Carly E. Simon v. Starbucks Corporation, No. 2:2009cv09074 - Document 16 (C.D. Cal. 2009)

Court Description: MEMORANDUM in Opposition to MOTION to Stay Case pending Decision by the United States Supreme Court on a Controlling Issue of Law 10 filed by Plaintiff Carly E. Simon. (Goldman, Jeremy)

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Case 2:09-cv-09074-GW-PLA Document 16 1 2 3 4 5 6 7 8 9 10 11 12 Filed 12/23/09 Page 1 of 13 David W. Shapiro (SBN 219265) Jeremy M. Goldman (SBN 218888) BOIES, SCHILLER & FLEXNER, LLP 1999 Harrison Street, Suite 1900 Oakland, CA 94612 (510) 874-1000 dshapiro@bsfllp.com, jgoldman@bsfllp.com David Boies BOIES, SCHILLER & FLEXNER, LLP 333 Main Street Armonk, New York 10504 (914) 749-8200 dboies@bsfllp.com Philip M. Bowman BOIES, SCHILLER & FLEXNER, LLP 575 Lexington Avenue New York, New York 10022 (212) 446-2300 pbowman@bsfllp.com (pro hac vice motion pending) Attorney for Plaintiff Carly E. Simon 13 14 UNITED STATES DISTRICT COURT 15 CENTRAL DISTRICT OF CALIFORNIA 16 WESTERN DIVISION 17 CARLY E. SIMON, 18 Plaintiff, 19 v. 20 21 22 23 24 STARBUCKS CORPORATION, Defendants. Case No. CV09-09074 GW (PLAx) PLAINTIFF CARLY E. SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY PENDING DECISION BY THE UNITED STATES SUPREME COURT ON A CONTROLLING ISSUE OF LAW (Civil Code §§ 1709, 1710, Tortious Interference with Contract, Business & Professions Code §17200 et seq.) 25 26 27 28 __________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 Filed 12/23/09 Page 2 of 13 TABLE OF CONTENTS 2 3 INTRODUCTION ...................................................................................................1 4 ARGUMENT...........................................................................................................2 5 I. LEGAL STANDARD.........................................................................2 6 II. A STAY SHOULD NOT BE GRANTED WHEN THERE IS NO UNSETTLED QUESTION OF LAW ........................................................................2 III. 9 GRANTING A STAY WILL PREJUDICE MS. SIMON AND DENYING A STAY WILL CAUSE NO HARM TO STARBUCKS. ....................................................................................7 10 CONCLUSION........................................................................................................9 7 F L E X N E R & S C H I L L E R O A K L A N D , B O I E S , C A L I F O R N I A L L P 8 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 Filed 12/23/09 Page 3 of 13 TABLE OF AUTHORITIES 2 Cases 3 Burns v. Mukasey, No. CIV S-09-0497-MCE-CMK, 2009 WL 3756489 (E.D. Cal. Nov. 6, 2009) ...................................................................................................................5 4 5 6 7 & C A L I F O R N I A S C H I L L E R B O I E S , 9 O A K L A N D , F L E X N E R L L P 8 10 11 12 13 14 15 Clinton v. Jones, 520 U.A. 681, 117 S.Ct. 1636 (1997).................................................................2 CMAX, Inc. v. Hall, 300 F.2d 265 (9th Cir. 1962) ...............................................................................7 Espinoza v. County of Fresno, 2009 U.S. Dist. LEXIS 58025 (E.D. Cal. June 18, 2009)..................................6 Friend v. Hertz Corp., 297 Fed. Appx. 690 (9th Cir. 2008) ...................................................................3 Friend v. Hertz Corporation, No. C-07-5222 MMC, 2008 WL 7071465 (N.D. Cal. Jan. 15, 2008) .............. 3 Greene v. Sanchez, No. CVF 045439, 2006 WL 708540 (E.D. Cal. Mar. 21, 2006)........................5 16 17 18 19 20 21 22 23 24 25 26 Hertz Corp. v. Friend, 08-1107 (U.S. cert. granted June 8, 2009)......................................................1, 2 J.A. Olson Co. v. City of Winona, 818 F.2d 401 (5th Cir. 1987) ..............................................................................8 Landis v. North America Co., 299 U.S. 248, 57 S.Ct. 163 (1936) .....................................................................2 Mbalati v. Starbucks Corporation, CV 07-3267 RGK (FFMx) (C.D. Cal. June 12, 2007).......................................4 Nordyke v. King, 575 F.3d 