation of TBM and provide a
fairness opinion concerning the consideration to be paid by
the ESOP for the Sharma parties' shares.
November 17, 2017, Lubbock filed a motion to dismiss.
Thereafter, the court stayed discovery pending resolution of
the motion to dismiss. On May 31, 2018, the court granted in
part and denied in part Lubbock's motion, and lifted the
stay of discovery, in part dismissing TBM as a plaintiff.
5, 2018, Lubbock filed answer, affirmative defenses,
counterclaim, and third-party complaint. Lubbock subsequently
amended its answer and third-party complaint on September 13,
2018, and in its first amended third-party complaint seeks
indemnity, contribution and/or apportionment from
counterclaim defendants and third-party defendants, including
the Sharma parties and Stout, should it be deemed liable to
the ESOP for the losses alleged in the complaint.
and the Sharma parties filed motions to dismiss Lubbock's
claims on September 18 and 27, 2018, respectively.
Stout's motion to dismiss argues that ERISA does not
provide fiduciary Lubbock a right to contribution against
non-fiduciary Stout. The Sharma parties' motion to
dismiss argues that 1) ERISA does not provide fiduciary
Lubbock a right to contribution or indemnity against
co-fiduciary the Sharma parties, 2) even if ERISA did provide
such a cause of action, the Sharma parties were not ERISA
fiduciaries and 3) Lubbock's claims are barred by the
statute of limitations. Lubbock argues that ERISA provides
for a right of indemnity and contribution against fiduciaries
and non-fiduciaries, that Lubbock has sufficiently alleged
that the Sharma parties were fiduciaries, and that its claims
are not barred by the statute of limitations.
January 14, 2019, the court issued initial order regarding
planning and scheduling directing the parties to file joint
report and plan concerning discovery following the
parties' Federal Rule of Civil Procedure 26(f)
conference, and further providing that “[i]f the
parties have made a good faith attempt to confer and submit a
joint discovery plan, but have been unable to do so, the
parties shall file separate plans within the allotted time
period, each of which must include the parties'
respective positions and information as would be included in
a joint report.” (DE 77 at 8).
February 8, 2019, the moving parties filed the instant motion
to stay discovery. Also on February 8, 2019, plaintiffs Bill
Remy, Michele Bennett, Dan Sullivan and Ken Koenemann
(“plaintiffs”), counterclaim-defendants Bill
Remy, Michele Bennett, and Dan Sullivan
(“counterclaim-defendants”), and third-party
defendants TBM, TBM Consulting Group, Inc., Employee Stock
Ownership Plan Committee, Robert Dean, Ron Wince, Stephen
Smith, William A. Schwartz, Mark Gottfredson, and Melvin R.
Haught (“TBM third-party defendants”)
(collectively, “TBM parties”) filed individual
Rule 26(f) report and plan. On February 12, 2019, the moving
parties filed individual Rule 26(f) report and plan. On
February 22, 2019, the TBM parties filed opposition to the
moving parties' motion to stay.
Standard of Review
district court has the authority pursuant to Federal Rule of
Civil Procedure 26(c) to establish limitations on discovery.
Lone Star Steakhouse & Saloon, Inc. v. Alpha of
Virginia, Inc., 43 F.3d 922, 929 (4th Cir. 1995). The
court may properly exercise its discretion pursuant to Rule
26(c) to issue a stay of discovery pending resolution of
dispositive motions. Tilley v. United States, 270
F.Supp.2d 731, 734 (M.D. N.C. 2003), aff'd, 85
Fed.Appx. 333 (4th Cir. 2004), cert. denied, 543
U.S. 819 (2004); see also Thigpen v. United States,
800 F.2d 393, 396-97 (4th Cir. 1986) (endorsing the trial
court's decision to stay discovery pending resolution of
a Rule 12(b)(1) motion), overruled on other grounds
by, Sheridan v. United States, 487 U.S. 392
weighing in favor of a stay include 1) the potential for the
dispositive motion to terminate all claims in the case or all
claims against a defendant; 2) strong support on the merits
for the dispositive motion; and 3) the irrelevancy of
discovery to determining the dispositive motion. Yongo v.
Nationwide Affinity Ins. Co. of Am., No. 5:07-CV-94-D,
2008 WL 516744, at *2 (E.D. N.C. Feb. 25, 2008). However,
courts should not stay discovery where discovery is still
necessary to gather facts to defend against a dispositive
motion. Tilley, 270 F.Supp.2d at 734; see also
Simpson v. Specialty Retail Concepts, Inc., 121 F.R.D.
261, 263 (M.D. N.C. 1988) (“[Motions to stay discovery]
are not favored because when ...