Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_06-cv-00016/USCOURTS-casd-3_06-cv-00016-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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1 06cv16-BEN(NLS)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TIMOTHY G. O’NEAL, individually, and on

behalf of all others similarly situated;

Plaintiffs,

v.

NCO FINANCIAL SYSTEMS, INC.,

Defendant. 

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Civil No. 06cv16-BEN (NLS)

ORDER DENYING DEFENDANT NCO

FINANCIAL SYSTEMS, INC.’S

MOTION TO STAY DISCOVERY

[Doc. No. 19]

On October 3, 2006, Defendant NCO Financial Systems, Inc. filed a Motion to Strike the class

allegations contained in Plaintiff Timothy G. O’Neal’s Second Amended Complaint [Doc. No. 20], and

a Motion to Stay Discovery pending the District Court’s ruling on the motion to strike [Doc. No. 19]. 

Both motions were set for hearing before District Judge Benitez on November 6, 2006. On October 17,

2006, Judge Benitez referred the Motion to Stay Discovery to the undersigned Magistrate Judge [Doc.

No. 21]. For the reasons outlined below, the Court DENIES Defendant’s motion to stay discovery. 

BACKGROUND

Plaintiff Timothy G. O’Neal (“Plaintiff”) has filed a Second Amended Complaint [Doc. No. 13]

in which he alleges that Defendant NCO Financial Systems, Inc. (“Defendant”) violated both federal

and California state fair debt collection laws. (Complaint ¶ 4.) This action arises out of events

occurring on or about January 15, 2005, when Plaintiff received a written notice from Defendant, a

third-party debt collector, requesting that Plaintiff pay a debt for which collection had been assigned to

Defendant by Plaintiff’s creditor. (Id. ¶ 13.) Plaintiff claims that this written communication from

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Defendant did not contain the consumer rights notice required by California’s fair debt collection act,

Cal. Civ. Code § 1812.700(a), and in violation of California’s Business and Professions Code, section

17200 et seq. (Id. ¶ 13, 17-18.) Plaintiff’s Second Amended Complaint also contains class action

allegations. (Id. ¶¶ 22-33.) Plaintiff claims to be a member of a purported class of individuals with

addresses within the state of California who received a similarly deficient written communication from

Defendant in the time period since July 1, 2004. (Id. ¶ 22.) 

On October 3, 2006, Defendant filed a motion to strike Plaintiff’s class allegations from his

Second Amended Complaint. Concurrent with the motion to strike, Defendant filed a Motion to Stay

Discovery in this case while awaiting a ruling by the District Court on the motion to strike. Defendant

argues that discovery should be stayed pending Judge Benitez’s ruling because no discovery is needed

by Plaintiff in order to respond to Defendant’s motion to strike and to avoid engaging in further

“extensive, irrelevant, and expensive discovery.” (Memorandum of Points and Authorities in Support of

Defendant’s Motion to Stay Discovery (“Defendant’s Memorandum”), 3.) Plaintiff filed the following

statement in opposition to Defendant’s motion to stay discovery:

“Plaintiff opposes any stay of discovery in this action. However, because it appears that

Defendant’s Motion to Stay Discovery is requested only until such time that the Court hears and

decides this motion scheduled for November 3, 2006 [sic], Plaintiff will not oppose this motion

as it will be moot by the time it is heard. Defendant has made it clear they will not be attending

the depositions on November 1 and 2, 2006 in the Philadelphia area.”

(Plaintiff’s Opposition to Defendant’s Motion to Stay Discovery, 1.) Defendant filed a reply, stating

that:

 “Although the ‘opposition’ is unclear, plaintiff either conceded the stay pending the outcome of

the Motion to Strike or failed to cite any authority supporting a denial of the stay. For those

reasons, defendant respectfully requests the Court grant the motion to stay discovery.” 

(Defendant’s Reply in Support of Motion to Stay Discovery, 1.)

ANALYSIS

Motions to stay discovery may be granted upon a showing of good cause by the moving party or

where “justice requires to protect a party or person from annoyance, embarrassment, oppression, or

undue burden or expense.” See Fed.R.Civ.P. 26(c)(4); GTE Wireless, Inc. v. Qualcomm, Inc., 192

F.R.D. 284, 285-86. (S.D.Cal. 2000). A court has broad discretion to stay discovery pending decision

on a potentially dispositive motion. See Scroggins v. Air Cargo, Inc., 534 F.2d 1124, 1133 (5th Cir.

