Court Opinion

ID: 9965859
Source: CourtListenerOpinion
Date Created: 2024-05-03 17:00:46.995772+00
Date Added: 2024-06-11T08:25:49.790688
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

In re: PG&E CORPORATION                    No. 22-16711
SECURITIES LITIGATION,
                                              D.C. No.
------------------------------             5:18-cv-03509-
                                                EJD
PUBLIC EMPLOYEES
RETIREMENT ASSOCIATION OF
NEW MEXICO, The Class; YORK                  OPINION
COUNTY ON BEHALF OF THE
COUNTY OF YORK RETIREMENT
FUND; CITY OF WARREN POLICE
AND FIRE RETIREMENT SYSTEM;
MID-JERSEY TRUCKING
INDUSTRY & LOCAL NO. 701
PENSION FUND,

                  Plaintiffs-Appellants,

  v.

ANTHONY F. EARLEY, Jr.;
GEISHA J. WILLIAMS; NICKOLAS
STAVROPOULOS; JULIE M.
KANE; CHRISTOPHER P. JOHNS;
PATRICK M. HOGAN; BARBARA
L. RAMBO; DAVID S.
THOMASON; DINYAR B. MISTRY;
2                  PERA V. EARLEY

LEWIS CHEW; FRED J. FOWLER;
MARYELLEN C. HERRINGER;
RICHARD C. KELLY; ROGER H.
KIMMEL; RICHARD A. MESERVE;
FORREST E. MILLER; BARRY
LAWSON WILLIAMS; ROSENDO
G. PARRA; ANNE SHEN SMITH;
ERIC D. MULLINS; BARCLAYS
CAPITAL, INC.; BNP PARIBAS
SECURITIES CORPORATION;
MORGAN STANLEY & CO. LLC;
MUFG SECURITIES AMERICAS,
INC.; WILLIAMS CAPITAL
GROUP, L.P., AKA Siebert Williams
Shank Co., LLC; CITIGROUP
GLOBAL MARKETS, INC.; J.P.
MORGAN SECURITIES, LLC;
MERRILL LYNCH, PIERCE
FENNER & SMITH, INC, AKA B of
A Securities, Inc.; MIZUHO
SECURITIES USA LLC;
GOLDMAN SACHS & CO; RBC
CAPITAL MARKETS, LLC; WELLS
FARGO SECURITIES, LLC; BNY
MELLON CAPITAL MARKETS,
LLC; TD SECURITIES (USA), LLC;
C. L. KING & ASSOCIATES, INC.;
GREAT PACIFIC SECURITIES;
CIBC WORLD MARKETS CORP.;
SMBC NIKKO SECURITIES
AMERICA, INC.; U. S. BANCORP
INVESTMENTS, INC.; MISCHLER
FINANCIAL GROUP, INC.;
                          PERA V. EARLEY                             3

BLAYLOCK VAN, LLC; SAMUEL
A. RAMIREZ & COMPANY, INC.;
MFR SECURITIES, INC.,

                 Defendants-Appellees,

and

PG&E CORPORATION,

                 Defendant.

        Appeal from the United States District Court
          for the Northern District of California
        Edward J. Davila, District Judge, Presiding

         Argued and Submitted September 13, 2023
                 San Francisco, California

                        Filed May 3, 2024

Before: J. Clifford Wallace, Danny J. Boggs,* and Danielle
                  J. Forrest, Circuit Judges.

                    Opinion by Judge Forrest

*
 The Honorable Danny J. Boggs, United States Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation.
4                         PERA V. EARLEY

                          SUMMARY**

                        Bankruptcy Stay

   The panel vacated the district court’s order staying a
securities fraud action pending completion of a Chapter 11
bankruptcy case and remanded.
    A group of retirement and pension funds filed a
consolidated putative securities class action against PG&E
Corp. and Pacific Gas & Electric Co. (collectively, PG&E)
and some of its current and former officers, directors, and
bond underwriters (collectively, Individual Defendants).
PG&E filed for Chapter 11 bankruptcy, automatically
staying this action as against PG&E but not the Individual
Defendants. The district court then sua sponte stayed these
proceedings as against the Individual Defendants.
    The panel held that it had jurisdiction over this
interlocutory appeal under the Moses H. Cone doctrine
because the stay was both indefinite and likely to be lengthy.
    The panel held that the district court abused its discretion
in ordering the stay as to the Individual Defendants. When
deciding to issue a docket management stay, the district
court must weigh three non-exclusive factors: (1) the
possible damage that may result from the granting of a stay;
(2) the hardship or inequity that a party may suffer in being
required to go forward; and (3) judicial efficiency. As to
judicial efficiency, the district court properly concluded that
the bankruptcy court’s initial determination of identical

