In Re: Chad Udeen and Mary Jane Jeffery v. Subaru of America Inc.

U.S. Magistrate Judge Joel Schneider (New Jersey) has issued a ruling on a motion made by Subaru of America’s (Subaru) counsel to stay full discovery in defending itself against a class claim. At stake is a suit that claims that the automaker sold and leased new vehicles that had defective infotainment systems. The defendant has another motion (filed February 28^th, 2018) in which it asked the court to dismiss the case. That motion has yet to be ruled on, so Subaru asked the court to issue a stay on discovery until that issue is decided citing “extremely expensive” discovery as a reason.

Judge Schneider, in ruling against the defendant’s motion, called their concern “overblown” and assured Subaru that the court would closely manage the discovery process to ensure any discovery that takes place will be proportional. Although he stopped short of opening the floodgates of discovery (Schneider’s ruling called for limited discovery), the resolution is an attempt to be fair to all parties. As Schneider wrote in his ruling, “On the one hand, plaintiffs can immediately proceed to obtain plainly relevant and important core discovery”.

In limiting discovery to “limited and focused on core issues” the Judge has permitted the process to begin before ruling on the motion to dismiss. As part of their claim that starting discovery would be extremely expensive and unnecessary, Subaru also argued that a stay in discovery would “simplify issues at trial”. In his ruling, however, Judge Schneider stated he believed the opposite would be true.

Judge Schneider also sited Gerald Chalames Corp. v. OKI Data Americas, Inc., which is a 2007 decision out of the District of New Jersey that in part states, “the mere filing of a motion to dismiss does not stay discovery.”

As reported by LegalTech news, Judge Schneider went on to say:

• “After examining all relevant evidence, the Court finds the relevant factors weigh in plaintiffs’ favor and, therefore, the Court will deny defendants’ request to stay all discover. The Court agrees that plaintiffs will be prejudiced if all discovery is stayed while waiting for defendants’ motion to be decided.”
• He said the plaintiffs have the right to move forward with their complaint and that furthering the delay increases the chance that relevant evidence could get lost, memories fade or witnesses could became unavailable before the case goes to trial.
• “The Court does not expect the Court-ordered discovery to be unduly time consuming or expensive,” Schneider said in also rejecting the “undue hardship” argument by the defendants to halt discovery. “The Court agrees with plaintiffs that, ‘[m]oving this litigation forward despite the pending motion to dismiss would ensure that the parties are able to timely and effectively resolve the claims and defenses presented in this case.”
• “The discovery will serve to educate plaintiffs concerning the most important individuals and issues in the case. In the long run the Court expects defendants to benefit from this staging so that the parties do not chase discovery ‘down a rabbit hole.’”

All in all, we find this ruling to be fair in that it doesn’t stop discovery simply because of a procedural motion to dismiss, yet it does take into account the fact that spending too much time, effort and money at this point could be unfair to the defendant, if they are granted their motion to dismiss. We are curious to know if the outcome would have been different if the defendants tried to put an actual number to the expected expense. By calling it simply “extremely expensive” the defendants left the argument open to a subjective interpretation of what constitutes “extremely expensive”.

We advise our clients to walk out the subjective discovery cost claim by taking the opportunity to educate both the Court and the plaintiffs as to how much even limited discovery would truly cost. By collecting objective numbers as to number of records identified and combining the cost of acquiring, processing, reviewing and producing the data, they could have arrived at an estimated dollar amount that may have been more persuasive to the Court.

By ordering that discovery begin immediately, but on a limited basis, both sides are able to move forward in this matter without spending resources in a disproportionate manner. We will keep an eye on other news that develops out of this case as the electronic evidence is sure to tell an interesting part of the story.

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