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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MOHAMMED AZAD, et al.,

Plaintiffs,

v.

TOKIO MARINE HCC - MEDICAL 

INSURANCE SERVICES GROUP, et al.,

Defendants.

Case No. 17-cv-00618-PJH 

ORDER DENYING MOTION TO STAY 

DISCOVERY WITHOUT PREJUDICE

AND VACATING CASE 

MANAGEMENT CONFERENCE

Re: Dkt. No. 63

Before the court is defendants’ motion to stay discovery pending the resolution of 

a number of motions to dismiss the complaint. Dkt. 63. The matter is fully briefed and 

suitable for decision without oral argument. Having read the parties’ papers and carefully 

considered their arguments and the relevant legal authority, the court hereby DENIES the 

motion as premature, without prejudice.

BACKGROUND

This putative class action was filed on February 7, 2017 by plaintiffs Mohammed 

Azad and Danielle Buckley. Dkt. 1 (“Compl.”). Plaintiffs make claims against Tokio 

Marine HCC – Medical Insurance Services Group (“HCC”), a seller of short-term medical 

insurance, and other entities who allegedly worked with HCC. Also named as defendants 

are HCC Life Insurance Company (“HCC Life Insurance”), a subsidiary of Tokio Marine 

Holdings, LLC; Health Insurance Innovation, Inc. (“HII”); and Consumer Benefits of 

America (“CBA”). Compl. ¶¶ 5–7.

HCC contracted with plaintiffs to provide them short-term medical insurance 

policies (“STMs”). Compl. ¶¶ 8–9. HCC Life Insurance was the underwriter on the 

polices. Compl. ¶ 16. HII is allegedly a “close affiliate” of HCC that works with HCC “in 

the sale, administration, and/or servicing” of the policies. Compl. ¶ 17. CBA provides 
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discounts and other benefits to its members, and allegedly “works with” the other 

defendants to provide HCC policies to consumers. Compl. ¶¶ 7, 57.

In brief, plaintiffs allege that HCC falsely represented that their policies provided 

comprehensive coverage and fair claim processing. In reality, plaintiffs allege that HCC 

misled policyholders about the scope of the coverage and made it unreasonably difficult 

to make a claim. Plaintiffs further allege that HCC had a common policy and practice of

marketing their polices in a misleading manner, delaying and refusing to pay claims, 

providing deliberately unhelpful customer service, and generally obstructing 

policyholders’ claims in bad faith.

Much of the complaint is devoted to the experiences of the putative class 

representatives, who allegedly were told to submit burdensome documentation and had 

the payment of their claims delayed and denied in bad faith. Compl. ¶¶ 19–38. The 

complaint then reviews the aspects of HCC’s marketing materials, policies, and 

application forms that plaintiffs allege are misleading. Compl. ¶¶ 39–57. Finally, plaintiffs 

allege that HCC trains its customer service representatives to obstruct policyholders and 

give them the “runaround,” refusing to help and referring claimants to a “highly confusing” 

website. Compl. ¶¶ 58–72.

Plaintiffs assert claims for (1) violations of the California Unfair Competition Law 

(the “UCL”); (2) violations of the California False Advertising Law (“FAL”); (3) breach of 

contract; (4) breach of the implied duty of good faith and fair dealing; and (5) unjust 

enrichment. The putative class is all “individuals who have purchased HCC health 

insurance policies from Defendants in the State of California, and/or all California 

residents for whom HCC denied their insurance claim, since a date to be ascertained 

through discovery.” Compl. ¶ 82.

On April 13 and 14, 2017, the defendants separately filed motions to dismiss the 

complaint and/or strike its allegations, which are all noticed for hearing on June 14, 2017. 

Dkt. 48, 49, 58, 60. Currently, the initial case management conference is scheduled for 

the following day, June 15, 2017. Dkt. 65.
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On April 20, 2017, defendants filed a motion to stay discovery pending resolution 

of the motions to dismiss. Dkt. 63. This matter is fully briefed and ripe for decision.

DISCUSSION

A. Legal Standard

District courts have “broad discretion” to stay discovery pending the disposition of 

a dispositive motion. See Hall v. Tilton, No. C 07-3233 RMW (PR), 2010 WL 539679, at 

*2 (N.D. Cal. Feb. 9, 2010). In particular, a district court may “stay discovery when it is 

convinced that the plaintiff will be unable to state a claim for relief.” Wenger v. Monroe, 

282 F.3d 1068, 1077 (9th Cir. 2002) (quotation omitted).

Since a discovery stay requires a protective order, the moving party must show 

“good cause.” Mlejnecky v. Olympus Imaging Am., Inc., No. 2:10-CV-02630, 2011 WL 

489743, at *5 (E.D. Cal. Feb. 7, 2011); Fed. R. Civ. P. 26(c)(1). In general, the party 

seeking a stay of discovery carries a “heavy burden” to make a “strong showing” why 

discovery should be denied. Gray v. First Winthrop Corp., 133 F.R.D. 39, 40 (N.D. Cal. 