**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                       PERA V. EARLEY                      5

factual and legal issues could promote efficient adjudication
of the claims presented in this action. The district court,
however, did not adequately consider whether the stay
imposed hardship on plaintiffs that outweighed the
efficiencies to be gained by the stay. The panel vacated the
stay and remanded for the district court to weigh all the
relevant interests in determining whether a stay was
appropriate.

                        COUNSEL

Carol C. Villegas (argued), Jeffrey A. Dubbin, Thomas A.
Dubbs, and Michael P. Canty, Labaton Keller Sucharow
LLP, New York, New York; Darren J. Robbins, Robbins
Geller Rudman & Dowd LLP, San Diego, California;
Willow E. Radcliffe, Robbins Geller Rudman & Dowd LLP,
Nashville, Tennessee; Hadiya Deshmukh, Robbins Geller
Rudman & Dowd LLP, San Francisco, California; James M.
Wagstaffe, Adamski Moroski Madden Cumberland & Green
LLP, San Luis Obispo, California; Frank Busch, Coblentz
Patch Duffy & Bass LLP, San Francisco, California; for
Plaintiffs-Appellants.
Stephen P. Blake (argued) and Jonathan Sanders, Simpson
Thacher & Bartlett LLP, Palo Alto, California; Jonathan
Youngwood, Simpson Thacher & Bartlett LLP, New York,
New York; Steven S. Scholes, McDermott Will & Emery
LLP, Chicago, Illinois; Jason D. Strabo, McDermott Will &
Emery LLP, Los Angeles, California; Neal A. Potischman,
Davis Polk & Wardwell LLP, Menlo Park, California;
Charles S. Duggan, Dana M. Seshens, and Craig T. Cagney,
Davis Polk & Wardwell LLP, New York, New York; for
Defendants-Appellees.
6                      PERA V. EARLEY

                         OPINION

FORREST, Circuit Judge:

     Following several wildfires in Northern California in
2017 and 2018, a group of retirement and pension funds filed
this consolidated putative securities class action against
PG&E Corporation and Pacific Gas & Electric Company
(collectively, PG&E) and some of its current and former
officers, directors, and bond underwriters (collectively,
Individual Defendants), alleging that all the Defendants
made false or misleading statements related to PG&E’s
wildfire-safety policies and regulatory compliance. Shortly
after lead plaintiff Public Employees Retirement
Association of New Mexico (PERA) and the other
retirement and pension funds (collectively, Plaintiffs) filed
the operative complaint, PG&E filed for Chapter 11
bankruptcy, automatically staying this action as against
PG&E but not the Individual Defendants. The district court
then sua sponte stayed these proceedings as against the
Individual Defendants, pending completion of PG&E’s
bankruptcy case. In this interlocutory appeal, Plaintiffs argue
that the district court abused its discretion by entering the
stay.
   We have jurisdiction over this appeal under the so-called
Moses H. Cone doctrine. We conclude that the district court
abused its discretion in ordering the stay as to the Individual
Defendants, vacate the stay, and remand with instructions.
                   I. BACKGROUND
          A. Plaintiffs’ Securities-Fraud Action
    In June 2018, a PG&E shareholder filed a putative class
action against PG&E and some of its current and former
                          PERA V. EARLEY                            7

