McNeary-Calloway v. JPMorgan Chase Bank, N.A. et alMOTION to Stay Proceedings Pending Settlement Proceedings in Related ActionN.D. Cal.July 15, 20131 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO STAY PROCEEDINGS CV-11-03058-JCS ARNOLD & PORTER LLP PETER OBSTLER (No. 171623) peter.obstler@aporter.com JEE YOUNG YOU (No. 241658) jeeyoung.you@aporter.com Three Embarcadero Center, 10th Floor San Francisco, CA 94111-4024 Telephone: 415.471.3100 Facsimile: 415.471.3400 Attorneys for Defendants JPMORGAN CHASE BANK, N.A.; CHASE BANK USA, N.A.; BANC ONE INSURANCE COMPANY; and CHASE INSURANCE AGENCY [Additional Counsel Listed on Signature Page] UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION In Re JPMorgan Chase LPI Hazard Litigation Civil Action No. CV-11-03058-JCS NOTICE OF MOTION AND MOTION TO STAY PENDING SETTLEMENT PROCEEDINGS IN RELATED ACTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Date: July 26, 2013 Time: 1:30 p.m. Place: Courtroom G, 15th Floor Judge: Hon. Joseph C. Spero Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page1 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO STAY PROCEEDINGS CV-11-03058-JCS NOTICE OF MOTION AND MOTION TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE that, on Friday July 26, 2013 at 1:30 p.m., or as soon thereafter as the matter may be heard before the Honorable Joseph C. Spero, United States Magistrate Judge, in Courtroom G, 15th Floor, of the United States District Court for the Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California 94102, Defendants JPMorgan Chase Bank, N.A., Chase Bank USA, N.A., Banc One Insurance Company, and Chase Insurance Agency (collectively “Chase”) and Assurant, Inc., American Security Insurance Company, and Standard Guaranty Insurance Company (collectively “Assurant”) (together with Chase, “Defendants”) will and hereby do move for an order staying all further proceedings and vacating all motion and discovery response deadlines pending in the above-captioned case (“McNeary-Calloway”) pending final approval of the settlement in principal reached on Friday, July 12, 2013 in Herrick v. JPMorgan Chase Bank, N.A., et al., 13-21107-civ-Moreno (S.D. Fl.) (“Herrick”), a nationwide class action involving the same claims and putative class members as that of McNeary-Calloway (the “Motion for Stay”). Defendants bring their Motion for Stay on the ground that Defendants and the plaintiffs in Herrick reached a settlement in principal on behalf of the nationwide class of borrowers who have asserted claims challenging Chase’s Hazard LPI practices that subsume the same claims and overlap with the same putative class members alleged in McNeary-Calloway. If the Herrick settlement is approved by the court, that settlement will finally and forever resolve and release all of the class claims in McNeary-Calloway. Accordingly, to allow the settlement approval process to proceed and advance as efficiently and smoothly as possible and to avoid the waste of judicial and party resources, the Court should enter an order staying all proceedings in McNeary-Calloway until the settlement approval proceedings have run their course in Herrick. Defendants’ Motion for Stay is based on this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities, the Declaration of Jee Young You filed in support thereof, Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 2 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS Declaration of Denise A. Fee filed in support thereof, Defendants’ Notice of Motion and Motion to Shorten Time filed and supporting papers filed concurrently with this Motion for Stay, the pleadings, orders, and other papers on file in this action and related actions, including all papers filed with the Judicial Panel on Multi-District Litigation (“JPMDL”), and on such other evidence and argument as may be presented to the Court on reply and/or at the time of hearing. MEMORANDUM OF POINTS AND AUTHORITIES Defendants respectfully submit this Memorandum of Points and Authorities in support of their Motion for Stay. PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT On July 12, 2013, the parties in Herrick reached a settlement in principal that, upon final court approval, will resolve once and for all the class action claims pending before this Court in McNeary-Calloway. As is the practice of this and other federal courts, when a class action settlement is pending approval in another court that will resolve the class action claims pending before this Court, the Court may enter an order staying all proceedings to facilitate and help advance the settlement approval process in the other court and avoid the unnecessary waste of party or judicial resources. See, e.g., Jaffe v. Morgan Stanley DW, Inc., No. C06-3903 TEH, 2007 WL 163196, at *2 (N.D. Cal. Jan. 19, 2007) (granting two month stay to allow “advanced” settlement negotiations to play out in parallel class action). McNeary-Calloway is one of three