Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-06681/USCOURTS-cand-4_18-cv-06681-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court 

Northern District of California 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SST MILLENNIUM LLC, 

Plaintiff, 

vs. 

MISSION STREET DEVELOPMENT LLC, ET 

AL, 

Defendants. 

CASE NO. 18-cv-06681-YGR

ORDER GRANTING MOTIONS TO COMPEL 

ARBITRATION AND STAY ACTIONS

Re: Dkt. No. 31 

MILLENNIUM1002 LLC, 

Plaintiff, 

vs. 

MISSION STREET DEVELOPMENT LLC, ET 

AL.,

Defendants. 

CASE NO. 18-cv-06684-YGR 

Re: Dkt. No. 29 

Plaintiffs SST Millennium LLC (“SST”) and Millennium1002 LLC (“Millennium1002”) 

bring related actions (Case Nos. 18-cv-06681 and 18-cv-06684, respectively) against defendants 

Mission Street Development LLC (“MSD”), Mission Street Holdings, LLC (“MSH”), Millennium 

Partners (“MP”), and Does 1-50 inclusive. (Dkt. No. 1 (“Compl.”).)1

 In each case, plaintiffs assert 

fraudulent concealment, suppression, nondisclosure, and intentional misrepresentation against all 

defendants. (Id. ¶¶ 44–63.) 

 

1

 The Court notes that plaintiffs’ complaints are nearly identical. Accordingly, the Court will 

refer to SST Millennium LLC v. Mission Street Development LLC, Case No. 18-cv-06681-YGR unless 

stated otherwise. 

Case 4:18-cv-06681-YGR Document 46 Filed 06/03/19 Page 1 of 11
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Now before the Court are defendant MSD’s motions to compel arbitration and stay the 

instant actions pursuant to 9 U.S.C. § 3.2 (Dkt. No. 31 (“MTC”).) Having carefully considered the 

pleadings, the papers and exhibits submitted, and oral argument by counsel on April 9, 2019, and for 

the reasons set forth below, the Court GRANTS MSD’s motions to compel arbitration and STAYS the 

actions in their entireties. 

I. BACKGROUND

On June 16, 2009,3 SST purchased and closed escrow on a two-bedroom condominium, Unit 

34D, at 301 Mission Street, San Francisco, California 94105 (the “Millennium Tower”). (Compl. 

¶ 36.) Millennium1002 purchased and closed escrow on Unit 1002 in the Millennium Tower on 

June 13, 2012. (Case No. 18-cv-06684-YGR, Dkt. No. 1 (“Millennium1002 Compl.”) ¶ 37.) The 

Millennium Tower is a luxurious fifty-eight story mixed-use real estate development. (Compl. 

¶¶ 21–22.) Plaintiffs allege that defendants “embarked on a scheme to defraud and conceal” the fact 

that the Millennium Tower was sinking and tilting, which “could cause the frame of the building to 

distort, floors to slope, walls and glass to crack, and doors and windows to malfunction.” (Id. 

¶¶ 27, 33.) Plaintiffs further allege that each of the defendants “is the alter ego of the other” and that 

“MSD is primarily liable” to plaintiffs, whereas “MSH and MP are both secondarily liable” for their 

participation in the scheme. (Id. ¶¶ 5, 51.) 

On May 14, 2009, SST entered into a residential purchase agreement with MSD. (Compl., 

Ex. B (“Agreement”).) Millennium1002 entered into a substantially similar agreement with MSD on 

May 30, 2012. (Millennium1002 Compl., Ex. B.) The Agreement contains an arbitration provision. 

 

2

 In support of their opposition to MSD’s motion to compel, plaintiffs request judicial notice 

of MSD’s statement of information, MSH’s statement of information, and two of Millennium Mission 

Street Partners, LLC’s statements of information. (Dkt. No. 36.) As these documents are matters of 

public record filed with the California Secretary of State, the Court GRANTS plaintiffs’ request for 

judicial notice. See Lee v. City of L.A., 250 F.3d 668, 688–89 (9th Cir. 2001) (noting “a court may 

take judicial notice of matters of public record” and documents whose “authenticity . . . is not 

contested” and upon which a plaintiff’s complaint relies) (internal quotation marks omitted) 

(alterations in original). 