890 (9th Cir. 2009) ...............................................................................6 Ortega v. J.B. Hunt Transp., Inc., 258 F.R.D. 361 (C.D. Cal. 2009)........................................................................6 27 28 ii ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 3 4 5 Filed 12/23/09 Page 4 of 13 Pena v. Cid, 2009 U.S. Dist. LEXIS 92605 (E.D. Cal. Oct. 2, 2009) ....................................6 Tosco Corp. v. Communities for a Better Environment, 236 F.3d 495 (9th Cir. 2001) ..........................................................................3, 8 Yong v. Immigration and Naturalization Service, 208 F.3d 1116 (9th Cir. 2000) ............................................................................4 6 7 F L E X N E R & C A L I F O R N I A S C H I L L E R 28 U.S.C. § 1441(b).............................................................................................1, 4 9 L L P 8 O A K L A N D , B O I E S , Other Authorities 28 U.S.C. §§ 1332 and 1441....................................................................................1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 5 of 13 Plaintiff Carly E. Simon ( Simon ) respectfully submits this memorandum of law in opposition to Defendant Starbucks Corporation s ( Starbucks ) Motion 3 4 to Stay Pending Decision by the United States Supreme Court on a Controlling 5 Issue of Law. 6 7 L L P F L E X N E R & 9 C A L I F O R N I A S C H I L L E R On October 9, 2009, Simon, a citizen of Massachusetts, filed this action 8 O A K L A N D , B O I E S , INTRODUCTION based on state law against Defendant Starbucks in Los Angeles Superior Court. 10 On December 10, 2009 Starbucks removed this action on the basis of diversity 11 pursuant to 28 U.S.C. §§ 1332 and 1441. At the same time, Starbucks filed this 12 13 motion to stay all proceedings in this case pending a decision by the United States 14 Supreme Court in Hertz Corporation v. Friend, 08-1107 (U.S. cert granted June 15 8, 2009). Starbucks effectively concedes that under settled Ninth Circuit 16 17 precedent, this case was not properly removed under 28 U.S.C. § 1441(b) because 18 Starbucks is deemed to be a citizen of California, but argues that in Hertz the 19 Supreme Court is is expected to adopt a test that is different from the operative 20 21 test in the Ninth Circuit. Def s Br. at 2. As discussed below, however, a stay of 22 proceedings pending the outcome of another case is an extraordinary measure 23 granted only in rare circumstances. Under the present circumstances, where the 24 25 law of the Ninth Circuit is clear and settled, pending Supreme Court review of a 26 Ninth Circuit decision is not a basis on which to grant a stay of separate 27 28 proceedings, even where the Supreme Court s decision would affect the outcome 1 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 6 of 13 of those proceedings. This is particularly true here, where there is no substantive question of law, and the only issue is whether the case proceeds in state court or 3 4 in federal court. 5 ARGUMENT 6 7 L L P F L E X N E R & C A L I F O R N I A S C H I L L E R 9 10 Legal Standard A court should grant a stay of proceedings only when the proponent of the 8 O A K L A N D , B O I E S , I. stay makes a clear case that the party will suffer hardship or inequity in being required to move forward when there is even a fair possibility that the stay for 11 12 which it prays will work damage to the non-moving party. Landis v. North 13 America Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166 (1936). The movant bears the 14 burden of proving that a stay is warranted. Clinton v. Jones, 520 U.S. 681, 708, 15 16 117 S.Ct. 1636 (1997). Only in rare circumstances will a litigant in one cause be 17 compelled to stand aside while a litigant in another settles the rule of law that will 18 define the rights of both. Landis, 299 U.S. at 255. 