officers for violating the Securities Exchange Act of 1934
(Exchange Act). The district court consolidated that
shareholder’s case with other similar cases, and Plaintiffs
jointly filed the operative third amended consolidated class-
action complaint (Complaint) in May 2019. The Complaint
asserts two categories of federal securities claims against
three groups of defendants. The first category of claims
arises under the Exchange Act and is asserted against PG&E
and six current or former PG&E officers. The second
category of claims arises under the Securities Act of 1933
(Securities Act) and is asserted against former PG&E
officers and directors and over 20 financial institutions that
participated in certain PG&E note offerings.1
     Plaintiffs’ claims against PG&E and the Individual
Defendants are based on nearly identical legal theories and
factual allegations. The Exchange Act claims are based on
19 allegedly false or misleading statements that PG&E and
the Individual Defendants made between April 29, 2015, and
November 15, 2018.2 These statements concern numerous
complex issues relating to PG&E’s wildfire-safety policies
and regulatory oversight. Plaintiffs’ Securities Act claims
are      based     on    substantially    similar    alleged
misrepresentations. Plaintiffs allege that the prospectus
filings for three PG&E note offerings and one note-exchange
offer that took place between March 2016 and April 2018
contained or incorporated statements that misleadingly

1
  PG&E was not named in the Securities Act claims because the
bankruptcy court’s automatic stay was in place.
2
  The Exchange Act claims are brought on behalf of a putative class of
“all persons and entities who, during the period from April 29, 2015,
through November 15, 2018, . . . purchased or otherwise acquired
publicly traded PG&E securities.”
8                         PERA V. EARLEY

omitted material information about PG&E’s regulatory
compliance, vegetation-management practices, and
equipment inspections and maintenance.3
   The Individual Defendants filed two motions to dismiss
in October 2019. The parties completed briefing on those
motions, and they were submitted for decision in the district
court, in January 2020. Those motions remain pending.
                B. PG&E’s Bankruptcy Case
    In January 2019, a few months before Plaintiffs filed the
Complaint, PG&E filed for Chapter 11 bankruptcy.
Accordingly, this action was automatically stayed as to
PG&E under 11 U.S.C. § 362. The bankruptcy court
confirmed PG&E’s Plan of Reorganization (Plan) in June
2020, which provided for PG&E’s emergence from
bankruptcy as a solvent debtor on July 1, 2020. The Plan did
not extend the automatic bankruptcy stay to the Individual
Defendants and, with some limitations, explicitly permitted
continued prosecution of this action against those
defendants.
    The Plan provided for the bankruptcy court’s continued
jurisdiction over certain claims asserted against PG&E,
including federal securities claims brought by shareholders
in the bankruptcy case by way of proofs of claim. The Plan
treats these “shareholder claims as ‘subordinated’”—
meaning that, if they succeed, they “are to be paid at reduced
amounts in shares of reorganized PG&E’s common stock.”
    Earlier in the bankruptcy proceedings, Plaintiffs sought
to pursue their securities claims against PG&E through a

3
  The Securities Act claims are brought on behalf of “all persons or
entities that acquired PG&E senior notes in or traceable to one or more
of the Notes Offerings and corresponding Offering Documents.”
                           PERA V. EARLEY                               9

class-action procedure. They moved the bankruptcy court to
treat their claims as “class proofs of claim” and to appoint
PERA (the lead Plaintiff here) as lead claimant for the class.
They presented to the bankruptcy court the Complaint in this
case and expressly incorporated its claims and allegations
into their securities claims filed in the bankruptcy court.
Further, Plaintiffs sought to define the proposed bankruptcy
class as “the proposed class [PERA] represents” in this
action, and made clear that the proposed bankruptcy class’s
claims “are based solely on the allegations in the
[Complaint].”
    The bankruptcy court denied Plaintiffs’ request for class
treatment in January 2021, and instead adopted a specialized
multi-step alternative-dispute-resolution procedure (the
securities-claims ADR) to “facilitate and simplify the
resolution of” the securities claims filed in the bankruptcy
case.4 The securities-claims ADR allows individual
claimants to submit trading information; make and receive
settlement offers; and, if necessary, mediate with PG&E.
Securities claims in the bankruptcy case that are not resolved
through settlement or mediation ultimately proceed to a
“claims reconciliation and objection process” before the
bankruptcy court. The parties appear to agree that this
claims-reconciliation process necessarily will require the
bankruptcy court to address the merits of the securities
claims raised in this litigation.

