Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01987/USCOURTS-casd-3_08-cv-01987-2/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332fr Diversity-Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

COLLEGESOURCE, INC., a California

corporation,

Plaintiff,

CASE NO. 08-CV-1987 H (CAB)

ORDER 

(1) GRANTING DEFENDANT’S

MOTION TO STAY; &

(2) DENYING PLAINTIFF’S EX

PARTE APPLICATION TO

ENJOIN THE SECOND-FILED

ACTION PENDING APPEAL

vs.

ACADEMYONE, INC., a Pennsylvania

corporation,

Defendant.

On November 22, 2011, Defendant AcademyOne, Inc. filed a motion to transfer this

case to the Eastern District of Pennsylvania or stay the case until the Pennsylvania action is

complete. (Doc. No. 121.) On December 5, 2011, Plaintiff CollegeSource, Inc. filed its

response in opposition to the motion. (Doc. No. 126.) On December 12, 2011, Defendant filed

its reply. (Doc. No. 131.) On December 15, 2011, Plaintiff filed an ex parte application to

enjoin the Pennsylvania action pending its appeal. (Doc. No. 134.) On December 22, 2011,

Defendant filed its response in opposition to the application to enjoin. (Doc. No. 135.) The

Court, pursuant to its discretion under the Local Rule 7.1(d)(1), determines these matters to

be appropriate for resolution without oral argument, submits it on the parties’ papers, and

vacates the motion hearing set for January 9, 2012. For the following reasons, the Court grants

Case 3:08-cv-01987-GPC-MDD Document 137 Filed 12/30/11 Page 1 of 5
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Defendant AcademyOne, Inc.’s motion to stay. The Court denies Plaintiff’s application to

enjoin the Pennsylvania action pending appeal.

Background

CollegeSource filed this action on October 27, 2008, alleging six causes of action: (1)

violation of the United States Computer Fraud and Abuse Act, 18 U.S.C. §1030; (2) violation

of the California Computer Crimes Act, Cal. Pen. Code § 502; (3) breach of contract; (4)

misappropriation; (5) unfair competition, in violation of Cal. Bus. Prof. Code § 17200; and (6)

unjust enrichment. (Doc. No. 1.) On December 3, 2008, AcademyOne filed a motion to

dismiss CollegeSource’s Complaint for lack of personal jurisdiction or transfer to the Eastern

District of Pennsylvania. (Doc. No. 8.) On February 23, 2009, the Court denied

AcademyOne’s motion to dismiss without prejudice to refile after additional jurisdictional

discovery had been conducted. (Doc. No. 46.) On June 19, 2009, CollegeSource amended its

complaint, adding causes of action for trademark infringement, in violation of 15 U.S.C. §

1114, and unfair competition, in violation of the Lanham Act, 15 U.S.C. § 1125. (Doc. No.

61.) On July 27, 2009, AcademyOne again filed a motion to dismiss for lack of personal

jurisdiction or transfer venue. (Doc. No. 66.) On August 24, 2009, the Court granted

AcademyOne’s motion to dismiss. (Doc. No. 93.) On September 21, 2009,CollegeSource

filed a Notice of Appeal. (Doc. No. 99.) 

On July 20, 2010, CollegeSource filed a complaint against AcademyOne in the United

States District Court for the Eastern District of Pennsylvania, CollegeSource, Inc. v.

AcademyOne, Inc., Case No. 10-cv-3542-MAM (“Pennsylvania action”). In the Pennsylvania

action, CollegeSource alleged causes of action for: (1) violation of the United States Computer

Fraud and Abuse Act, 18 U.S.C. §1030; (2) breach of contract; (3) unjust enrichment; (4)

trademark infringement under the Lanham Act, 15 U.S.C. §1114; and (5) unfair competition

under the Lanham Act, 15 U.S.C. § 1125(a). On August 8, 2011, in a published opinion, the

Ninth Circuit reversed the dismissal of this action for lack of personal jurisdiction and

remanded the matter to this Court “for further proceedings consistent with this opinion.” See

CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1080 (9th Cir. 2011). 

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Discussion

I. Motion to Stay

The District Court has broad discretion to stay proceedings as an incident to its power

to control its own docket. Clinton v. Jones, 520 U.S. 681, 706 (1997) (citing Landis v. N. Am.

