Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00541/USCOURTS-casd-3_10-cv-00541-19/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ZEST IP HOLDINGS, LLC, a

Delaware limited liability company;

ZEST ANCHORS, LLC, a

Delaware limited liability company, 

Plaintiffs,

CASE NO. 10cv541-GPC(WVG)

ORDER:

1) DENYING IMPLANT DIRECT’S

MOTION TO STAY ENFORCEMENT

OF MONETARY SANCTIONS

PENDING APPEAL;

[Dkt. No. 573.]

2) VACATING HEARING DATE

v.

IMPLANT DIRECT MFG. LLC, a

Nevada limited liability company;

IMPLANT DIRECT LLC, a

Nevada limited liability company;

IMPLANT DIRECT INT’L, a

Nevada corporation; IMPLANT

DIRECT SYBRON

MANUFACTURING LLC, a

California limited liability

company; IMPLANT DIRECT

SYBRON INTERNATIONAL, a

Nevada limited liability company,

Defendants.

Presently before the Court is a motion to stay enforcement of monetary

sanctions pending appeal by Defendants Implant Direct MFG, LLC, Implant Direct

LLC, and Implant Direct International (collectively, “Implant Direct”). (Dkt. No.

573.) The parties have fully briefed the motion. (Dkt. Nos. 581, 584.) The Court

finds the motion suitable for disposition without oral argument pursuant to Civil

Local Rule 7.1(d)(1). For the reasons set forth below, the Court DENIES Implant

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Direct’s motion to stay enforcement of monetary sanctions pending appeal.

BACKGROUND

As set forth in prior orders in this case, this is a patent and trademark

infringement action filed by Plaintiffs Zest IP Holdings, LLC and Zest Anchors

LLC (collectively, “Zest”) and involving dental attachment products. (See Dkt. No.

1.) The procedural history in this five-year-old litigation is long and complex.

On June 16, 2014, the Court imposed monetary sanctions against Implant

Direct because “Implant Direct acted in bad faith to impede and delay the discovery

process.” (Dkt. No. 440 at 30.) Subsequently, on December 3, 2014, the Court

ordered Implant Direct to pay Zest $122,486.95 in sanctions (“Sanctions Order”). 

(Dkt. No. 568.) 

On January 12, 2015, Implant Direct filed the instant motion to stay

enforcement of these sanctions pending appeal of the Court’s Sanctions Order. 

(Dkt. No. 573.) Implant Direct requests that the Sanctions Order be stayed until at

least thirty days after the entry of final judgment so that it will have an opportunity

to file a notice of appeal after the final judgment and request a further stay. (Id. at

3.) Implant Direct also states that it is willing to post a bond in the amount of the

Sanctions Order during the stay. (Id. at 4-5.) On February 13, 2015, Zest opposed

Implant Direct’s motion. (Dkt. No. 581.) Implant Direct replied on February 27,

2015. (Dkt. No. 584.) 

LEGAL STANDARD

As a preliminary matter, the parties dispute the correct legal standard to apply

to Implant Direct’s motion to stay monetary sanctions pending appeal. 

Implant Direct argues that its motion is akin to a “stay with bond on appeal”

under Federal Rule of Civil Procedure 62(d). (Dkt. No. 573-1 at 5; Dkt. No. 584 at 2,

4-5.) Rule 62(d) provides: “If an appeal is taken, the appellant may obtain a stay by

supersedeas bond, except in an action described in Rule 62(a)(1) or (2). The bond may

be given upon or after filing the notice of appeal or after obtaining the order allowing

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the appeal. The stay takes effect when the court approves the bond.”1

Zest counters that Rule 62(d) is not applicable here because there is no final

judgment yet and therefore Implant Direct cannot immediately appeal.

2

(Dkt. No. 581

at 9.) See Wright, Miller & Kane, 11 Fed. Prac. & Proc. Civ. § 2901 (3d ed. 2014)

(Rule 62 “does not govern stays in proceedings other than to enforce a judgment.”);

accord Law v. NCAA, 134 F.3d 1025, 1030 (10th Cir. 1998) (“When there is no appeal

of right there is no duty on the district court to grant a stay upon the filing of a

supersedeas bond.”).

Instead, Zest contends that the Court should apply the test for a stay pending

appeal set forth by the U.S. Supreme Court in Hilton v. Brauskill, 481 U.S. 770, 776

(1987). (Dkt. No. 581 at 4-5.) Under this test, courts consider four factors:

“‘(1) whether the stay applicant has made a strong showing that he is likely to succeed

on the merits; (2) whether the applicant will be irreparably injured absent a stay;

(3) whether issuance of the stay will substantially injure the other parties interested in

the proceeding; and (4) where the public interest lies.’”3 Golden Gate Rest. Ass’n v.