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1976). Generally, however, such motions are disfavored because discovery stays may interfere with

judicial efficiency and cause unnecessary litigation in the future. Feldman v. Flood, 176 F.R.D. 651,

652 (M.D.Fla. 1997). Therefore, before a stay can be issued, the moving party must meet the “heavy

burden of making a ‘strong showing’ why discovery should be denied . . . [by showing] a particular or

specific need for the stay, as opposed to making stereotyped or conclusory statements.” Skellerup v.

City of Los Angeles, 163 F.R.D. 598, 600 (C.D.Cal. 1995). The harm of staying discovery, for any

period of time, should be balanced against the benefits of allowing it to proceed. GTE, 192 F.R.D. at

289. A request to stay all discovery pending resolution of a contemporaneously filed motion is rarely

appropriate where resolution of the motion will not dispose of the entire case. Lugo v. Alvarado, 819

F.2d 5 (1st Cir. 1987). Finally, in a purported class action, it is important to note that discovery relating

to the threshold issue of class certification may be closely enmeshed with discovery relating to the

merits of the case. See Manual for Complex Litigation 2d § 30.12 (1985). 

Here, Defendant asserts a stay of class action discovery is warranted because Plaintiff has had

fifteen months to discover the identity of potential class members, yet in all that time he has found only

two out of 117,000 Californians who received defective debt collection letters similar to his. If the class

action allegations are stricken from the complaint, Defendant contends that most of the outstanding

discovery Plaintiff seeks, including the depositions noticed for November, 2006 in Philadelphia would

become moot. (Defendant’s Memorandum, 3.) For reasons that are not apparent to the court, Plaintiff

does not oppose a stay of discovery. (Plaintiff’s Opposition to Defendant’s Motion to Stay Discovery,

1.) However, Plaintiff says there is still critical discovery outstanding relative to class certification. 

(See Plaintiff’s Opposition to Motion to Strike [Doc.No. 22].) According to Plaintiff, Defendant kept

no copies of the 117,000 debt collection letters it sent to California debtors, so in order to prove

numerous defective letters went out, Plaintiff has to depose the people who printed those letters and

determine the procedures they followed. Plaintiff claims this discovery has not yet been taken because

“Defendant has fought Plaintiff’s attempts at such discovery every step of the way.” (Id. at 6.) If that is

the case, the Court was not apprised of those discovery difficulties. 

In the Court’s view, both parties have been dilatory or uncooperative in conducting discovery. 

The Court’s Scheduling Order [Doc. No.10] was filed on April 17, 2006. Plaintiff has had ample time

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since that order went into effect to either conduct the depositions now noticed for November in

Philadelphia, or to notify the Court that he needed assistance in getting those depositions taken. (Id. at

6.) If Defendant has in fact attempted to thwart Plaintiff’s class certification discovery at “every step of

the way,” then certainly it ought not be rewarded for such conduct with a discovery stay. Notably, in

their briefs requesting and opposing a discovery stay in this case, both parties have conveniently ignored

this Court’s Scheduling Order which sets a discovery deadline of November 14, 2006 and a pre-trial

motion filing deadline of December 15, 2006.

A discovery stay is not practical, efficient, or justified in this case based on the parties’

submissions to the Court. Therefore, the Court DENIES Defendant’s request for a stay. However,

given present circumstances, all remaining scheduling order deadlines shall be extended for a period of

90 days in order to allow completion of discovery and filing of Plaintiff’s motion for class certification. 

CONCLUSION

Based on the foregoing reasons, IT IS HEREBY ORDERED that:

1. Defendant’s Motion to Stay Discovery is DENIED;

2. All remaining deadlines in the Court’s April 17, 2006 Scheduling Order [Doc. No. 10]

are EXTENDED by ninety days. An Amended Scheduling Order shall be issued

concurrently with this order. 

IT IS SO ORDERED.

DATED: November 14, 2006

Hon. Nita L. Stormes

U.S. Magistrate Judge

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