3

 The Court notes that the complaint incorrectly states “June 16, 2019.” 

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(Id. at 11–12.) In pertinent part, the arbitration provision provides as follows: 

[A]ny claim or dispute between the buyer and the seller . . . arising out of this contract or 

relating in any way to the property being purchased . . . shall be determined by submission 

to binding arbitration . . . . The arbitrator shall apply California substantive law in 

rendering a final decision . . . . [T]he Federal Arbitration Act (9 U.S.C. § 1 et seq.) now 

in effect and as it may be hereafter amended will govern the interpretation and 

enforcement of the arbitration provisions set forth herein . . . disputes [will be] decided 

by neutral arbitration as provided by California Law . . . you may be compelled to 

arbitrate under the authority of the California Code of Civil Procedure. 

(Id.) On November 2, 2018, plaintiffs filed the instant actions asserting diversity jurisdiction. (See 

Compl. ¶¶ 12–15.) On February 19, 2019, MSD filed the instant motions to compel arbitration and 

stay the actions. (MTC; see also Case No. 18-cv-06684-YGR, Dkt. No. 29.) 

II. DISCUSSION

A. Motions to Compel Arbitration 

 MSD moves to compel arbitration of plaintiffs’ claims in the instant actions pursuant to the 

arbitration provision contained in their respective contracts. (Motion at 2–4.) Plaintiffs do not 

dispute that a valid arbitration agreement exists or that their claims fall within the scope of the 

Agreement. Instead, plaintiffs argue that the California Arbitration Act (“CAA”), not the Federal 

Arbitration Act (“FAA”), governs the arbitration provision and that the Court should not enforce the 

arbitration provision pursuant to Section 1281.2(c) of the California Code of Civil Procedure. 

 Section 1281.2(c) permits nonenforcement of an otherwise binding arbitration agreement 

where “[a] party to the arbitration agreement is also a party to a pending court action or special 

proceeding with a third party, arising out of the same transaction or series of related transactions and 

there is a possibility of conflicting rulings on a common issue of law or fact.” Cal. Code Civ. P. 

§ 1281.2(c). The FAA lacks a comparable provision. See 9 U.S.C. § 3; Wolsey, Ltd. v. Foodmaker, 

Inc., 144 F.3d 1205, 1209–10 (9th Cir. 1998) (“Unlike the FAA, California’s arbitration rules grant 

courts the discretion to stay arbitration proceedings pending resolution of related litigation”). 

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The FAA requires a district court to stay judicial proceedings and compel arbitration of 

claims covered by a written and enforceable arbitration agreement. 9 U.S.C. § 3. A party may bring 

a motion in a federal district court to compel arbitration. Id. § 4. The FAA reflects “both a liberal 

federal policy favoring arbitration and the fundamental principle that arbitration is a matter of 

contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal quotations and 

citations omitted). “In accordance with that policy, ‘doubts concerning the scope of arbitrable issues 

should be resolved in favor of arbitration.’” Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 

1072 (9th Cir. 2013) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 

24–25 (1983)). The FAA broadly provides that an arbitration clause in a contract involving a 

commercial transaction “shall be valid, irrevocable, and enforceable, save upon such grounds as 

exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. 

 In ruling on a motion to compel arbitration, a court’s role is typically limited to determining 

whether: (i) an agreement exists between the parties to arbitrate; (ii) the claims at issue fall within 

the scope of the agreement; and (iii) the agreement is valid and enforceable. Lifescan, Inc. v. 

Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). However, “if there is a genuine 

dispute of material fact as to any of these queries, a [d]istrict [c]ourt should apply a ‘standard similar 

to the summary judgment standard of Fed.R.Civ.P. 56.’” Ackerberg v. Citicorp USA, Inc., 898 F. 