parallel nationwide class action lawsuits pending against Defendants JPMorgan Chase N.A., Chase Bank USA, N.A., and related entities in connection with the practice of placing hazard insurance on properties owned or serviced by Chase where coverage lapsed (collectively the “LPI Hazard Class Actions”). The other LPI Hazard Class Action is Isom v. JPMorgan Chase, N.A., No. 1:12-cv-05431 (S.D.N.Y.). If the Herrick settlement is approved, it will resolve all claims both here and in Isom. See Declaration of Jee Young You ISO Motion To Stay And Motion To Shorten Time (“You Decl.”) Ex. A, Herrick, Joint Motion for Stay of All Hazard Lender-Placed insurance Claims Pending Approval of Settlement Proceedings and Notice of Class-Wide Settlement, Docket No. 50 (hereinafter, “Joint Motion for Stay”). Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page3 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 3 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS To expedite, facilitate, and advance the settlement approval process in Herrick, the parties to that action jointly moved to stay all non-settlement proceedings. Id. Similarly, the plaintiffs in Isom have agreed to stay proceedings in that case pending settlement approval in Herrick.1 You Decl. ¶9. This Court should follow suit and enter an order for a stay of proceedings in McNeary-Calloway pending final approval of settlement in Herrick. First, Herrick contains the same “common questions of fact and law” as those at issue in McNeary-Calloway and Isom and the parties and issues are effectively the same in Herrick and McNeary-Calloway. According to Plaintiffs in this case, both class actions “involve allegations arising out of the same conduct, and have overlapping classes,” such that “centralizing these actions…will promote the just and efficient conduct of the actions….” You Decl. Ex. C, In re: JPMorgan Chase LPI Hazard Litigation, No. 2465, Plaintiffs’ Mem. of Law ISO Mot. to Transfer for Coordinated or Consolidated Pre-Trial Proceedings Pursuant to 28 U.S.C. § 1407 and 28 U.S.C. § 1407(a), Docket No. 1-1 at 2, 5 (JPMDL) (“Motion to Transfer”). As a result of that overlap, approval of a final settlement in Herrick will resolve all outstanding claims in all of the other Hazard LPI Class Actions, including McNeary-Calloway.2 Id. A stay will allow the parties to focus their resources and efforts on obtaining consideration and approval of the proposed settlement pending in Herrick. See Packer v. Power Balance, LLC, No. 11-802 (WJM), 2011 WL 1099001, at *2 (D. N.J. Mar. 22, 2011) (granting stay where comprehensive national settlement reached in competing class action pending in federal court and case also subject to possible transfer to an MDL). Second, other factors, including potential benefits to the parties and the Court would be furthered by a stay. If the Herrick settlement is approved, the claims in McNeary-Calloway will be resolved forever without the concomitant need of the Court or the parties to waste substantial resources on the voluminous motion practice and discovery looming in this case. And, to the extent 1 In addition, Isom is effectively stayed at this time until the court there decides the pending motion to dismiss. You Decl. ¶9. Regardless, the parties to Isom have agreed to jointly request a blanket stay in light of the Herrick settlement. Id. 2 The exception, of course, would be the claims of any individual plaintiffs or putative settlement class members who decide to opt out of the Herrick settlement. Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page4 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 4 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS that the McNeary-Calloway Plaintiffs want to pursue the concerns they raised earlier with this Court about the potential fairness of the proposed settlement in Herrick, they, like all other members of the putative class in Herrick, will be afforded a full and fair opportunity to vet and raise their concerns during the approval process in Herrick. And by staying the proceedings here, the Court can ensure that any potential disputes over fairness between competing Plaintiffs in the respective LPI Hazard Class Actions will not spill over into these proceedings so as to require this Court adjudicate issues that could potentially interfere with a settlement approval proceeding that is pending in a different court. Of course, if the settlement is not approved for any reason, the McNeary-Calloway Plaintiffs (and the Isom Plaintiffs) can then move this Court to lift the stay at the appropriate time and resume their prosecution of that action. Accordingly, Defendants respectfully request that this Court help facilitate and advance the possibility of final resolution to all the LPI Hazard Class Actions, including McNeary-Calloway, by entering a stay of all proceedings in this lawsuit until the settlement approval proceedings in Herrick conclude. BACKGROUND On Friday, July 