City & Cnty. of S.F., 512 F.3d 1112, 1115 (9th Cir. 2008) (quoting Hilton, 481 U.S. at

776). Zest cites several cases which have applied the Hilton test to deny a motion to

stay monetary sanctions pending appeal. See Pattison v. Nevada, No. 12-cv-670-RCJ1Rule 62(a)(1) concerns “an interlocutory or final judgment in an action for an

injunction or a receivership” and Rule 62(a)(2) concerns “a judgment or order that

directs an accounting in an action for patent infringement.” Fed. R. Civ. P. 62(a).

2An order awarding sanctions against a party is generally not an appealable

collateral order because it can be effectively reviewed after final judgment. See

Riverhead Sav. Bank v. Nat’l Mortg. Equity Corp., 893 F.2d 1109, 1113 (9th Cir.

1990).

3

“There is substantial overlap between these and the factors governing

preliminary injunctions.” Nken v. Holder, 556 U.S. 418, 434 (2009). Similar to

preliminary injunctions, the standard for granting a stay pending appeal is a continuum.

“At one end of the continuum, if there is a ‘probability’ or ‘strong likelihood’ of

success on the merits, a relatively low standard of hardship issufficient.” Golden Gate

Rest. Ass’n, 512 F.3d at 1119 (citing Lopez v. Heckler, 713 F.2d 1432, 1435 (9th Cir.

1983)). “At the other end, if ‘the balance of hardships tips sharply in . . . favor’ of the

party seeking the stay, a relatively low standard of likelihood of success on the merits

is sufficient.” Id. (quoting Lopez, 713 F.2d at 1435).

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WGC, 2014 WL 548200, at *2-3 (D. Nev. Feb. 11, 2014); Mitchell v. Daniels, No. 06-

cv-00624-DRH, 2014 WL 2117084, at *2 (S.D. Ill. May 21, 2014); In re Reese, No.

08-41173, Dkt. No. 111 at 10 (Bankr. N.D. Ohio, June 30, 2011).

4

Implant Direct responds that the Hilton test is irrelevant because it applies to

requests for stays of injunctions under Rule 62(c),5not monetary damages under Rule

62(d). (Dkt. No. 584 at 2-6.) Implant Direct relies on Bolt v. Merrimack Pharms., Inc.,

No. 04-0893-WBS-DAD, 2005 WL 2298423, at *2 (E.D. Cal. 2005), which held that

Rule 62(d), rather than Rule 62(c) and the Hilton test, applied to a motion for an

unsecured stay of execution of judgment pending appeal. The court reasoned that:

[W]hether the court granted injunctive or monetary relief is significant in

a motion to stay in light of an appeal. The Federal Rules of Civil

Procedure impose distinct standards for stays of judgments involving

injunctions, see Fed. R. Civ. P. 62(c), and stays of other judgments, see

Fed. R. Civ. P. 62(d). Given these distinctions, it should come as no

surprise that courts evaluate unsecured stays of these categories of

judgments under different tests. Although the court could not find a

single case straightforwardlyacknowledging the existence oftwo separate

tests, an examination of the case law clearly reveals a different method of

analysis applicable to motions for unsecured stays when Rule 62(d),

rather than Rule 62(c), applies.

Bolt, 2005 WL 2298423, at *2 (internal citation omitted).

6

Implant Direct argues that

the cases cited by Zest which apply the Hilton test to monetary awards applied the

4Attached as Exh. 5 to Dkt. No. 581-1.

5Rule 62(c) concerns an “injunction pending an appeal” and provides that

“[w]hile an appeal is pending from an interlocutory order or final judgment that grants,

dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an

injunction on terms for bond or other terms that secure the opposing party’s rights.” 

Rule 62(c) “provides for discretionary injunctions pending appeal” while Rule 62(d)

“provides for an automatic stay in appeals of money judgments.” United States v. Orr

Water Ditch Co., 391 F.3d 1077, 1079 n.2 (9th Cir. 2004).

6

See also C.B. v. Sonora Sch. Dist., 819 F. Supp. 2d 1032, 1054 n.1 (E.D. Cal.