Supp. 2d 1172, 1175 (N.D. Cal. 2012) (quoting Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 

804 (N.D. Cal. 2004)); see also Starke v. SquareTrade, Inc., 913 F.3d 279, 281 n.1 (2d Cir. 2019) 

(same). Once a court is satisfied that the parties entered into an enforceable arbitration agreement 

covering the subject of their litigation, the Court must promptly compel arbitration. 9 U.S.C. § 4. 

The FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that 

district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration 

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agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) 

(emphasis in original). Generally, if a contract contains an arbitration provision, arbitrability is 

presumed, and “doubts should be resolved in favor of coverage.” AT&T Techs., Inc. v. Commc’ns 

Workers of Am., 475 U.S. 643, 650 (1986).

Parties “may agree to state law rules for arbitration even if such rules are inconsistent with 

those set forth in the [FAA].” Sovak v. Chugai Pharm. Co., 280 F.3d 1266, 1269 (9th Cir. 2002) 

(citing Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468, 479 (1989)). In order to do so, “parties must 

clearly evidence their intent to be bound by such rules[,] . . . the strong default presumption is that 

the FAA, not state law, supplies the rules for arbitration.” Sovak, 280 F.3d at 1269 (internal citations 

omitted). Courts must “apply ordinary state-law principles that govern the formation of contracts” 

when interpreting arbitration agreements. First Options of Chi., Inc., v. Kaplan, 514 U.S. 938, 944 

(1995). “Under California contract law, the court must ‘endeavor to effectuate the mutual intent of 

the parties.’” Wolsey, 144 F.3d at 1210 (citing City of El Cajon v. El Cajon Police Officers’ Ass’n, 

49 Cal.App.4th 64 (1996)). 

 In Wolsey, the Ninth Circuit considered whether to apply federal or California arbitration 

rules to a contract that “contains both an agreement to arbitrate and a general choice-of-law clause in 

the same section.” 144 F.3d at 1211. There, the plaintiff argued that California law applied and 

therefore the court had discretion to refuse to compel arbitration pursuant to California Code of Civil 

Procedure Section 1281.2(c). Id. at 1209–10. The court found that absent specific language to the 

contrary, “general choice-of-law clauses do not incorporate state rules that govern the allocation of 

authority between courts and arbitrators.” Id. at 1212–13 (citing Mastrobuno v. Shearson Lehman 

Hutton, Inc., 514 U.S. 52, 63–64 (1995) (finding that “the best way to harmonize the choice-of-law 

provision with the arbitration provision is to read ‘the laws of the State of New York’ to encompass 

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substantive principles that New York courts would apply, but not to include special rules limiting the 

authority of arbitrators”)). The court concluded that Section 1281.2(c) “assuredly does affect 

California’s ‘allocation of power between alternative tribunals.’” Wolsey, 144 F.3d at 1212. 

Accordingly, the FAA governed the arbitration provision because the contract did “not contain a 

specific reference” to Section 1281.2(c). Id.

 Here, plaintiffs rely on two statements in the arbitration provision to assert that the parties 

expressly agreed to arbitrate pursuant to the California Code of Civil Procedure.4

 (Opp. at 5.) 

Specifically, that the parties “may be compelled to arbitrate under the authority of the California 

Code of Civil Procedure,” and that they “are agreeing to have any dispute arising out of the matters 

included in the ‘arbitration of disputes’ provision decided by neutral arbitration as provided by 

California law.” (Id. (citing Agreement at 11–12).) However, plaintiffs overlook the Agreement’s 

critical reference to the FAA, which states that “the Federal Arbitration Act . . . will govern the 

interpretation and enforcement of the arbitration provisions set forth herein.” (Agreement at 12.) 