4
 The securities-claims ADR applies to shareholders who filed proofs of
claim in PG&E’s bankruptcy case alleging losses “related to purchases
of publicly-traded PG&E . . . securities as a result of alleged inadequate
or fraudulent disclosures or non-disclosures of information from April
29, 2015 through November 15, 2018.”
10                         PERA V. EARLEY

    As of April 9, 2021, more than 7,100 securities claims
had been filed in the bankruptcy case, totaling in the billions
of dollars. Approximately 1,600 of those claims have settled
through the securities-claims ADR, and many more remain
pending. PG&E and the Individual Defendants represent that
all settlements with securities claimants in the bankruptcy
case “have also resolved those claimants’ putative claims in
this [a]ction” through releases of claims.5
     C. The District Court’s Notice of Intent to Stay
    In April 2021, well over a year after the Individual
Defendants’ motions to dismiss were ripe for decision, the
district court issued a Notice of Intent to Stay (Notice) this
action based on the parties’ status reports concerning the
bankruptcy case. In one joint status report, Plaintiffs
emphasized the significant overlap between the bankruptcy
case and this action because the Plan “includes a ‘class’ . . .
of shareholder claims against PG&E that is, for all practical
purposes, a large subset of the putative class before th[e]
[district court].” Plaintiffs further acknowledged:

         [P]roceedings involving the merits of the
         securities claims in bankruptcy court . . . will
         necessarily involve addressing identical
         issues [the district court] may be called on to
         consider, including whether the 19 asserted
         false and misleading statements made over
         three-and-a-half years are actionable

5
  Certain named Plaintiffs in this action, but not PERA, allege that they
“are [entirely] excluded” from the bankruptcy securities-claims ADR.
However, it appears undisputed that many (or all) of the securities
claimants participating in the securities-claims ADR are also members
of the putative class in this action.
                        PERA V. EARLEY                       11

       (including the elements of falsity, materiality,
       and scienter), as well as whether and to what
       extent these statements caused investor losses
       over the nine asserted loss causation events.

Thus, Plaintiffs predicted that the bankruptcy court’s
adjudication of securities claims “may be conducted in
parallel with [this action in the district court], including to
judgment and, potentially, to inconsistent judgments on
identical issues.” In another status report, Plaintiffs
reiterated that “at some point, the bankruptcy court will face
the merits of the claims against PG&E that are also at issue
in the securities action before [the district court].”
    Apparently relying on Plaintiffs’ representations that the
two proceedings “will necessarily involve addressing
identical issues,” the district court issued the Notice
indicating its “inten[t] to stay this case pending completion
of the claims procedure and ADR.” The district court
reasoned that a stay “will promote judicial efficiency and
economy, as well as avoid the potential for inconsistent
judgments,” in part because “the ongoing bankruptcy
[securities] claim process will affect, among other things, the
size and potential damage claims of the putative classes in
this action.” The district court acknowledged that resolution
of the Individual Defendants’ motions to dismiss would be
delayed but determined that “the potential prejudice a delay
will cause to any of the parties” was outweighed by the
district court’s “stated justifications.”
    Plaintiffs objected to the district court’s Notice,
vigorously contending that staying the action would not
further judicial efficiency and that they and the putative class
would be prejudiced by the delay. Regarding judicial
efficiency, Plaintiffs argued that having the bankruptcy court
12                       PERA V. EARLEY

address the merits of the securities claims in the first instance
“cannot possibly avoid the potential for inconsistent
judgments” because the bankruptcy court’s decisions are
appealable to the district court, thereby eventually requiring
the district court to decide the full set of issues for itself. The
only efficient course, Plaintiffs reasoned, was for the district
court to decide the merits issues first. Additionally, Plaintiffs
argued that, because the Individual Defendants’
proportionate responsibility for any damages owed to the
putative class for securities violations must be determined by
a jury, the district court was incorrect that the bankruptcy
case addressing PG&E’s responsibility would affect the
“size and potential damage claims . . . in this action.”
    Regarding prejudice, Plaintiffs submitted reports of
multiple experts who estimated that the bankruptcy court’s
securities-claim ADR will likely take between four and
seven years to complete. Plaintiffs argued that this delay
significantly increased “the likelihood of lost evidence and
fading memories,” thereby prejudicing their ability to collect
evidence for their action. Plaintiffs also contended that a stay
would increase PG&E’s bargaining power and unfairly
inflate the importance of the securities-claim ADR because
putative class members who did or could not submit claims
were excluded from participating in the ADR.
    The Individual Defendants did not object to a stay or
identify any harm they would suffer if this action were not
stayed.
            D. The District Court’s Stay Order
    Over a year-and-a-half after issuing the Notice, the
district court entered a stay on the last day of September
2022 in a summary order (Order) that differed from the
Notice in several ways. First, the Order recited only
                           PERA V. EARLEY                              13

