Richan v. Ageiss, Inc.
1:22-cv-01060
| D. Colo. | Jul 7, 2022Background
- Plaintiff Ted S. Richan, formerly senior consultant then president of Ageiss, alleges retaliation, discrimination, harassment, and wrongful termination in violation of Puerto Rico law (Act No. 80 and Act No. 115).
- Richan filed in Puerto Rico state court on May 24, 2021; defendant removed to federal court and the case was transferred to the District of Colorado.
- Ageiss filed a Motion to Compel Arbitration asserting an employment agreement contains a broad arbitration clause; Richan opposes that motion but did not oppose staying discovery pending its resolution.
- The parties jointly moved to stay discovery pending the court’s ruling on arbitration, arguing that pursuing discovery could be wasteful if arbitration is compelled.
- The magistrate judge found the FAA does not itself mandate a pre‑ruling discovery stay but exercised discretion under Landis and applied the String Cheese factors, concluding the balance favors a stay.
- Holding: discovery is STAYED pending resolution of the Motion to Compel Arbitration; the July 14, 2022 scheduling conference and related deadlines are vacated; if arbitration motion is denied, parties must contact the court within five business days to set a scheduling conference.
Issues
| Issue | Richan (Plaintiff) Argument | Ageiss (Defendant) Argument | Held |
|---|---|---|---|
| Whether the FAA bars discovery while a motion to compel arbitration is pending | Did not oppose a discovery stay; argued no prejudice from delay | FAA bars discovery/litigation on the merits while arbitration motion is pending; stay appropriate to avoid duplicative expense | Court: FAA contains no express pre‑ruling bar on discovery; but court may stay discovery in its discretion and did so here |
| Whether the String Cheese factors support a discovery stay | Asserted lack of prejudice; neutral because plaintiff did not oppose stay | Argued efficiency and avoidance of unnecessary litigation costs favor a stay | Court: factors overall favor a stay (plaintiff neutral; defendant burden favors stay; convenience to court favors stay; non‑parties neutral; public interest favors stay) |
| Appropriate interim docket management | Agreed to vacatur of scheduling conference while arbitration motion is pending | Sought stay and vacatur to conserve resources | Court: vacated scheduling conference/deadlines and ordered parties to notify court within five business days if arbitration motion denied |
Key Cases Cited
- Landis v. North American Co., 299 U.S. 248 (U.S. 1936) (courts have inherent power to stay proceedings for docket control and efficiency)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (U.S. 1967) (courts deciding arbitrability may consider only issues relating to making and performance of the arbitration agreement)
- AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (U.S. 1986) (courts should not decide merits of underlying claims when addressing arbitrability)
- Max Software, Inc. v. Computer Associates Int’l, Inc., 364 F. Supp. 2d 1233 (D. Colo. 2005) (district court may stay discovery pending resolution of motion to compel arbitration)
- Cherry Creek Card & Party Shop, Inc. v. Hallmark Mktg. Corp., 176 F. Supp. 2d 1091 (D. Colo. 2001) (recognizing strong federal policy favoring arbitration and the propriety of limiting discovery while arbitration issues are resolved)