IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JAMES SMITH, on behalf of himself and )

all others similarly situated, and on behalf of the )

Triad Manufacturing, Inc. Employee )

Stock Ownership Plan, )

)

Plaintiff, )

) No. 20 C 2350

v. )

) Judge Ronald A. Guzmán 

GREATBANC TRUST COMPANY, )

THE BOARD OF DIRECTORS OF TRIAD )

MANUFACTURING, INC., DAVID CAITO, )

ROBERT HARDIE, and MICHAEL )

McCORMICK, )

)

Defendants. )

ORDER

The Triad Defendants’ motion to stay this litigation pending appeal [56] is granted. All 

proceedings in this case, including all discovery proceedings, are stayed until further order of 

court. 

STATEMENT

On August 21, 2020, the Court entered a Memorandum Opinion and Order denying the 

Triad Defendants’ motion to compel arbitration or dismiss the case. The Federal Arbitration Act, 

9 U.S.C. § 16(a), provides that such decisions are immediately appealable, unlike most 

interlocutory rulings. The Triad Defendants appealed. Now before the Court is their motion to 

stay this litigation pending appeal. 

Under Bradford-Scott Data Corp. v. Physician Computer Network, Inc., 128 F.3d 504, 

505-06 (7th Cir. 1997), a notice of appeal from a decision denying a motion to compel arbitration 

divests the district court of jurisdiction over those aspects of the case that are involved in the 

appeal, unless the appeal is frivolous. Plaintiff opposes the Triad Defendants’ motion on the 

ground that the appeal is frivolous. The Court disagrees. While the Court ultimately was not 

persuaded by the Triad Defendants’ arguments or the authority on which they relied, it cannot 

say that their arguments are wholly without merit, because the intersection between the FAA and 

ERISA is a developing area of law.

Plaintiff further argues that under Bradford-Scott, discovery may proceed against 

defendant GreatBanc Trust Company, which did not move to compel arbitration, and that 

Case: 1:20-cv-02350 Document #: 62 Filed: 09/21/20 Page 1 of 2 PageID #:425
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plaintiff will be prejudiced if the case develops on two separate discovery tracks. But in 

Bradford-Scott, the Court of Appeals indicated that when there are defendants who have not 

appealed, the district court “should decide whether discovery among” the plaintiff and those 

defendants “sensibly can proceed” without the appellants, and if not, the court should put a hold 

on all discovery until the appeal is resolved. 128 F.3d at 506-07. Given the nature of the factual 

allegations here, the Court does not see how discovery sensibly can proceed against GreatBanc 

without the Triad Defendants’ participation. Accordingly, discovery will be stayed as to the 

entire case during the pendency of the appeal, and plaintiff’s request that he be permitted to 

conduct limited discovery on the amount of proceeds the Triad Defendants received from the 

ESOP Transaction and the current location of those proceeds is denied. 

Plaintiff expresses concerns about a possibly lengthy appeal process and difficulty in 

collecting a potential judgment, and he seeks an order (1) directing the Triad Defendants “to 

preserve all relevant documents” and (2) enjoining them from “transferring or dissipating any 

Transaction proceeds during the pendency of the appeal.” (ECF No. 61, Pl.’s Resp. at 5.) The 

Court declines to do so. Defendants are under a continuing duty to preserve potentially relevant 

evidence even if proceedings in this court are stayed, and plaintiff’s assertion that defendants 

might dissipate assets is based on sheer speculation. 

DATE: September 21, 2020

Hon. Ronald A. Guzmán

United States District Judge

Case: 1:20-cv-02350 Document #: 62 Filed: 09/21/20 Page 2 of 2 PageID #:426