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Coyle v. Hornell Brewing Co.

June 9, 2009


The opinion of the court was delivered by: Simandle, District Judge


This matter comes before the Court on appeal by Defendants Hornell Brewing Company, Ferolito Vultaggio & Sons, and Arizona Beverage Company, LLC, (collectively, "Defendants") of the Magistrate Judge's March 25, 2009 Letter Order denying Defendant's application for a stay of discovery pursuant to Rule 26(c), Fed. R. Civ. P., while awaiting the Third Circuit opinion on the appeal of a related case, Holk v. Snapple Beverage Corp., 574 F. Supp. 2d 447, 454 (D.N.J. 2008) [Docket Item 57]. Defendants argue that the Magistrate Judge's opinion should be reversed because (1) the Judge erroneously relied on his November 5, 2008 Order denying a stay of discovery and did not adequately consider subsequent procedural developments, (2) discovery will be more complex and substantial than acknowledged by the Judge, and (3) the Judge's finding of prejudice to Plaintiff is insufficiently substantiated and the Judge placed an undue burden on Defendants as the moving party. The Court, however, cannot find that the Magistrate Judge abused his discretion and will, for the foregoing reasons, affirm the March 25, 2009 Letter Order denying a stay of discovery.


A. Factual Allegations

Defendants are responsible for the manufacturing, brewing, sale and distribution of the Arizona Iced Tea beverages at issue here. (Compl. ¶¶ 6-9.) In brief, Plaintiff Lauren Coyle ("Plaintiff") alleges in this proposed class action that over a period of six years she purchased various Arizona Iced Tea beverages, all labeled "100% NATURAL," because she believed they were made from only "natural" products as Plaintiff understood the term "natural." (Id. ¶ 35-40.) The crux of Plaintiff's Complaint is that these Arizona Iced Tea beverages should not have born the "100% NATURAL" label because they contain high fructose corn syrup ("HFCS"), which, Plaintiff argues, is not "natural," because process for making HFCS "does not occur naturally." (Id. ¶¶ 24, 33.) Relying on the above allegations, Plaintiff brings four claims for relief for herself and the proposed injured class: violation of the New Jersey Consumer Fraud Act (Count I); unjust enrichment and common law restitution (Count II); breach of express warranty (Count III); and breach of implied warranty of merchantability (Count IV).

B. Procedural History

Originally brought on April 21, 2008, in the Superior Court of New Jersey, Atlantic County, Defendants removed this action to federal court on June 4, 2008 [Docket Item 1]. On July 7, 2008, Plaintiff filed a motion to remand and the Magistrate Judge, with consent of all parties, stayed proceedings until the Court had an opportunity to rule on that remand motion [Docket Items 11 & 12]. Plaintiff then withdrew its motion to remand [Docket Item 18], and Defendants subsequently moved to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P., [Docket Item 19], and sought a continued stay of discovery while the motion to dismiss was pending [Docket Item 20]. On November 5, 2008, after briefing from all parties, the Magistrate Judge heard oral argument on Defendants' motion to stay discovery and denied the request in an Oral Opinion [Docket Item 32 & 35]. Defendants did not appeal, nor did they seek reconsideration.

On February 23, 2009, this Court heard oral argument on Defendants' motion to dismiss, but with consent of all parties reserved decision until the Third Circuit issued its opinion in Holk, a case that raises identical issues and may dispose of Plaintiff's claims or invalidate Defendants' arguments for dismissal [Docket Items 42 & 49]. At Defendants' request, the Court referred the issue of a stay of discovery to the Magistrate Judge to consider in light of the decision to reserve judgment on Defendants' motion to dismiss. (Feb. 23, 2009 Tr. at 70.) This Court stated:

[] I think it's more orderly and at least more in tune with my judicial philosophy of respecting a magistrate judge's decision, that I'm not going to second guess absent an appeal or some drastic change. But I would want to give [the Magistrate Judge] a second opportunity to look at it in light of this stay.


By way of a letter dated March 3, 2009, Defendants applied again to the Magistrate Judge for a stay of discovery. (Defs. Ex. C.) As ordered by the Magistrate Judge, Plaintiff filed an opposition to Defendants' motion and Defendants filed a reply [Docket Items 52 & 53.] On March 25, 2009, the Magistrate Judge issued his Letter Order denying Defendants' application for a stay of discovery [Docket Item 54]. The Judge began by summarizing his November 5, 2008 Oral Opinion denying a stay of discovery, noting that it was "central" to his ruling. (Letter Order at 1.) The Judge noted that his November 5th opinion was based on the fact that Defendants were engaged in, or would soon be engaged in, similar discovery for two related cases (a fact the Judge found "most compelling"), that discovery would not be unduly burdensome (noting that discovery would focus solely on class certification), and that Plaintiff would be prejudiced by a stay as it would interfere with her interest in pursuing her case in an expeditious manner and would increase the chance that witnesses' memories would fade and evidence would be lost. (Id. at 2-3.)

The Magistrate Judge, having "carefully considered defendants' arguments,"*fn1 explained why they did not justify a stay of discovery. (Id. at 4-6.) First, he observed that referral to a Multi-District Litigation ("MDL") panel did not automatically call for a stay.*fn2 (Id. at 4-5.) Second, he observed that the "primary justification" for the November 5th Oral Opinion -- that Defendants would not be unduly burdened by proceeding with discovery because they were proceeding with discovery in the Covington case pending in Florida -- remained true. (Id. at 5.) Third, the Judge again rejected "defendants' argument that discovery should be stayed until the Third Circuit rules on the Holk appeal," because there is "simply no certainty when the decision will be issued." (Id.) The Judge went on: "The Court already ruled that the prejudice resulting to plaintiff from an indefinite stay outweighs any prejudice resulting to defendants from denying a stay." (Id.) Fourth, evidence that Defendants complied with FDA regulations went to the merits and could not be decided at this stage. (Id.) And finally, the Judge reiterated that Plaintiff would be prejudiced by a stay of discovery and that the interests of judicial economy and fairness did not warrant such a stay. (Id.)

On April 8, 2009, Plaintiff filed its ...

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