1990) (citing Blackenship v. Hearst Corp., 519 F.2d 418, 429 9th Cir. 1975)).

“The Ninth Circuit Court of Appeals has not announced a clear standard against 

which to evaluate a request or motion to stay discovery in the face of a pending, 

potentially dispositive motion.” Mlejnecky, 2011 WL 489743, at *6 (E.D. Cal. Feb. 7, 

2011); see also Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 602 (D. Nev. 2011). In 

light of this uncertainty, the court in Mlejnecky engaged in a thorough analysis of how 

district courts in the Ninth Circuit have addressed such motions, distilling the following 

principles. See Mlejnecky, 2011 WL 489743 at *5–*8.

First, the “Federal Rules of Civil Procedure do not provide for an automatic stay of 

discovery pending resolution of a motion to dismiss.” In re Valence Tech. Sec. Litig., No. 

C 94-1542-SC, 1994 WL 758688, at *2 (N.D. Cal. Nov. 18, 1994). Accordingly, courts 

generally do not “look favorably” upon requests for a blanket discovery stay merely 

because a dispositive motion has been filed. Novelposter v. Javitch Canfield Grp., No. 

13-CV-05186-WHO, 2014 WL 12618174, at *1 (N.D. Cal. May 23, 2014).
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Second, courts in the Northern District of California have applied a two-factor test 

to evaluate a motion to stay discovery pending resolution of a dispositive motion. “First, 

the pending motion must be potentially dispositive of the entire case, or at least 

dispositive on the issue at which discovery is aimed.” Mlejnecky, 2011 WL 489743 at *6. 

“Second, the court must determine whether the pending, potentially dispositive motion 

can be decided absent additional discovery.” Id.; accord Hall, 2010 WL 539679 at *2.

If both of the factors are met, the court “may issue a protective order” staying 

discovery. Smith v. Levine Leichtman Capital Partners, Inc., No. C 10-00010 JSW, 2011 

WL 13153189, at *1 (N.D. Cal. Feb. 11, 2011) (citing The Pacific Lumber Co. v. Nat’l 

Union Fire Ins. Co. of Pittsburgh, Pa., 220 F.R.D. 349, 352 (N.D. Cal. 2003)). Discovery 

should proceed if “either prong of the test is not met.” Mlejnecky, 2011 WL 489743 at *6.

B. Analysis

Defendants’ motion to stay argues that they should not face “costly and 

burdensome discovery” in light of the pending motions to dismiss, which are potentially

“meritorious and case dispositive.” The stay would cause no harm to plaintiffs, because it 

is “limited and brief” and the motions to dismiss will be heard by the court in a few weeks. 

Defendants thus argue that the two-part test for a stay is met. Plaintiffs respond that 

defendants have not shown an “immediate and clear possibility” that the dispositive 

motions will be granted. Mlejnecky, 2011 WL 489743 at *8. Moreover, plaintiffs allege 

that a stay would prejudice them by delaying resolution of their claims.

The court finds that defendants’ motion to stay discovery is premature. It is 

defendants’ “heavy” burden to show “good cause” to justify a stay. Fed. R. Civ. P 

23(c)(1); Gray, 133 F.R.D. at 40 (citing Blackenship, 519 F.2d at 429). Plaintiffs have not 

served any discovery on defendants (to the court’s knowledge), and they cannot do so 

until after the Rule 26(f) conference. See Fed. R. Civ. P. 26(d)(1). The court cannot

evaluate the burden and proportionality of the discovery until the requests are actually 

made. Although defendants are correct that a brief stay would cause no substantial 

prejudice to plaintiffs, “a mere lack of prejudice is not the same as ‘good cause’ and falls 
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far short of the ‘strong showing’ required.” Novelposter, 2014 WL 12618174 at *1. The 

court therefore DENIES defendants’ motion to stay discovery because defendants have 

not met their burden. Of course, this denial is without prejudice to defendants later 

seeking a stay or protective order should any actual discovery requests be unduly 

burdensome or disproportionate to the needs of the case at this stage.

However, it is not this court’s typical practice to conduct a case management 

conference (CMC) until the pleadings are settled. Although the parties stipulated to 

schedule the initial CMC on June 15, 2017, see Dkt. 65, the court finds that conducting a 

CMC on that date would be inappropriate in light of defendants’ pending motions to 

dismiss. The court therefore VACATES the June 15, 2017 case management 

conference. The court will reschedule the initial CMC once it has ruled on the pending 

Rule 12(b) motions. Insofar as the date of the Rule 26(f) conference is based on the date 

of the initial CMC, no discovery will be permitted, by operation of the Federal Rules of 

Civil Procedure, until the court has ruled on the motions and rescheduled the initial CMC. 

See Fed. R. Civ. P. 26(d)(1), (f)(1).

CONCLUSION

For the foregoing reasons, defendants’ motion to stay discovery is DENIED. The 

case management conference set for June 15, 2017 is VACATED. 

IT IS SO ORDERED.

Dated: May 26, 2017

__________________________________

PHYLLIS J. HAMILTON

United States District Judge