19 20 21 A Stay Should Not Be Granted When There is No Unsettled Question of Law 22 Starbucks seeks a stay of all proceedings in this case pending the Supreme 23 II. Court s decision in Hertz Corp. v. Friend, 297 Fed. Appx. 690, 691 (9th Cir. 24 25 2008), cert. granted (U.S. June 8, 2009) (No. 08-1107). Hertz originated as a 26 class action against Hertz Corporation in the California state courts. Hertz 27 removed the action to the United States District Court for the Northern District of 28 2 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 7 of 13 California on the basis of diversity jurisdiction. Plaintiffs were all citizens of California and Hertz claimed to be a citizen of Delaware, the state where it is 3 4 incorporated, and New Jersey, where it maintains its corporate headquarters. See 5 Friend v. Hertz Corporation, No. C-07-5222 MMC, 2008 WL 7071465, *1 (N.D. 6 Cal. Jan. 15, 2008). Settled Ninth Circuit law holds that where the majority of a 7 F L E X N E R & C A L I F O R N I A S C H I L L E R O A K L A N D , B O I E S , corporation s business activity does not take place in one state, the citizenship of 9 L L P 8 a corporation for purposes of diversity jurisdiction is the state in which the 10 corporation s business activity is significantly larger than any other state in which 11 12 the corporation conducts business, even if the corporate headquarters are located 13 in a different state. See Tosco Corp. v. Communities for a Better Environment, 14 236 F.3d 495, 500-02 (9th Cir. 2001). Applying that settled law, both the district 15 16 court and the Ninth Circuit held that Hertz was a citizen of California because a 17 substantial predominance of its activities were in the state of California. See id. at 18 *2-3 (finding Hertz a citizen of California where it has 43% more employees, 19 20 75% more tangible property, earns over 60% more revenue, and conducts over 21 70% of its primary business activity car rentals in the state of California than 22 in Florida, the state where Hertz has the next greatest amount of activity); Friend 23 24 v. Hertz Corp., 297 Fed. Appx. 690, 691 (9th Cir. 2008) (finding Hertz a citizen 25 of California because its relevant business activities are significantly larger in 26 27 28 California than in the next largest state, Florida). Under the standard set forth in Tosco and Hertz, Starbucks is a citizen of California and this case was not 3 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 8 of 13 properly removed to federal court. See 28 U.S.C. § 1441(b) (where no federal question jurisdiction exists, actions are only removable if no defendant is a citizen 3 4 of the state in which the action was brought); Mbalati v. Starbucks Corporation, 5 CV 07-3267 RGK (FFMx) (C.D. Cal. June 12, 2007) (finding Starbucks a citizen 6 of California because 27% of Starbucks total workforce is in California 100% 7 F L E X N E R & C A L I F O R N I A S C H I L L E R O A K L A N D , B O I E S , more than the next highest state, California generates 25% of Starbucks revenues 9 L L P 8 more than 300% more than the next highest state, and 27% of Starbucks retail 10 stores are in California more than 200% more than the next highest state). 11 12 13 14 Starbucks does not assert that there is any question as to the proper standard for determining citizenship of a corporate party in the Ninth Circuit. Rather, Starbucks only argument is that the Supreme Court is expected to 15 16 adopt a different test in the Hertz case. That is not a basis on which to grant a 17 stay. A stay of proceedings pending a decision by the Supreme Court is not 18 warranted when, as here, the law is settled. See, e.g., Greene v. Sanchez, No. 19 20 CVF 045439, 2006 WL 708540 (E.D. Cal. Mar. 21, 2006) (citing Yong v. 21 Immigration and Naturalization Service, 208 F.3d 1116, 1119 n.2 (9th Cir. 22 2000)). In Greene, the court denied a stay pending a decision of the Supreme 23 24 Court, stating: A pending decision by the U.S. Supreme Court on certiorari does 25 not render the Ninth Circuit s holding [in the case being reviewed] unreliable. 