“efficiency” and an “overlap between the bankruptcy
proceedings and the instant securities fraud action” as
justifications for the stay, without any analysis. The Order
did not include the Notice’s additional justifications of “the
potential for inconsistent judgments” or the impact on “the
size and potential damage claims of the putative classes in
this action.” And second, the Order delineated that the stay
would last until “resolution of the bankruptcy proceedings”
instead of until “completion of the [securities-claims ADR],”
as the Notice had previously indicated. Plaintiffs timely
appealed from the Order.6
                II. STANDARD OF REVIEW
    “We review a district court’s stay order for abuse of
discretion. However, the standard is ‘somewhat less
deferential’ than the abuse of discretion standard used in
other contexts.” Dependable Highway Exp., Inc. v.
Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007)
(citations omitted). Regarding stays, “[a] district court
abuses its discretion if it ‘base[s] its ruling on an erroneous
view of the law or on a clearly erroneous assessment of the
evidence.’” Id. (second alteration in original) (quoting
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990)). It is more likely that a district court has abused its
discretion when the party seeking relief from the stay
establishes the stay “will result in irreparable injury and a

6
 Contrary to the opening brief’s representation that the notice of appeal
was filed on October 28, 2022, the notice of appeal was dated and filed
on October 31, 2022. The appeal was nevertheless timely because
October 30, the end of the statutory period, see 28 U.S.C. § 2107(a), fell
on a Sunday, see Fed. R. App. P. 26(a)(1)(C) (“[I]f the last day is a
Saturday, Sunday, or legal holiday, the period continues to run until the
end of the next day that is not a Saturday, Sunday, or legal holiday.”).
14                        PERA V. EARLEY

miscarriage of justice.” CMAX, Inc. v. Hall, 300 F.2d 265,
268 (9th Cir. 1962).
                   III.      DISCUSSION
                 A. Appellate Jurisdiction
    We first consider whether we have jurisdiction over this
interlocutory appeal. “Ordinarily, a stay order is not an
appealable final decision.” Davis v. Walker, 745 F.3d 1303,
1308 (9th Cir. 2014). The Supreme Court has recognized,
however, that a stay order is appealable as a final decision
under 28 U.S.C. § 1291 if the order places the plaintiff
“effectively out of court.” Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 9 (1983) (quoting
Idlewild Liquor Corp. v. Epstein, 370 U.S. 713, 715 n.2
(1962)). Moses H. Cone concerned a stay of a federal action
pending resolution of a state action that would have
preclusive effect, thereby placing the litigant “effectively out
of [federal] court.” Id. at 10 (internal quotation marks
omitted). But the reasoning of Moses H. Cone applies even
“absent risk that another proceeding will have res judicata
effect” where “an indefinite delay amounts to a refusal to
proceed to a disposition on the merits.” Blue Cross & Blue
Shield of Ala. v. Unity Outpatient Surgery Ctr., Inc., 490
F.3d 718, 723–24 (9th Cir. 2007). And while lengthy or
indefinite stays may fall within Moses H. Cone’s ambit, see
id. at 723, we comfortably assert jurisdiction over appeals
from orders imposing stays that are both lengthy and
indefinite, see Davis, 745 F.3d at 1309.
    The stay entered in this case is indefinite because its end
date is triggered by the occurrence of an external event that
is not time limited. See id.; see also Dependable Highway,
498 F.3d at 1066–67 (observing that “stays of short, or at
least reasonable, duration” are favored). But see Blue Cross,
                           PERA V. EARLEY                              15

