IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-20244
IN RE: M.J. BEEBE, ET AL.,
Petitioners.
Petition for Writ of Mandamus to the United States
District Court for the Southern District of Texas
(No. CA-H-89-3174)
(May 15, 1995)
Before DUHÉ, WIENER, and STEWART, Circuit Judges.
PER CURIAM:*
Petitioners M.J. Beebe, et al. petition for writ of mandamus
requesting vacatur of an order staying proceedings in a case styled
Beebe v. Atlantic Financial Federal (Beebe),1 pending the trial of
an older and larger companion case styled Cogan v. Triad American
Energy (Cogan).2 We required the defendants in Beebe (Respondents)
to respond to Petitioners' petition, and invited the district court
to do so. Only Respondents responded. Finding the petition to
have merit, we grant the petition for mandamus as more particularly
*
Local Rule 47.5 provides: "The publication of opinions
that have no precedential value and merely decide particular
cases on the basis of well-settled principles of law imposes
needless expense on the public and burdens on the legal
profession." Pursuant to that Rule, the Court has determined
that this opinion should not be published.
1
No. C.A. H-89-3174 (S.D. Tex.).
2
No. C.A. H-87-4106 (S.D. Tex.)
specified below, and remand to the district court for proceedings
consistent with this order.
I
FACTS AND PROCEEDINGS
The Petitioners are plaintiffs in Beebe. They, like the
plaintiffs in Cogan, are among numerous investors in a series of
limited partnerships organized by Triad American Energy for the
purpose of developing wind turbine parks in Southern California.
Plaintiffs in both cases allege that the limited partnerships were
actually a classic Ponzi scheme constituting securities fraud, and
have named as defendants many of the same parties.
Cogan was filed in 1987 and removed to federal court in 1988.
Several other groups of investors, including Petitioners,
subsequently filed suit in several states. All of those related
cases were later consolidated pursuant to the Rules Governing
Multi-District Litigation (MDL). During the consolidated pre-trial
proceedings, Petitioners coordinated and participated in discovery
with other plaintiffs. In 1992, the consolidated pre-trial
proceedings in the MDL ended and all cases were remanded to their
original courts, as a result of which Cogan and Beebe were
transferred to the same judge of the United States District Court
for the Southern District of Texas.
Following that remand, the district court held a status
conference in Cogan, during which, Respondents contend, the parties
discussed the identity of issues and claims in Cogan and Beebe.
Shortly thereafter, on December 16, 1992, the district court sua
2
sponte stayed Beebe "until after the trial of Cogan." The court
did not articulate reasons for entering the stay.
On January 7, 1993, Petitioners filed a motion to vacate the
stay, which the district court denied. The court did not
articulate reasons for the denial. About a month later,
Petitioners filed a motion asking the court to rehear a motion to
vacate the stay. The district court denied the motion. The court
did not articulate reasons for its denial, but it did clarify that
the stay did not prohibit the parties from negotiating a
settlement, filing motions related to a settlement, or mediating
the dispute.
On September 30, 1993, Petitioners filed a second motion to
lift the stay, pointing out that nine months had passed since the
imposition of the order and that "the end is nowhere in sight":
"No trial date is expected in the Cogan case for the foreseeable
future." Not surprisingly, Respondents opposed the motion, stating
conclusionally that the court was conserving judicial resources and
decreasing the cost of litigation for all parties by maintaining
the stay until after the trial of Cogan. The district court has
never responded to the Petitioners' motion.
On December 5, 1994, Petitioners filed a Motion for Status
Conference, asking the district court to schedule a status
conference pursuant to Federal Rules of Civil Procedure Rule 16.
They requested that the stay be lifted so that they could complete
discovery and, if at all possible, that the district court schedule
a trial date. Respondents opposed this motion too, contending that
3
Petitioners had failed to show "good cause" why the district court
should abandon its earlier ruling. On December 27, 1994, the
district court denied the Petitioners' Motion for Status
Conference. The court did not articulate reasons for the denial.
Petitioners filed a Petition for Writ of Mandamus on April 11,
1995, by which time Beebe had been stayed in the district court for
well over two years, during which period no explanation had been
articulated by the district court. Although dispositive motions
were filed by both parties in Cogan more than a year ago, the
district court has not ruled on those motions; neither has the
district court scheduled a trial date for Cogan. Respondents
oppose mandamus, stating (without record citation) that "the
district court has informed the parties" that decisions on the
dispositive motions in Cogan are forthcoming, and that the stay is
continuing to save the court and all litigants substantial
resources.
II
DISCUSSION
A. MANDAMUS
"[M]andamus is an extraordinary remedy, not to be granted
lightly."3 As we recently observed, however, when mandamus is
sought to lift a stay of a trial court proceeding, as here, the
circumstances "are less foreboding than the usual case," as the
district court "can lay claim to no greater familiarity with the
matter than can be gleaned from the pleadings" and "there is no
3
In re Ramu Corp., 903 F.2d 312, 317 (5th Cir. 1990).