26 27 28 Greene, 2006 WL 708540, at *1. As the court in Greene further stated: The Ninth Circuit has made clear that once an opinion is entered on its docket and 4 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 9 of 13 forwarded for publication, it is . . . final for such purpose as stare decisis and full faith and credit unless it is withdrawn by the court. As such, this Court is bound 3 4 to proceed unless and until applicable authority is no longer reliable. Id. 5 (internal quotation marks omitted). 6 Similarly, in Burns v. Mukasey, No. CIV S-09-0497-MCE-CMK, 2009 WL 7 F L E X N E R & C A L I F O R N I A S C H I L L E R O A K L A N D , B O I E S , 3756489, *4 (E.D. Cal. Nov. 6, 2009) the court denied a stay of proceedings 9 L L P 8 pending resolution of cases before the U.S. Supreme Court and the Ninth Circuit 10 despite the fact that the decisions would be dispositive of an issue in the case. 11 12 The court held that there was no reason to stay proceedings given that the case 13 [did] not present a question of first impression which is pending in a higher 14 court. Rather, the current precedent which this court must follow answers the 15 16 question . . . [w]hether the Supreme Court may eventually conclude otherwise . . . 17 does not change the binding effect of current valid case law. Id. 18 Indeed, Starbucks has cited no case, and Simon is aware of no case, in 19 20 which a court in the Ninth Circuit granted a stay of proceedings pending a review 21 by the Supreme Court of a Ninth Circuit decision. That is not surprising. The 22 standard proposed by Starbucks would require a massive disruption to the 23 24 business of courts around the country every time the Supreme Court grants 25 certiorari. 26 27 28 The cases cited by Starbucks do not support its position. In Pena v. Cid, in direct contrast to the facts here, the relevant law within the Ninth Circuit was not 5 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 10 of 13 settled. 2009 U.S. Dist. LEXIS 92605 (E.D. Cal. Oct. 2, 2009). Critical to the plaintiff s case in Pena was whether the Due Process Clause of the Fourteenth 3 4 Amendment incorporates the Second Amendment, making the Second 5 Amendment applicable to the states, an issue of first impression in the Ninth 6 Circuit. Pena, 2009 U.S. Dist. LEXIS 92605, at *4-6. A panel of the Ninth 7 F L E X N E R & C A L I F O R N I A S C H I L L E R O A K L A N D , B O I E S , Circuit had recently held that the Due Process Clause did incorporate the Second 9 L L P 8 Amendment, but the Ninth Circuit had accepted the case for rehearing en banc 10 and directed that the three-judge panel opinion shall not be cited as precedent by 11 12 or to any court of the Ninth Circuit . Id. at *3 (emphasis added) (quoting 13 Nordyke v. King, 575 F.3d 890 (9th Cir. 2009). Accordingly, there was no settled 14 law in the Ninth Circuit and it was thus appropriate to grant a short stay to allow 15 16 17 18 the Ninth Circuit to rehear the case en banc. Similarly, in the second case cited by Starbucks, Espinoza v. County of Fresno, 2009 U.S. Dist. LEXIS 58025 (E.D. Cal. June 18, 2009), there was no 19 20 established Ninth Circuit precedent on the issue before the district court: whether 21 the donning and doffing of a police uniform is compensable work. The district 22 court therefore granted a motion to stay the proceedings pending decisions by the 23 24 25 Ninth Circuit in two cases that presented the issue. Id. at *2-4. In Ortega v. J.B. Hunt Transp., Inc., 258 F.R.D. 361 (C.D. Cal. 2009), the 26 27 28 district court found that the interpretation of a California statute was a matter of considerable debate in the courts in California and therefore granted a stay 6 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 Filed 12/23/09 Page 11 of 13 pending decisions of the California Supreme Court. Id. at 368, 371. 