490 F.3d at 724 (stating that lengthy or indefinite stays are
not “invariably improper or inappropriate”). Although the
stay could be lifted at some point in the future, the simple
fact that “litigation may eventually resume” does not deprive
us of appellate jurisdiction. Id. at 724; see Lockyer v. Mirant
Corp., 398 F.3d 1098, 1102 (9th Cir. 2005) (“[A]bsolute
certainty is not required in order to put a party ‘effectively
out of court’ within the meaning of the Moses H. Cone
doctrine.”).
    The stay entered here is also likely to be extremely
lengthy. The stay has already been in place for over 18
months, the benchmark we first recognized in Blue Cross.
490 F.3d at 724. We agree with the Individual Defendants
that Blue Cross did not establish a categorical rule that any
stay lasting longer than 18 months places litigants effectively
out of court. Nor do we establish such a rule here. There may
be circumstances in which a stay of this duration does not
prevent litigants from accessing court.7 But 18 months is
nonetheless a guidepost for our analysis, and the
circumstances here fall within Moses H. Cone’s reasoning.
    Moreover, given the size and complexity of PG&E’s
bankruptcy proceeding, we are persuaded that the stay is
likely to continue for a significant period. Plaintiffs’ expert
opined that the securities-claims ADR process alone could

7
  Our prior cases endorse a clear rule that the district court abuses its
discretion by issuing a stay order that places a plaintiff out of court,
regardless of the type of court presiding over the related proceeding. See
Leyva v. Cert. Grocers of Cal., Ltd., 593 F.2d 857, 863–64 (9th Cir.
1979) (“This rule [governing the district court’s stay authority] applies
whether the separate proceedings are judicial, administrative, or arbitral
in character, and does not require that the issues in such proceedings are
necessarily controlling of the action before the court.”); id. at 864
(collecting cases).
16                          PERA V. EARLEY

take approximately seven years to complete, a calculation
that the Individual Defendants do not contest. And as
explained, the stay the district court entered does not
terminate until “resolution of the bankruptcy proceedings,”
which could be much longer than seven years.
    Finally, to the extent there is any ambiguity regarding
whether the district court intended to end the stay at the
conclusion of the securities-claim ADR process or at the
conclusion of the bankruptcy proceedings as a whole, the
difference is immaterial. Measured against either end point,
the stay is of such a duration as to trigger jurisdiction under
Moses H. Cone and Blue Cross. Accordingly, we conclude
that we have jurisdiction over this interlocutory appeal.8
                        B. The Stay Order
    We next turn to whether the district court abused its
discretion by staying this case pending resolution of PG&E’s
bankruptcy proceedings. The district court possesses
“inherent authority to stay federal proceedings pursuant to
its docket management powers.” Ernest Bock, LLC v.
Steelman, 76 F.4th 827, 842 (9th Cir. 2023). A district court
“may, with propriety, find it is efficient for its own docket
and the fairest course for the parties to enter a stay of an

8
  In cases invoking Moses H. Cone, we have previously also analyzed
the existence of jurisdiction under the related doctrine set forth in Cohen
v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). See, e.g.,
Lockyer, 398 F.3d at 1103–04; see also Dependable Highway, 498 F.3d
at 1065 (“To fall within Cohen’s ambit, an order ‘must [1] conclusively
determine the disputed question, [2] resolve an important issue
completely separate from the merits of the action, and [3] be effectively
unreviewable on appeal from a final judgment.’” (quoting Coopers &
Lybrand v. Livesay, 437 U.S. 463, 468 (1978))). We decline to conduct
this additional analysis here because this appeal clearly falls within
Moses H. Cone.
                             PERA V. EARLEY                               17

action before it, pending resolution of independent
proceedings which bear upon the case.” Mediterranean
Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th
Cir. 1983) (citation omitted). The decision to stay
proceedings “calls for the exercise of judgment, which must
weigh competing interests and maintain an even balance.”
Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936).
    Our prior cases have “identified three non-exclusive
factors courts must weigh when deciding whether to issue a
docket management stay: (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.’” Ernest Bock, 76 F.4th at 842 (quoting
Lockyer, 398 F.3d at 1110).9 A district court’s concern for
the last factor, which courts refer to as “judicial efficiency,”
“standing alone is not necessarily a sufficient ground to stay
proceedings.” Dependable Highway, 489 F.3d at 1066. We
begin our analysis there.
                       1. Judicial Efficiency
   The district court gave a single justification for its stay
order: judicial efficiency. Because of “the overlap between