12, 2013, a Notice of Settlement in Herrick was filed with the MDL Panel. You Decl. Ex. E. At the same time, the parties in Herrick, including Chase, filed a Joint Motion for Stay proceedings in Herrick subject to the following schedule: 1. Settlement agreement shall be executed by Friday, August 23, 2013; 2. Joint Status Report shall be filed on Monday, August 26, 2013; 3. Motion for Preliminary Approval of the Settlement Agreement shall be filed by Friday, September 6, 2013; 4. If the Motion for Preliminary Approval is Granted, the Court shall set a date and time for Final Approval Hearing. You Decl. Ex. A, Joint Motion to Stay, at 3-4. As this Court heard from the parties at the case management conference conducted on June 14, 2013 in McNeary-Calloway, discovery and briefing deadlines are looming in this case. Specifically, Plaintiffs served voluminous discovery the day prior to the conference. And, Defendants’ replies in support of their motions to dismiss are also due on July 26, 2013. Although Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page5 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 5 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS Defendants have obtained extensions to respond to discovery, deadlines to produce documents, written responses, and to prepare and present witnesses begins to run on July 26, 2013. You Decl. ¶10; Declaration of Denise A. Fee In Support Of Defendants’ Motions To Stay Pending Settlement Proceedings In Related Action And To Shorten Time For Hearing (“Fee Decl.”) ¶5. Both the motion practice and the discovery proceedings will require the parties and the Court to expend substantial resources that are and will be entirely unnecessary if the settlement is approved in Herrick. Instead, the parties and this Court are better served conserving and expending their resources to focus on and facilitate the settlement approval process in Herrick. Because of the looming motion and discovery deadlines that are fast approaching, Defendants have also filed a Motion to Shorten Time concurrently with their Motion for Stay. Defendants filed the Motion to Shorten Time so that the Court can consider the appropriateness of a stay before the parties are forced to expend and waste substantial resources complying with the motion practice deadlines and discovery response dates. To that end, Defendants met and conferred with Plaintiffs in an attempt to reach an agreement on the stay and a briefing schedule on the motion to shorten time in compliance with the local rules on Monday, July 15, 2013. You Decl. ¶8. The parties could not reach an agreement to stay this case pending the Herrick settlement proceedings, or a briefing schedule on the motion to shorten time or the Motion for Stay. Id. ARGUMENT I. A STAY OF THIS CASE IS IN THE INTERESTS OF JUSTICE AND WILL NOT PREJUDICE PLAINTIFFS This Court has the full authority to order a stay of all proceedings in McNeary-Calloway pending the outcome of the Herrick settlement proceedings. “[A] trial 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 action before it, pending resolution of independent proceedings which bear upon the case.” Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983); see also Landis v. N. American Co., 299 U.S. 248, 254-55 (1936) (noting that the decision to grant a stay is an “exercise of judgment” that requires a court to “weigh competing interests and maintain an even balance”). Indeed, “[c]ourts have also stayed civil actions pending consideration of nationwide class action Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 6 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS settlement” in other federal courts. Packer, 2011 WL 1099001, at *1; Jaffe v. Morgan Stanley DW, Inc., No. C06-3903 TEH, 2007 WL 163196, at *2 (N.D. Cal. Jan. 19, 2007) (granting two month stay to allow “advanced” settlement negotiations to play out in parallel class action). Such a stay is particularly appropriate where, as here, a comprehensive national settlement was reached in another class action pending in federal court, even where the action is subject to possible transfer pursuant to an MDL petition. See, e.g., Packer, 2011 WL 1099001. at *2. In determining whether to enter such a stay, the Court looks to a number of factors, including the hardship to the moving party should the case proceed; the potential prejudice to the non-moving party; and whether the actions involve the same or similar parties; the similarity of issues; and judicial economy.” See id. Based on those and other factors a stay is warranted in McNeary-Calloway. As a preliminary matter, the parties and issues are the same in Herrick and McNeary- Calloway. Indeed, the McNeary-Calloway Plaintiffs have filed a petition with The JPMDL to consolidate all three of the pending Hazard LPI class actions, including Herrick, because “they are substantially identical, are being pursued against the same defendants, and challenge the same