2 Here, in contrast to all the cases cited by Starbucks, the law of corporate 3 4 citizenship in the Ninth Circuit is clear and settled, as Starbucks concedes, and the 5 Court is bound to apply it. 6 7 & C A L I F O R N I A S C H I L L E R B O I E S , 9 O A K L A N D , F L E X N E R L L P 8 10 11 III. Granting a Stay Will Prejudice Simon and Denying a Stay Will Cause No Harm to Starbucks. The Supreme Court heard oral arguments in Hertz on November 10, 2009. The Supreme Court does not have a set calendar and may hand down a decision at any time after oral argument. See Guide for Counsel in Cases to Be Argued 12 13 Before the Supreme Court of the United States, October 2009, p. 14, available 14 online at www.supremecourtus.gov/oral_arguments/guideforecounsel.pdf. The 15 only information provided by the Supreme Court is that cases argued during the 16 17 Term are usually decided before the end of June. Id. at 15. It is unreasonable to 18 delay this case for up to six months when there is controlling precedent in the 19 Ninth Circuit to inform the Court in its determination of Starbucks place of 20 21 citizenship. Starbucks suggests that where only money damages are sought, no 22 harm to a plaintiff can result from a stay, citing CMAX, Inc. v. Hall, 300 F.2d 265, 23 268-69 (9th Cir. 1962). That is not the law. In CMAX, the issue was whether a 24 25 writ of mandamus should be granted, a drastic remedy to which resort should be 26 had only in extraordinary cases . Id. at 268. In seeking that drastic remedy, the 27 28 petitioner argued that it would suffer irreparable injury and a miscarriage of 7 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 12 of 13 justice if a stay were not granted. Id. The Ninth Circuit found that the petitioner had not made a showing of irreparable injury such as would justify the grant of a 3 4 writ of mandamus. Id. Here, the question is whether there is even a fair 5 possibility that the stay . . . will work damage to Simon, Landis at 255, not 6 whether she will be irreparably harmed. A potential delay of six months would 7 & C A L I F O R N I A S C H I L L E R B O I E S , 9 O A K L A N D , F L E X N E R L L P 8 10 plainly prejudice her. By contrast, Starbucks can articulate no harm that would result to it if proceedings were not stayed and the case which is based entirely on state law 11 12 were remanded to state court. As discussed above, under established Ninth 13 Circuit precedent, Starbucks has no right to a federal forum. But even assuming 14 the Supreme Court was to articulate a different standard, there is simply no reason 15 16 to believe that Starbucks could not receive a fair trial in state court. See Tosco 17 Corp, 236 F.3d at 502 (citing J.A. Olson Co. v. City of Winona, 818 F.2d 401, 404 18 (5th Cir. 1987) ( The purpose of diversity jurisdiction is to provide a federal 19 20 forum for out-of-state litigants where they are free from prejudice in favor of a 21 local litigant. Plaintiff, as a major employer and business operator in California, 22 is not the type of litigant that diversity jurisdiction was designed to protect. ) 23 24 Indeed, Starbucks has cited no case, and plaintiff is aware of no case, in which a 25 court has granted a stay pending review of a decision by a higher court where the 26 27 28 only question was whether the case would proceed in state court or federal court. Accordingly, Starbucks motion to stay should be denied for the additional reason 8 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY Case 2:09-cv-09074-GW-PLA Document 16 1 2 Filed 12/23/09 Page 13 of 13 that Starbucks can articulate no harm let alone the required clear case of hardship or inequity, Landis at 255, that would result from the denial of a stay. 3 4 CONCLUSION 5 For all of the above reasons, Simon requests that Starbucks motion be 6 7 & C A L I F O R N I A S C H I L L E R B O I E S , 9 O A K L A N D , F L E X N E R L L P 8 denied. Dated: December 23, 2009 Respectfully submitted, BOIES, SCHILLER & FLEXNER, LLP 10 11 12 13 14 15 David W. Shapiro Jeremy M. Goldman 1999 Harrison Street, Suite 1900 Oakland, CA 94612 (510) 874-1000 Attorney for Plaintiff 16 17 OF COUNSEL: 18 David Boies 333 Main Street Armonk, New York 10504 (914) 749-8200 19 20 21 22 23 Philip M. Bowman 575 Lexington Avenue New York, New York 10022 (212) 446-2300 (pro hac vice motion pending) Of counsel to Plaintiff 24 25 26 27 28 9 ___________________________________________________________________________________________________________________ SIMON S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT S MOTION TO STAY

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