9
 In Blue Cross, we referenced a five-factor balancing test set forth in
Keating v. Office of Thrift Supervision, 45 F.3d 322, 325 (9th Cir. 1995).
490 F.3d at 724. Keating’s five-factor test is materially similar to the test
originally described in CMAX—both consider judicial efficiency and
prejudice to the parties and others—but the Keating test has been applied
when a district court is considering staying “civil proceedings in the face
of a parallel criminal proceeding,” as was the case in Blue Cross.
Keating, 45 F.3d at 324. Because there are no parallel criminal
proceedings here, we apply the balancing test set forth in CMAX. See
Lockyer, 398 F.3d at 1112 (applying the CMAX test).
18                      PERA V. EARLEY

the bankruptcy proceedings and the instant securities fraud
action,” the district court concluded that “[a] stay of the
entire action ‘is in the interest of efficiency’ and would avoid
proceeding on a piecemeal basis.” The parties dispute
whether the stay here achieves any efficiency.
      A district court may stay a case “pending resolution of
independent proceedings which bear upon the case,” and we
have clarified “that the issues in such [independent]
proceedings” do not need to be “necessarily controlling of
the action before the [district] court.” Leyva, 593 F.2d at
863–64. Indeed, we have repeatedly held that a district court
does not abuse its discretion by staying litigation for
efficiency reasons pending resolution of other related
proceedings. See, e.g., Lockyer, 398 F.3d at 1110–12
(discussing cases upholding stays). For example, in CMAX,
a mandamus proceeding challenging a stay order, we upheld
a stay pending resolution of related administrative
proceedings because “at the very least, the [administrative]
proceeding [would] provide a means of developing
comprehensive evidence bearing upon the highly technical
. . . questions which [were] likely to arise in the district court
case.” 300 F.2d at 269. And in Mediterranean Enterprises,
we sustained the district court’s stay of an entire federal
action pending resolution of arbitration proceedings, even
though only some of the plaintiff’s claims were subject to
arbitration, because both the federal action and arbitration
involved identical questions. 708 F.2d at 1465.
    Plaintiffs argue that any efficiency achieved by the stay
entered here is illusory because any decision the bankruptcy
court makes about PG&E’s liability for federal securities
violations is appealable to—and not binding on—the district
court. Plaintiffs further contend that “the [s]tay does not
avoid piecemeal litigation because the separate claims
                        PERA V. EARLEY                        19

against [the Individual] Defendants . . . will still, eventually,
need to proceed to discovery and then judgment in the
District Court.” We are not persuaded. As the Individual
Defendants argue, the efficiency to be gained by the stay is
not illusory simply because the bankruptcy court’s decision
will not bind the district court or because the district court
will still have to adjudicate the claims. See Leyva, 593 F.2d
at 863–64; CMAX, 300 F.2d at 269.
    Put simply, because the bankruptcy court must address
issues identical to those presented in this action in resolving
the securities claims asserted against PG&E in the
bankruptcy action, the district court could receive
“considerable assistance in resolving” this action from the
bankruptcy court’s development of the record and
assessment of common issues. Lockyer, 398 F.3d at 1110.
Indeed, Plaintiffs acknowledge as much: They represented
that PG&E is likely to “seek and provide discovery, engage
experts, and conduct evidentiary hearings” in litigating the
securities claims pending in the bankruptcy court, including
in relation to the complex element of loss causation.
Plaintiffs’ own statements thus highlight how the bankruptcy
court’s adjudication of “identical” securities claims could “at
the very least, . . . provide a means of developing
comprehensive evidence bearing upon the highly technical
[securities] questions which are likely to arise in the district
court case.” CMAX, 300 F.2d at 269; see also Leyva, 593
F.2d at 863 (“[F]indings, as well as the documents and
testimony produced during the arbitration hearing, may be
of valuable assistance to the court in resolving the [statutory]
claims presented in . . . the complaint, even under the
assumption that the court is not bound and controlled by the
arbitrator’s conclusions.”).
20                          PERA V. EARLEY

