Republic of Turk. v. Christie's, Inc.
316 F. Supp. 3d 675 (2018)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A stay of discovery pending a motion to dismiss is not automatic and requires the moving party to demonstrate "good cause" under Federal Rule of Civil Procedure 26(c). Courts consider factors including the burden of discovery, potential prejudice from a delay, and the apparent strength of the pending motion to dismiss.
Facts:
- Michael Steinhardt consigned a rare Anatolian Kiliya-Type Idol to Christie's, Inc. for auction.
- The Republic of Turkey claimed it was the rightful owner of the Idol, alleging it was illicitly removed from its territory.
- Christie's proceeded with the auction, and a 'High Bidder' won the right to purchase the Idol.
- The Republic of Turkey filed a lawsuit to recover the Idol on the eve of the auction's completion.
- In addition to the lawsuit, the Republic allegedly engaged in 'acts of intimidation' to interfere with the sale, including publishing a full-page newspaper advertisement and instigating a demonstration at Christie's.
- Following these actions, the High Bidder withdrew their bid and declined to purchase the Idol.
- Christie's and Steinhardt claimed they suffered financial damages because the sale fell through.
Procedural Posture:
- The Republic of Turkey sued Christie's and Steinhardt in the U.S. District Court for the Southern District of New York, seeking to recover the Idol.
- Christie's and Steinhardt filed amended counterclaims against the Republic, including claims for tortious interference with contract and prospective economic advantage.
- The Republic of Turkey filed a motion to dismiss the tortious interference counterclaims.
- The Republic then filed a letter-motion with a Magistrate Judge seeking to stay (pause) all discovery related to the tortious interference counterclaims pending the District Court's ruling on its motion to dismiss.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a party's filing of a motion to dismiss, combined with assertions that the opponent's claims are 'scandalous and unfounded,' constitute sufficient 'good cause' under Federal Rule of Civil Procedure 26(c) to justify a stay of discovery on those claims?
Opinions:
Majority - Stewart D. Aaron
No. The filing of a motion to dismiss does not automatically constitute 'good cause' to stay discovery under FRCP 26(c). The court, exercising its discretion, found the Republic failed to meet its burden of demonstrating good cause. The court applied a multi-factor test, considering the burden of discovery, prejudice to the opposing party, and the strength of the pending motion. Here, the Republic conceded the requested discovery was 'limited,' negating any argument of undue burden. Furthermore, after a preliminary review, the court could not conclude that the tortious interference counterclaims were 'utterly devoid of merit,' as they plausibly alleged the required elements for the tort, including that the Republic may have used 'wrongful means' by instituting litigation in bad faith. Without a strong showing of either undue burden or a high likelihood of success on the motion to dismiss, a stay is not warranted.
Analysis:
This case illustrates the high bar for obtaining a stay of discovery pending a dispositive motion, reaffirming that such stays are an exception, not the rule. The decision emphasizes that a party cannot halt discovery simply by asserting that an opponent's claims are meritless or 'scandalous'; it must provide a specific, factual showing of undue burden or demonstrate that the motion to dismiss is highly likely to succeed. This reinforces the judicial preference for keeping litigation moving forward and preventing the use of procedural motions as a tool for delay, ensuring that discovery proceeds unless a compelling reason is presented.
