United States District Court, W.D. Texas, Austin Division
SPARKS SENIOR UNITED TATES DISTRICT JUDGE.
REMEMBERED on this day the Court reviewed the file in the
above-styled cause, and specifically Defendant University
Video Services (UVS)'s Opposed Motion to Stay Discovery
and Motion for Protective Order [#21], Plaintiff Apogee
Telecom, Inc. (Apogee)'s Response [#28] in opposition,
UVS's Reply [#31] in support, and Apogee's Surreply
[#32-l]thereto. Having considered the documents,
the case file as a whole, and the applicable law, the Court
enters the following opinion and orders.
a trade secrets misappropriation case between Apogee and UVS,
competitors in the business of providing video services to
universities. Apogee alleges UVS improperly received trade
secrets from a former Apogee employee, Brian Rosenblatt.
Compl. [#1] at ¶ 2. Rosenblatt is the founder, co-owner,
and chief executive of UVS. Mot. Stay [#21-1] Ex. 1
(Rosenblatt Aff) at ¶ 2. In 2017, University of Mary
Hardin-Baylor (UMHB) terminated its contract with Apogee and
contracted instead with UVS for residential network and video
services. Compl. [#1] at ¶ 3. Apogee asserts UVS
unlawfully used Apogee's trade secrets in its business
dealings with UMHB. Id. at ¶ 18.
early 2016, Apogee sued Rosenblatt in California state court
for, among other things, interference with business
relations, breach of employment contract, and
misappropriation of the same trade secrets at issue in this
case. Mot. Stay [#21-3] Ex. 2-1 (Cal. Complaint). The
California case has a bifurcated trial schedule, with the
first phase-to determine whether Apogee has met its burden of
proof to establish the existence of a trade secret and
whether the trade secret was misappropriated-set to begin
August 10, 2018. Mot. Stay [#21-12] Ex. 2-10 (Minute Order).
filed this lawsuit against UVS, Just in Time Communications,
Inc. (JIT), and Justin Jones on July 12, 2017, asserting
claims for common law and statutory misappropriation of trade
secrets in addition to tortious interference with prospective
relations. Compl. [#1] at ¶¶ 14-29. The Court
dismissed defendants JIT and Justin Jones for lack of
personal jurisdiction. See Order of Nov. 20, 2017
[#17]. UVS now moves to stay discovery pending resolution of
the California litigation and for entry of a protective
order. See Mot. Stay [#21]. UVS's motion is
fully briefed and ripe for consideration.
noted above, UVS requests a stay of discovery and an entry of
a protective order under Rule 26 of the Federal Rules of
Civil Procedure. The Court will address each request in turn.
Stay of Discovery
contends this case is duplicative of the California state
court lawsuit Apogee is pursuing against Rosenblatt.
See Mot. Stay [#21] at 1-7. According to UVS, the
Court should stay this lawsuit pending the outcome of the
California litigation based on abstention grounds and the
Court's inherent power to manage its docket. Id.
opposes any stay, arguing abstention should not apply here
because this case is not a parallel proceeding to the
California litigation, and even if it was, the abstention
factors do not favor a stay. Resp. [#28] at 2-9.
general, "the pendency of an action in the state court
is no bar to proceedings concerning the same matter in the
Federal court having jurisdiction." McClellan v.
Carland, 217 U.S. 268, 282 (1910). The doctrine of
abstention, under which a district court may decline to
exercise or postpone the exercise of its jurisdiction based
on parallel proceedings in a state court, is only appropriate
under extremely limited circumstances. Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800
(1976); Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Co., 460 U.S. 1 (1983). Indeed, the Supreme Court has
called abstention under Colorado River "an
extraordinary and narrow exception to the duty of a district
court to adjudicate controversies properly before it."
424 U.S. at 813.
threshold issue is whether the proceedings pending in state
and federal court are indeed "parallel, " as the
Colorado River abstention cannot be invoked where
suits are not parallel. Brown v. Pac. Life Ins. Co.,
462 F.3d 384, 395 n.7 (5th Cir. 2006). Suits are parallel if
they involve the same parties and the same issues, but
"a mincing insistence" on identical parties and
claims is not required. Republic Bank Dallas Nat.
Ass'n v. Mcintosh, 828 F.2d 1120, 1121 (5th Cir.
1987); PPG Indus., Inc. v. Cont'l Oil Co., 478
F.2d 674, 682 (5th Cir. 1973). An important inquiry is
whether the state litigation will dispose of all claims
presented in the federal action. See African Methodist
Episcopal Church v. Lucien, 756 F.3d 788, 798 (5th Cir.
2014) (finding actions to be sufficiently parallel because
the state court proceeding "will necessarily dispose of
all claims asserted by AME in the federal action").
Court finds the Colorado River abstention doctrine
inapplicable because this case is not parallel to the
California state court litigation. In California, Apogee is
suing its former employee Rosenblatt for alleged interference
with business relations, misappropriation of trade secrets,
and breach of employment contract, among other things. By
contrast, Apogee is suing UVS in this matter for its alleged
acquisition of trade secrets from Rosenblatt and use of the
trade secrets for UVS's personal gain with respect to the
UMHB contract. While the trade secrets at issue in both cases
are the same, the defendants are different, and more
importantly, the alleged wrongful conduct is different
between the lawsuits. In addition, the causes of action arise
under different state laws, and it is unlikely the California