     Accordingly, we hold that the district court did not abuse
its discretion in determining that the bankruptcy court’s
initial determination of identical factual and legal issues
could promote efficient adjudication of the claims presented
in this action.10 See Lockyer, 398 F.3d at 1113 (holding that
the district court’s stay was improper where, among other
considerations, “the proceeding in the bankruptcy court
[was] unlikely to decide, or contribute to the decision of, the
factual and legal issues before the district court”).
                            2. Prejudice
    Even if there are efficiencies to be gained by a stay, the
district court must also weigh the relative hardships that a
stay might cause. See Landis, 299 U.S. at 254–55; CMAX,
300 F.2d at 268. In Landis, the Supreme Court made clear
that “if there is even a fair possibility that the stay . . . will
work damage to some one else,” the party seeking a stay
“must make out a clear case of hardship or inequity in being
required to go forward.” 299 U.S. at 255. Here, no party
sought a stay, and the district court did not adequately weigh
these interests.
     To begin, the Individual Defendants do not articulate any
prejudice that they will suffer from having to continue
litigating this case. See Lockyer, 398 F.3d at 1112 (“[B]eing

10
   The district court’s Notice included two more efficiency-based
justifications—the “potential for inconsistent judgments” and that “the
ongoing bankruptcy claim process will affect, among other things, the
size and potential damage claims of the putative classes in this action.”
Because we conclude that the invocation of judicial efficiency in the
district court’s Order was a proper justification for a stay and adequately
supported by the record, we need not address the additional questions of
whether we may look to the Notice’s justifications and, if so, whether
these justifications support a stay.
                            PERA V. EARLEY                              21

required to defend a suit, without more, does not constitute
[prejudice].”). Therefore, there are no relative hardships to
balance. The question is whether the stay imposes hardship
on Plaintiffs that outweighs the efficiencies to be gained by
the stay. Both below and on appeal, Plaintiffs raised several
arguments for why they will be prejudiced by a stay,
including: (1) danger of lost evidence; (2) competition with
claimants in other actions for limited insurance covering
damages awards; and (3) inability for class members who
did not (or were unable to) submit claims in the bankruptcy
proceedings to “pursue a remedy in any court, for an
unknown length of time.” The district court’s Notice tersely
acknowledged that a stay could cause prejudicial delay, but
its Order was silent as to Plaintiffs’ specific arguments raised
in their objections.
    The Order’s failure to address Plaintiffs’ prejudice
arguments is particularly problematic because the length of
the stay ordered exceeds what the district court initially
indicated in the Notice.11 While a district court has discretion
to grant a lengthy stay, it must “weigh[] the proper factors”
in doing so. Blue Cross, 490 F.3d at 724. “We cannot review
the district court’s exercise of its discretion in weighing
these factors unless we know that it has done so and why it
reached its result.” Id. Here, the district court’s Order gives
no indication that Plaintiffs’ specific objections were
considered or why the efficiencies the district court seeks to
gain outweigh the potential prejudice caused by the

11
  Despite the plain terms of the Order stating that the stay remains in
place until “resolution of the bankruptcy proceedings,” the Individual
Defendants contend that the stay lasts only until completion of the
securities-claims ADR, as contemplated in the district court’s Notice.
The Individual Defendants offer no authority establishing that the district
court’s Notice controls over the express terms of the Order.
22                             PERA V. EARLEY

significant delay. Because we generally “decline to indulge
in speculation in an effort to make plain that which is not
discernible in the record,” Barba-Reyes v. United States, 397
F.2d 91, 93 (9th Cir. 1967), we must end our analysis here.
The district court, more familiar with the complexities
presented in this action and the extent of this action’s overlap
with the bankruptcy action, is in the better position to assess
and weigh Plaintiffs’ objections to the stay in the first
instance. If, after considering the potential prejudice to
Plaintiffs, the district court determines that a stay is
nonetheless appropriate, it should state its findings and
explain why a stay promotes “a just and efficient
determination of th[is] case.” Leyva, 593 F.2d at 864.
    For these reasons, we vacate the stay and remand for the
district court to weigh all the relevant interests in
determining whether a stay of this action is appropriate. See
CMAX, 300 F.2d at 268.
       VACATED and REMANDED.12

12
     Plaintiffs’ motion for judicial notice [Dkt. 46] is granted.