conduct.” You Decl. Ex. B at 1; Ex. D at 2 (listing present case and Herrick on schedule of cases to be consolidated). Specifically, the McNeary-Calloway Plaintiffs assert that the Herrick, Isom, and McNeary-Calloway class action lawsuits “involve allegations arising out of the same conduct, and have overlapping classes [thus] centralizing these actions…will promote the just and efficient conduct of the actions….” Id. Ex. B at 5. There can be no dispute here that the settlement of the Herrick action would resolve all claims pending before this Court. In addition, the interests of the parties and judicial efficiency weigh heavily in favor of a stay. If this case proceeds, Defendants, the Court and the other parties to this action will “be compelled to unnecessarily litigate claims in different fora, [and] become subject to competing court orders.” Packer, 2011 WL 1099001, at *2. And, absent a stay, the parties and the Court will have no choice but to expend the considerable resources necessary to proceed with pending and future motions as well as voluminous discovery. See Annunziato v. eMachines Inc., No SACV 05- 610-JVS (MLGx), 2006 WL 5014567, at *5 (C.D. Cal. July 24, 2006) (granting motion to stay class Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page7 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 7 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS action where parallel state court case had settled because stay would save defendants from “hundreds of hours spent on discovery and briefing”). Specifically, Defendants currently have a number of motion and discovery deadlines that are fast approaching, including their replies in support of lengthy and complex papers filed in connection with a multi-issue, multi-state law motions to dismiss. Plaintiffs have served and are pressing for responses to document requests, interrogatories, and Rule 30(b)(6) deposition notices (both substantive and ESI-related) on each of the Defendants on June 13. You Decl. ¶8; Fee Decl. ¶5. Chase has already begun a rolling production of documents, and pursuant to agreements with opposing counsel, the written responses and objections are currently due July 26, the written responses to the interrogatories are due August 14, and depositions are anticipated to begin as early as the first week of August. Id. Furthermore, Defendants’ replies in support of their motions to dismiss are currently due on July 26, 2013. (Docket No. 136.) Defendants will have to respond to the voluminous discovery requests as well as prepare for and sit for multiple depositions, and prepare a reply brief to a dispositive motion, all of which will be unnecessary and meaningless in the event that the district court approves the Herrick settlement disposing of all LPI Hazard claims against Defendants in this action and all other related actions. See Annunziato, 2006 WL 5014567, at *5. A stay will also conserve judicial resources. The hearing on Defendants’ motions to dismiss the consolidated complaint is set for August 23, 2013. This motion involves complex legal issues such as preemption and the filed-rate doctrine, and covers eleven causes of action (including state law claims from four different states). Just this week Plaintiffs filed 44-page opposition brief to Chase’s motion to dismiss, and over 90 pages of opposition to the Assurant motions. Preparing for this hearing and drafting a decision will no doubt require considerable time from this Court. The resolution of these issues is unnecessary at this time and should be deferred until later. Advanced Internal Techs, Inc. v. Google, Inc., No. C-05-02579 RMW, 2006 WL 889477, at *1-2 (N.D. Cal. Apr. 5, 2006) (granting motion to stay in part because judicial resources would not be “wasted” by having to consider pending motion for class certification). In addition, the continued litigation of and any ruling by this Court on those issues could jeopardize the compromise reached on those Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 8 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS issues under the Herrick settlement and interfere with the approval process. Packer, 2011 WL 1099001, at *2 (noting stay would prevent “competing court orders”). In addition, Plaintiffs will suffer no prejudice from a stay and cease fire in McNeary- Calloway. Rather, allowing the parties, including the McNeary-Calloway Plaintiffs, to focus on settlement fairness, is in everyone’s best interests at this time. If the Herrick settlement is not approved or falls apart for any reason, Plaintiffs can move to lift the stay and resume prosecution of this action against Defendants. And, to the extent Plaintiffs believe the Herrick settlement is unfair to the putative class or is otherwise inappropriate, Plaintiffs can focus their resources on contesting fairness and raising objections to the settlement terms during the settlement approval proceedings conducted by the Herrick Court in the Southern