Moreover, the Agreement lacks any specific reference to Section 1281.2(c), despite numerous 

 

4

 Plaintiffs cite three cases to argue that the parties agreed to apply California law and 

therefore the CAA applies. (See Opp. at 5 (citing Mastick v. TD Ameritrade, Inc., 209 Cal.App.4th 

1258 (Cal. Ct. App. 2012); Cronus Invs., Inc. v. Concierge Servs., 35 Cal.4th 376 (Cal. 2005); Volt, 

489 U.S. at 468.) However, the Court finds no authority, including those cited by plaintiffs, which 

holds that the CAA governs an arbitration agreement with express language indicating the parties’ 

intent for the FAA to govern the agreement’s interpretation and enforcement. See Mastick, 209 

Cal.App.4th at 1264 (finding that the CAA applies to an arbitration agreement with a choice-of-law 

clause providing that the agreement was “governed by the laws of the State of California”); Cronus, 

35 Cal.4th at 387 (finding that the CAA governed an arbitration agreement, which provided that it 

“shall be construed and enforced in accordance with and governed by the laws of the State of 

California”). With respect to Volt, there the Court “assum[ed] the choice-of-law clause meant what 

the [California] Court of Appeal found it to mean” and held that the FAA does not preempt Section 

1281.2(c) if “the parties have agreed to arbitrate in accordance with California law.” Volt, 489 U.S. 

at 476–77. The Court did not, however, interpret the underlying arbitration agreement. Id.; see also 

Wolsey, 144 F.3d at 1213 (finding that “in interpreting the [arbitration] Agreement, we are bound . . . 

not by Volt” because the Court in Volt “declined to review a [California] state court’s interpretation” 

of the contract) (emphasis supplied). 

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citations to other California statutes. 5 (Id.) Accordingly, in light of current precedent, the Court 

may not address plaintiff’s argument relating to California Code of Civil Procedure Section 

1281.2(c) but instead must compel plaintiffs to resolve their disputes with MSD through arbitration 

pursuant to the FAA.6

 Thus, the Court GRANTS MSD’s motions to compel plaintiffs into arbitration. 

B. Motions to Stay Proceedings as to Remaining Defendants 

It is well-settled that “the power to stay proceedings is incidental to the power inherent in 

every court to control the disposition of the causes on its docket with economy of time and effort for 

itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). When a court 

compels arbitration, as “a matter of its discretion to control its docket,” it may stay litigation among 

non-arbitrating parties pending the outcome of arbitrable claims or a parallel arbitration. Moses H. 

Cone, 460 U.S. at 20 n.23; see also, e.g., BrowserCam, Inc. v. Gomez, Inc., No. 08–CV–02959–

WHA, 2009 WL 210513, at *3 (N.D. Cal. Jan. 27, 2009) (it is “within a district court’s discretion 

 

5 The Court notes that the Ninth Circuit diverges from California courts in how to interpret 

agreements containing potentially conflicting choice-of-law and procedural arbitration rules. The 

California courts in Cronus and Mastick declined to follow Wolsey and Mastrobuono and found that 

Section 1281.2(c) “is not a special rule limiting the authority of arbitrators” and therefore arbitration 

agreements are not required to reference specifically the statute for it to apply. See Cronus, 35 

Cal.4th at 393 & n.8 (“We decline to follow Wolsey . . . in which the court relied on Mastrobuono” 

to interpret Section 1281.2(c)); Mastick, 209 Cal.App.4th at 1265 (same). Here, the Court finds that 

the FAA governs under either approach because of the Agreement’s explicit language. 