Co., 299 U.S. 248, 254 (1936)). In determining whether to grant a motion to stay, “the

competing interests which will be affected by the granting or refusal to grant a stay must be

weighed.” 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)). These interests include: (1) the possible damage

which may result from the granting of 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. Id. 

A stay of this action is appropriate, because it would promote judicial economy. Here,

CollegeSource filed both this case and the Pennsylvania action, and the parties and the issues

involved in the Pennsylvania action are the same as in the present case. The Pennsylvania

action has proceeded further than this case: CollegeSource pursued its claims there for fourteen

months while its appeal was pending in the Ninth Circuit. Fact discovery in that case closed

on October 14, 2011. (Doc. No. 120 at 21.) By contrast, the narrow discovery in this case

included issues concerning personal jurisdiction only. The parties have not engaged in motion

practice on the merits. In declining to apply the first-to-file rule to dismiss, transfer or stay the

Pennsylvania action, the Pennsylvania Court noted:

CollegeSource affirmatively represented to the Court that it intended to continue

litigating this case no matter the outcome of the appeal. The parties proceeded

and expended time and resources accordingly, as did the Court. It would be

unfair to allow the plaintiff to change course after the defendants bore the

expense and burden of litigating in this forum.

CollegeSource, Inc. v. AcademyOne, Inc., 2011 WL 5127813, at *4 (E.D. Pa. Oct. 31, 2011).

No damage will result to Plaintiff from granting a stay, because it will be able to litigate its

claims against the Defendant in the Pe4nnsylvania action, as it has done since July 2010. On

the other hand, in the absence of a stay, Defendant would be forced to defend the same claims

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in both actions. Given the procedural posture of both actions, and the fact that CollegeSource

filed both cases and proceeded with the Pennsylvania case while its appeal before the Ninth

Circuit was pending, the Court concludes that a limited stay of this action is appropriate.

Accordingly, the Court grants Defendant’s motion to stay the case for six months. 

II. Application to Enjoin the Pennsylvania Action Pending Appeal

 On December 8, 2011, the Court denied Plaintiff’s motion to enjoin the second-filed

Pennsylvania action, concluding that the interests of judicial efficiency weigh heavily against

enjoining the parties from prosecuting the Pennsylvania action. (Doc. No. 127.) On December

9, 2011, Plaintiff appealed the Court’s order denying the motion to enjoin. (Doc. No. 128.)

On December 15, 2011, Plaintiff filed an ex parte application to enjoin the Pennsylvania action

pending its appeal. (Doc. No. 134.) On December 22, 2011, Defendant filed its response in

opposition to the application to enjoin. (Doc. No. 135.) 

“[I]t is firmly established that an appeal from an interlocutory order does not divest the

trial court of jurisdiction to continue with other phases of the case.” Plotkin v. Pac. Tel. & Tel.

Co., 688 F.2d 1291, 1293 (9th Cir. 1982). Federal Rule of Civil Procedure 62 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.” Fed. R.

Civ. P. 62(c). To obtain an injunction pending an appeal, a party must show (1) likelihood of

success on the merits of its appeal; (2) irreparable harm absent an injunction; and (3) the

injunction is in the public interest. Warm Springs Dam Task Force v. Gribble, 565 F.2d 549,

551 (9th Cir. 1977). The Court notes that this is not the typical case in which a party invokes

the first-to-file rule after its opponent filed an action in a different court. CollegeSource filed

both this case and the Pennsylvania action, and it now seeks to enjoin the proceedings in the

Pennsylvania action. The Court concludes that Plaintiff has not shown a likelihood of success

of its appeal, or that it will suffer irreparable harm. Accordingly, the Court denies Plaintiff’s

application to enjoin the Pennsylvania action pending appeal. 

/// 

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Conclusion

For the reasons above, the Court the Court grants Defendant AcademyOne, Inc.’s

motion to stay this case for six months. The Court may extend the stay subject to a renewed

application. The Court denies Plaintiff’s application to enjoin the Pennsylvania action pending

appeal. 

IT IS SO ORDERED.

DATED: December 30, 2011

________________________________

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

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