2011) (concluding that Hilton test was inapplicable to motion to stay monetary

judgment pending appeal), rev’d on other grounds by 769 F.3d 1005 (9th Cir. 2014)

(en banc); Frommert v. Conkright, 639 F. Supp. 2d 305, 308-09 (W.D. N.Y. 2009)

(Rule 62(d) applies to money judgments, and Rule 62(c) and the Hilton test apply to

non-money judgment); FINOVA Capital Corp. v. Richard A. Arledge, Inc., No.

02-1277-PHX-RCB, 2008 WL 828504, *4-5 (D. Ariz. Mar 26, 2008) (holding that

Rule 62(d), rather than Hilton test, was applicable to motion seeking to stay monetary

judgment, even though the proposed alternative security was in the form of injunctive

relief).

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wrong standard.

7

 (Dkt. No. 584 at 4-6.) 

Neither Rule 62(c) or 62(d) directly control here because both provisions

expressly apply to cases in which an appeal is “pending” or “taken,” and no appeal of

the Sanctions Order has been (or can be) filed yet in this case. Fed. R. Civ. P. 62(c)-

(d);see also In re Matter of Seizure of Approximately 26 Grams of Marijuana, No. 01-

M-30204-MHP, 2004 WL 2915286, at *5 (N.D. Cal. Dec. 17, 2004). Nonetheless, the

Court has inherent authority to consider Implant Direct’s motion. See Oliva v. Sullivan,

958 F.2d 272, 273 (9th Cir. 1992) (“[d]istrict courts have inherent power to control

their dockets . . . .”); Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988)

(“Courts have inherent power to manage their dockets and stay proceedings[.]”); see

also Wright, Miller & Kane, 11 Fed. Prac. & Proc. Civ. § 2904 (While “[i]t may be

argued . . . that the court may not make an order under Rule 62(c) before the appeal has

been taken . . . [w]hen there is reason to believe that an appeal will be taken, there is

no reason why the district court should not make an order preserving the status quo

during the expected appeal. The order can be conditioned on an appeal being taken by

a stated date.”). 

The Court determines that it need resolve the precise standard to apply here

because, as discussed below, under either standard the Court declines to exercise its

discretion to stay the enforcement of monetary sanctions. 

DISCUSSION

The Court declines to exercise its discretion to stay the enforcement of

monetary sanctions against Implant Direct. The Court imposed monetary sanctions

“due to Zest’s submitted evidence and the Court’s record of Implant Direct’s delay,

disruption of the discovery process and this litigation, gamesmanship, and

repeatedly vexatious discovery abuses between the filing of this litigation and the

7Neither party addresses 13231 Sundance LLC v. Cronin, No. 11-cv-477-LABWVG, 2011 WL 2413465, at *1-2 (S.D. Cal. June 13, 2011), a case from this district

which applied the Hilton test to deny a motion to stay monetary sanctions pending

appeal. 

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close of fact discovery in this case.” (Dkt. No. 440 at 27.)

If the Hilton test applies here, the Court denies Implant Direct’s request for a

stay because: (1) Implant Direct has not shown that it is likely to succeed on the

merits; (2) Implant Direct has not indicated that it will be irreparably injured absent

a stay; (3) Zest would likely be harmed by having to wait years to collect the

sanctions; and (4) the public interest will not be served because the delay would

reward Implant Direct’s misconduct in this case. See Golden Gate Rest. Ass’n, 512

F.3d at 1115.

If Implant Direct’s request is more analogous to a stay of monetary judgment

under Rule 62(d), the Court still denies Implant Direct’s request for a stay because

Zest would likely be harmed by having to wait years to collect the sanctions, the

delay would reward Implant Direct’s misconduct in this case, and Implant Direct

has not indicated that it would suffer any hardship if the sanctions were not stayed,

or shown that a stay is necessary to permit it to later appeal the Sanctions Order. Cf.

CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (holding that the competing

interests that a district court must weigh in exercising its discretion to stay

proceedings are: (1) “possible damage which may result from granting a stay”; (2)

“the hardship or inequity which a party may suffer in being required to go forward”;

and (3) “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” (citing Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936)). 

As such, the Court DENIES Implant Direct’s motion to stay enforcement of

monetary sanctions pending appeal.

CONCLUSION AND ORDER

For the foregoing reasons, the Court:

1. DENIES Implant Direct’s motion to stay enforcement of monetary

sanctions pending appeal, (Dkt. No. 573);

2. ORDERS Implant Direct to pay the monetary sanctions within

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fourteen (14) days of the filing date of this order; and

3. VACATES the hearing date set for this matter on March 20, 2015 at

1:30 p.m. 

IT IS SO ORDERED.

DATED: March 16, 2015

HON. GONZALO P. CURIEL

United States District Judge

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