6 See, e.g., Diamond Foods, Inc. v. Hottrix, LLC, No. 14-cv-03162-BLF, 2018 WL 3008562, 

at **6–7 (N.D. Cal. June 15, 2018) (finding that, under Mastrobuono and Wolsey, the FAA governed 

the parties’ arbitration agreement despite a choice-of-law clause providing that it “shall be 

interpreted and construed under the laws of the State of California” because the agreement “did not 

refer to § 1281.2(c)”); De Souza v. Pulte Home Corp., No. S-08-337 LKK/GGH, 2008 WL 

11385594, at *4 (E.D. Cal. Oct. 9, 2008) (finding there was “no similar expression that the parties 

intended California’s arbitration law, not the FAA, to apply” even though the arbitration agreement 

provided that the parties “may be compelled to arbitrate under the authority of the California Code of 

Civil Procedure”); Affholter v. Franklin Cty. Water Dist., No. 1:07-CV-0388 OWW DLB, 2008 WL 

5385810, at *3 (E.D. Cal. Dec. 23, 2008) (finding that “the Arbitration Provision specifically 

provides that the FAA shall govern its enforcement” despite containing language identical to that at 

issue here regarding the California Code of Civil Procedure). 

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whether to stay, ‘for [c]onsiderations of economy and efficiency,’ an entire action, including issues 

not arbitrable, pending arbitration”) (quoting United States ex rel. Newton v. Neumann Caribbean 

Int’l., Ltd., 750 F.2d 1422, 1427 (9th Cir. 1985)). 

In contemplating a stay, a court should consider (A) the possible damage which may result 

from the granting of a stay; (B) the hardship or inequity which a party may suffer as a result of 

denial of a stay; and (C) the orderly course of justice measured in terms of the simplifying or 

complicating of issues, proof, and questions of law which could be expected to result from a stay. 

Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005) (citing CMAX, Inc. v. Hall, 300 F.2d 

265, 268 (9th Cir. 1962)). 

 Having granted MSD’s motion to compel arbitration, the FAA requires the Court to stay the 

action with respect to plaintiffs’ claims against MSD. See 9 U.S.C. § 3 (“[i]f any suit or proceeding 

be brought in any of the courts of the United States upon any issue referable to arbitration . . . [the 

court] shall on application of one of the parties stay the trial of the action until such arbitration has 

been had.”). As to litigants who are not parties to the arbitration agreement, the court may stay the 

litigation as a matter of discretion to await the outcome of the pending arbitration. Moses H. Cone, 

460 U.S. at 20 n.23. Accordingly, the Court now turns to the question of whether to stay the claims 

against the remaining defendants MSH and MP pending completion of arbitration. 

1. Possible Damage Resulting from Grant of Stay 

 Courts may issue a stay if “it appears likely the other proceedings will be concluded within a 

reasonable time in relation to the urgency of the claims presented to the court.” Lockyer, 398 F.3d at 

1111 (quoting Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979)). The 

duration of a stay must reflect “the strength of the justification given for it.” See Yong v. I.N.S., 208 

F.3d 1116, 1119 (9th Cir. 2000). Thus, an especially lengthy or “indefinite” stay “require[s] a 

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greater showing to justify it.” Id. 

 Plaintiffs argue that they “will be severely damaged” if the Court stays the actions in their 

entireties. (Opp. at 9.) Specifically, plaintiffs aver that staying plaintiffs’ claims against MSH and 

MP will deprive them of a “just and speedy resolution of this dispute.” (Id.) However, as MSD 

points out, “arbitration over the straightforward claim that MSD failed to disclose material facts” 

likely will conclude within a reasonable time and not cause undue delay. (See Reply at 7.) In 

addition, plaintiffs suggest that any judgment against MSD “will be a meaningless paper victory” 

because MSD allegedly “is a shell corporation with limited assets.” (Opp. at 9.) But even if 

plaintiffs are correct that MSD “may be at risk of bankruptcy and default,” plaintiffs must still 

pursue arbitration against MSD before they could recover from secondarily liable MSH and MP. 

(See Compl. ¶ 51 (“MSH and MP are both secondarily liable.”).) Therefore, granting a reasonable 

stay poses minimal risk of damage to plaintiffs in these cases. 

2. Hardship or Inequity Resulting from Denial of Stay 

MSD argues that it may experience hardship if the Court allows plaintiffs to proceed with 

their claims against MSH and MP because of the possibility of inconsistent and adverse rulings. 