4
interruption with ongoing proceedings below."4
B. STANDARD OF REVIEW
We review the district court's decision to impose a stay only
to determine whether there has been an abuse of discretion.5 We
note at the outset, however, that our review of the district
court's judgment in this case is severely hampered by that court's
complete silence regarding why it imposed the stay in the first
instance and, more important to the instant petition, why it
continues to maintain that stay))two and one-half years later and
no end in sight.
C. DISTRICT COURT'S POWER TO CONTROL ITS DOCKET
We commence our review by canvassing the familiar landscape of
the limits of a district court's authority to control its own
docket. In Landis v. North American Co.,6 the Supreme Court
recognized that incidental to a district court's inherent power "to
control the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants" is "the
power to stay proceedings."7 The Court noted that "how this can
best be done calls for the exercise of judgment, which must weigh
competing interests and maintain an even balance."8 Thus, a
district court has a "discretionary power to stay proceedings
4
Id. at 318.
5
Id.
6
299 U.S. 248 (1936).
7
Id. at 254.
8
Id. at 254-55.
5
before it in the control of its docket and in the interests of
justice,"9 but this control is not "unbounded."10 With this
guidance in mind, we consider the efficacy of the initial order
imposing the stay; and whether, if initially justified, subsequent
events have robbed that original judgment of it rationale.
1. Original Imposition of the Stay
The Supreme Court has advised that a stay must be "so framed
in its inception that its force will be spent within reasonable
limits, so far as they are susceptible of prevision and
description."11 There is nothing per se impermissible, however,
about staying a lawsuit until after another related action has been
tried.12
But "before granting a stay pending resolution of another
case, the court must carefully consider the time reasonably
expected for resolution of the `other case,' in light of the
principle that `stay orders will be reversed when they are found to
be immoderate or of an indefinite duration.'"13 There is nothing
in the record to indicate that before staying Beebe the district
9
McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982);
see In re Ramu Corp., 903 F.2d at 318 ("The stay of a pending
matter is ordinarily within the trial court's wide discretion to
control the course of litigation, which includes authority to
control the scope and pace of discovery.").
10
Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th
Cir. 1983).
11
Landis, 299 U.S. at 257.
12
See, e.g., id. at 258.
13
Wedgeworth, 706 F.2d at 545 (quoting McKnight, 667 F.2d at
479).
6
court actually considered how long it would take to try Cogan,
although it appears from both parties' briefs that all believed
that, at a minimum, dispositive rulings on pretrial motions were
just around the corner and that a trial schedule would not be long
behind. As time has tolled, however, neither belief has proven to
be well founded.
In any event, we cannot conclude that the district court
abused its discretion when it originally ordered the stay of Beebe
until after the trial of Cogan. Although the stay may have
interrupted Petitioners' discovery schedule, as they claim, Cogan
is an older and larger case; it involves many similar issues and
claims; and, at that time the stay was ordered, it appeared to be
ready for trial. Ordering a stay under those circumstances was
certainly not an abuse of discretion.
2. Maintaining the Stay
But the Supreme Court has also stated that courts should
reconsider the fairness of a stay order in light of "present day
realities."14 The realities today))almost two and one-half years
after the Beebe stay was initially imposed))are that in Cogan the
district court still has not ruled on several dispositive motions
(filed more than a year ago), much less set a trial date. To
ascertain whether the district court has now abused its broad
discretion in this area, we must weigh the competing interests, as
they now exist, and determine whether the equities continue to
14
Landis, 299 U.S. at 258.
7
justify a stay.15 This typically difficult task is made more
difficult in the instant situation because, like Petitioners, we
have not been favored with the district court's reasoning for
continuing to maintain the stay in full force and effect.
Petitioners argue that the current equities require that the
stay be lifted. They note that many things have happened since the
stay was first imposed, e.g., one defendant bank has filed for
bankruptcy and certain partnership assets have been sold to third
parties, thus reducing Petitioners' ability to recover damages in
the event that they are ultimately successful in their lawsuit.
Furthermore, Petitioners express the fear that relevant partnership
business records may well be lost and that the memories of key
witnesses may well be fading. We find these concerns to be
reasonable and the equities weighty.
Although the district court sua sponte stayed Beebe until
after Cogan is tried, Respondents now fully embrace that decision
and have become its foremost (not to mention only) overt advocate
on appeal. As such, they have essentially become the suppliant for
maintaining the stay, and "[a] party who seeks a stay bears the
burden of justifying a delay tagged to another legal proceeding:
[T]he suppliant . . . must make out a clear case of
hardship or inequity in being required to go forward, if
there is even a fair possibility that the stay for which
he prays will work damage to some one else. Only in rare
circumstances will a litigant in one cause be compelled
to stand aside while a litigant in another settles the
rule of law that will define the rights of both."16
15
See Wedgeworth, 706 F.2d at 545.
16
Id. (quoting Landis, 299 U.S. at 255).
