Two plaintiffs’ firms filed nearly identical class actions against a dietary supplement company, alleging that one of its weight loss supplement didn’t work. The cases were filed within two weeks of each other, one in federal court (Branca v. Iovate Health Sciences USA, Inc.), and one in California state court (Garcia v. Iovate Health Sciences USA, Inc.). Shortly thereafter, the defendant filed a motion to stay in the federal case, because it had settled the case in state court.
So far, this was all just run-of-the-mill procedural maneuvering. So why make it the subject of a blog post? As the court explained:
Why not stay this case, if one that’s virtually identical to it, and would resolve all of the claims, has reached a preliminary settlement that is now awaiting court approval? The real reason, according to Branca, is that the Garcia settlement is collusive, or at least looks really bad.
(Italics in original; bold emphasis added.) The part that "look[ed] really bad" was that the firm representing the defendant had been about to engage in mediation with opposing counsel when the Garcia case was filed. The opinion implies (but does not state outright) that the quick settlement in the Garcia case might be the result of a reverse auction.
The Court has read the parties’ briefs and given considerable thought to them. Here’s the basic problem: No matter how hard Iovate tries to argue that a stay is warranted under Landis v. North American Co., 299 U.S. 248, 254, 57 S. Ct. 163, 81 L. Ed. 153 (1936), and no matter how hard Branca tries to argue back that a stay isn’t warranted under Colorado River Conservation Dist. v. United States, 424 U.S. 800, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976), the real fight here is for control of a class action between two warring plaintiffs’ firms. That fight, moreover, is inseparable from the ostensibly disinterested legal arguments they make for the Court staying or not staying this case.
But, having identified the real stakes of the motion to stay, the court decided to grant it anyway.
The Court’s view is that if there’s something procedurally or substantively unsavory about the Garcia settlement, even though it appears to be the result of vigorous bargaining before an experienced mediator, Judge de Bellefeuille should be the judge to say so. Garcia is her case. But until Judge de Bellefeuille makes that call, and meaningfully stalls the progress of the Garcia settlement, the Court is inclined to exercise its discretionary power under Landis to stay this case in the interest of judicial economy.
The case is notable because it’s not often that a court will pull back the curtain to expose the real interests behind a mundane procedural motion. That kind of realism is always worth a second look. And the takeaway for defense lawyers is one that always bears repeating: don’t be afraid of telling the court what’s really going on. Courts are often more willing to wave aside legal fictions than we might think.