District of Florida. See Nesbit v. Fornaro, No. 11- cv-00092-PMP-GWF, 2011 WL 1869917, at *3 (D. Nev. Mar. 31, 2011) (recommending district court grant stay in favor of previously filed class action in which parties had reached proposed settlement and stating that plaintiff in the stayed action should raise any objection to settlement in the court overseeing the settlement); Annunziato,2006 WL 5014567, at *5 n.5 (noting objection to settlement properly raised before court overseeing settlement); Advanced Internal Techs, Inc., 2006 WL 889477, at *1-2 (same). Finally, while Plaintiffs may view the Herrick settlement as a threat to their control over the lender placed insurance litigation and their longstanding disputes with competing plaintiffs’ lawyers, the McNeary-Calloway Plaintiffs may not use that action to leverage their fight for control over certification and settlement of putative class claims. To that end, at least one federal court has remarked that, where, as here, “the real fight . . . is for control of a class action between two warring plaintiffs’ firms,” a stay is entirely appropriate. See, e.g., Branca v. Iovate Health Sciences USA, Inc., No. 12cv016860-LAB (WMC), 2013 WL 1344306, at *1-2 (S.D. Cal. Apr. 2, 2013). The LPI Hazard Class Actions are no exception. A stay will mitigate the well documented control disputes that have plagued the LPI Hazard Class Actions in the past and ensure that the McNeary-Calloway action is not used by any party to leverage additional control or obstruct good faith efforts to resolve the claims of putative class members quickly, efficiently, and fairly. Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page9 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 9 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS CONCLUSION The Herrick settlement makes it possible for Defendants and the putative class members to resolve, once and for all, the LPI Hazard Class Actions. An order staying the McNeary-Calloway action and suspending the looming motion and discovery deadlines and schedule will serve the interests of all parties and the Court in furthering the important goal of bringing the LPI Hazard Class Actions to a quick and efficient resolution. A stay will also ensure that the parties to those actions can vet and contest the fairness of any settlement before the district court in Florida and mitigate the risk that the McNeary-Calloway case will become a subterfuge for competing plaintiffs groups to attack each other. Accordingly, Defendants respectfully request that the Court enter an order staying all proceedings and vacating all motion and discovery deadlines in McNeary- Calloway during the pendency of the Herrick settlement approval process. To the extent that the Court believes that the initial stay order vacating upcoming deadlines should contain a definitive time period to allow the parties to update the Court on the status of the settlement approval proceedings in Herrick and to afford a party the opportunity to lift the stay for appropriate reasons, Defendants respectfully request that the Court enter a stay for 90 days subject to the parties’ right to continue or lift the stay at the end of the initial 90-day period. Dated: July 15, 2013 Respectfully. ARNOLD & PORTER LLP PETER OBSTLER JEE YOUNG YOU By: /s/ Jee Young You Jee Young You Attorneys for Defendants JPMORGAN CHASE BANK, N.A.; CHASE BANK USA, N.A.; BANC ONE INSURANCE COMPANY; and CHASE INSURANCE AGENCY Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page10 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS Dated: July 15, 2013 Respectfully. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership Including Professional Corporations PETER S. HECKER (Bar No. 66159) phecker@sheppardmullin.com DAVID E. SNYDER (Bar No. 262001) dsnyder@sheppardmullin.com Four Embarcadero Center Seventeenth Floor San Francisco, CA 94111-4109 Telephone: (415) 774-3155 Facsimile: (415) 403-6224 By: /s/ Peter S. Hecker Peter S. Hecker Frank G. Burt (pro hac vice) fgb@jordenusa.com Denise A. Fee (pro hac vice) daf@jordenusa.com JORDEN BURT LLP W. Glenn Merten (pro hac vice) wgm@jordenusa.com Brian P. Perryman (pro hac vice) bpp@jordenusa.com Jefferson Court, Suite 400 East 1025 Thomas Jefferson Street, N.W. Washington, D.C. 20007-5208 Telephone: (202)965-8100 Facsimile: (202) 965-8104 Attorneys for Defendant ASSURANT, INC., AMERICAN SECURITY INSURANCE COMPANY, and STANDARD GUARANTY INSURANCE COMPANY Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page11 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 11 - MOTION TO STAY PROCEEDINGS CV-11-03058-JCS ATTESTATION UNDER LOCAL RULE 5-1(i)(3) I, Jee Young You, am the ECF User whose ID and password are being used to file this Motion to Stay In compliance with Local Rule 5-1(i)(3), I hereby attest that Peter Hecker has concurred in this filing. /s/ Jee Young You JEE YOUNG YOU Case3:11-cv-03058-JCS Document149 Filed07/15/13 Page12 of 12