8
Essentially, the only hardship that Respondents claim is that if
the stay is lifted before Cogan is decided they could incur
unnecessary litigation expenses. In particular, they argue, it
would be a waste of Respondents' resources to respond to
Petitioners' discovery requests regarding issues or matters that
the district court may later deem to have no merit in Cogan. (Of
course, every defendant in a lawsuit faces this "inequity.") In
addition, the Respondents note that the district court too is
preserving resources by handling the cases seriatim, as the
resolution of issues in Cogan will pare down the scope of the
issues, and thus the litigation, in Beebe.
Although we are mindful of the increased cost of litigation to
parties, the congested dockets of our federal district courts, and
the scarcity of judicial resources, we nonetheless cannot conclude
that a careful weighing of the equities still warrants
maintaining))in its entirety))the comprehensive stay ordered by the
district court almost two and one-half years ago.
We find particularly compelling Petitioners' concerns
regarding the need to complete discovery. Respondents attempt to
minimize this concern by essentially arguing that Petitioners
overstate the need to conduct discovery: "[V]irtually all fact
discovery was completed in the Beebe case (with the exception of
the completion of the depositions of [Petitioners])" at the time
the stay was entered. But we find this position disingenuous in
light of Respondents' Opposition to Plaintiffs' Motion for Status
Conference, in which those same Respondents claimed that "discovery
9
was far from complete" at the time the stay was entered. But if
little additional discovery is necessary, as Respondents now claim
on appeal, what's their beef? The cost of complying with such
minimal discovery requests should be relatively small, imposing a
minimal hardship on the Respondents. On the other hand, a
continued delay in permitting Petitioners to acquire documents and
depose witnesses necessary to the eventual pursuit of their cause
of action could well lead permanently to the loss of those
documents or those recollections, thereby forever impeding the
search for truth in this litigation.
We also believe that Respondents overstate the extent of
judicial resources to be saved by maintaining this stay.
Foreclosing all discovery does not conserve significant judicial
resources; typically, it is the parties, not the district court,
who are the active participants in that pre-trial stage of the
litigation process. Expenditure of judicial resources accelerate
most briskly as trial nears; and as Cogan instructs, even if the
instant litigation continued unabated from this day forward, it
will probably be a long time before these parties have their day in
court.
Neither is this case one involving issues of "extraordinary
public moment." In such cases, the Supreme Court has noted, "the
individuals may be required to submit to delay not immoderate in
extent and not oppressive in its consequences if the public welfare
or convenience will thereby be promoted."17
17
Landis, 299 U.S. at 256.
10
Returning to applicable legal parlance, we conclude that
Petitioners have established that the current stay is of indefinite
duration and is immoderate. The stay is of indefinite duration as
evidenced by the passage of almost two and one-half years; and we
agree with Petitioners that "the end is nowhere in sight." The
stay is immoderate as the equities no longer warrant such a
pervasive halt to the Beebe proceedings. In fact, at this point
the continued proscription on all discovery is almost certainly
having an adverse, rather than salutary, effect on the litigation.
Most troubling is the very real potential that valuable information
regarding important issues in the case may be lost forever should
this stay be maintained as to discovery. Consequently, the
continued imposition of the stay imposes the "greater and the less
remediable burden" on Petitioners.18 As our late lamented
colleague, Judge Goldberg, once wrote:
We must always have great respect for a trial
court's judicial discretion in the control of
its docket, but we cannot abdicate our roles
in monitoring that discretion to prevent the
ossification of rights which attends
inordinate delay.19
III
CONCLUSION
We conclude that the equities can no longer justify the
comprehensive order staying Beebe, and that, at a minimum, the
district court must permit discovery to proceed expeditiously and
18
See Itel Corp. v. M/S Victoria U (Ex Pishtaz Iran), 710
F.2d 199, 203 (5th Cir. 1983).
19
Hines v. D'Artois, 531 F.2d 726, 737 (5th Cir. 1976).
11
unimpeded. But due to the Sphinxian silence of the district court,
the record is devoid of facts and reasons from which to ascertain
whether the equities might warrant a stay of more modest scope.20
We therefore grant Petitioners' request for writ of mandamus
and instruct the district court forthwith to vacate its order
staying Beebe until after the trial of Cogan. We also remand this
matter to the district court for the limited purpose of conducting
an expedited hearing to determine anew whether the equities might
warrant the imposition of a new stay of more limited extent in
light of "present day realities." In no event, however, may any
new stay prevent or impede any party's conduct of appropriate
discovery in Beebe. In considering whether a stay of limited
proportion may be warranted, we instruct the district court to
weigh carefully, on the record, the competing equities as described
by the Supreme Court in Landis. Failure of the court to conduct
and complete the consideration of a new, more limited stay in this
matter within ninety (90) days following the entry of this Order
shall, ipso facto, preclude the reimposition of any stay in the
subject proceedings.
Petitioners' petition for writ of mandamus is GRANTED, and the
matter is REMANDED for proceedings consistent with this Order.
20
We do not know, for example, either the current posture of
Cogan, or the current posture of the district court's docket, and
recognize that the district court is in a better position than we
to judge such matters.
12
Beebe v. Hughes
Court: Court of Appeals for the Fifth Circuit
Date filed: 1995-05-19
Citations: 56 F.3d 1384
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