(MTC at 5.) Specifically, “if the arbitration against MSD on the primary claims proceeded on a 

parallel track with a secondary liability trial [for MSH and MP] in this Court, there would be a risk 

that the arbitrator could find no primary liability, while this Court hypothetically could find 

secondary liability.” (Dkt. No. 39 (“Reply”) at 5.) Plaintiffs concede in their opposition that their 

claims against defendants all arise from the same conduct and may give way to inconsistent rulings. 

(Opp. at 6.) 

 The Court finds that allowing plaintiffs to pursue identical claims against MSH and MP in 

court while plaintiffs concurrently arbitrate their claims with MSD might undermine MSD’s 

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contractual right to resolve its disputes through arbitration. See Hill v. G.E. Power Sys., Inc., 282 

F.3d 343, 347–48 (5th Cir. 2002) (finding claims against signatory party were inseparable from 

claims against non-signatory and denial of stay would “undermine the arbitration proceedings . . . 

thereby thwarting the federal policy in favor of arbitration”). Accordingly, MSD has sufficiently 

demonstrated a “clear case of hardship or inequity” in the event that the Court allows plaintiffs to 

proceed simultaneously with their claims against MSH and MP. See Lockyer, 398 F.3d at 1112. 

3. Effect of a Stay on the Orderly Course of Justice 

 In determining whether a stay promotes the orderly course of justice, courts may consider the 

degree of overlap in factual allegations between parallel cases in order to avoid unnecessary 

duplicative litigation. Leyva, 593 F.2d at 863. In general, a stay should be granted where the 

resolution of issues in the arbitration would be determinative of the issues in the lawsuit. See

Lockyer, 398 F.3d at 1110 (noting that a discretionary stay is warranted where parallel action will 

help settle or simplify questions of fact and law).

 Plaintiffs claim that “regardless of the outcome of arbitration, the claims against [MP] and 

[MSH] will need to be litigated in this Court.” (Opp. at 8.) However, MSD argues that “it is very 

unlikely the stayed claims ever proceed because if MSD satisfies an award . . . there is no basis on 

which to proceed with the secondary liability claims.” (Reply at 6 (emphasis in original).) The 

Court agrees with MSD. Moreover, given the interdependence and identical nature of plaintiffs’ 

claims against each defendant, resolution of plaintiffs’ claims against MSD will simplify “issues, 

proof, and questions of law” with respect to the claims against MSH and MP. See Lockyer, 398 F.3d 

at 1110. Accordingly, the Court finds that issuing a stay for both actions in their entireties will help 

preserve judicial resources and promote the orderly course of justice. 

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4. Duration of Stay 

 Following the April 9, 2019 hearing, the parties submitted, at direction of the Court, a joint 

statement addressing (1) the specific discovery necessary to plaintiff regarding defendants MSH and 

MP; (2) the time period for the requested stay; and (3) a proposed schedule for when the stay is lifted 

as to MSH and MP. (Dkt. No. 42 (“Sub.”).) Plaintiffs request a two-month stay, and defendants 

request an eighteenth-month stay. (Id. at 4, 7.) The Court finds a stay through the end of 2019 

appropriate. 

III. CONCLUSION

 For the foregoing reasons, MSD’s motions to compel arbitration and stay the proceedings are 

GRANTED. Accordingly, the instant actions are STAYED in their entireties until Monday, January 

13, 2020. 

 The Court SETS this matter for a further case management conference on Monday, January 

13, 2020 on the Court’s 2:00 p.m. calendar in the Federal Courthouse, 1301 Clay Street, Oakland, 

California in Courtroom 1. The parties shall file an updated joint case management statement by no 

later than Monday, January 6, 2020. 

 This Order terminates Docket Number 31 of Case No. 18-cv-06681-YGR and Docket 

Number 29 of Case No. 18-cv-06684-YGR. 

 IT IS SO ORDERED. 

Dated: 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

June 3, 2019

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