Opinion
2:10-CV-1385 JCM (PAL)
06-26-2013
PAINTERS JOINT COMMITTEE, et al., Plaintiffs, v. J.L. WALLCO, INC. Dba Wallternatives, et al., Defendants.
ORDER
Presently before the court is defendants', Merchant Bonding Company ("MBC") and Shrader and Martinez Construction ("SMC"), motion to lift stay. (Doc. # 303). Plaintiffs filed a joinder to the motion, which is essentially a non-opposition. (Doc. # 309).
Also before the court is defendants' MBC and SMC motion to unbifurcate the trial. (Doc. # 304). Plaintiffs filed a response in opposition (doc. # 310), and the defendants filed a reply (doc. # 314).
I. Background
This case has a long and complex procedural and complex history. Plaintiffs have filed suit against over 100 different entities alleging, among other things, violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1002 et seq. The defendants can be classified into two categories. First, are the seven alter-ego defendants against whom the plaintiffs have alleged alter-ego claims under ERISA. The alter-ego defendants are the original defendants to this suit and were subcontractors to the second group of defendants (the originating contractor defendants).
Each of the additional ninety (approximately) defendants were added to this suit when plaintiffs filed their third amended complaint. These defendants all fall into the second group of originating contractor defendants. Plaintiffs assert claims of general contractor liability pursuant to NRS 608.150, which essentially makes an original contractor liable for the indebtedness for labor of subcontractors. Since filing the lawsuit against the additional ninety or so original contracting defendants, plaintiffs have been voluntarily dismissing original contracting defendants as more information becomes available.
In a prior order, this court stayed the action against the original contracting defendants and bifurcated the trial. (Doc. # 249). The court bifurcated the proceedings so that the plaintiffs would proceed against the seven alter-ego defendants; then, depending on that outcome, the lawsuit would proceed between the plaintiffs and the original contracting defendants.
MBC and SMC, two of the remaining original contracting defendants now move the court to unbifurcate the trial and lift the stay. For the reasons stated infra, the court agrees.
II. Legal Standard
A court may modify a pretrial order to prevent manifest injustice. Fed. R. Civ. P. 16(e); See Jordan v. Clark, 847 F.2d 1368, 1376-77 n. 9 (9th Cir. 1988) ("The decision whether to amend the pre-trial order is within the discretion of the trial judge."). "A district court has inherent power to control the disposition of the causes on its docket in a manner which will promote economy of time and effort for itself, for counsel, and for litigants." CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962).
III. Discussion
As an initial matter, both parties agree that the stay against the remaining original contracting defendants should be lifted. Therefore, the court finds good cause to lift the stay.
The issue of whether to unbifurcate the trial is more nuanced, but the answer is just as simple. In order for the original contracting defendants to be liable to plaintiffs, plaintiffs must first prove liability in their claims against the alter-ego defendants. These alter-ego defendants were subcontractors. At the time the original contracting defendants agreed to stay the action against them and to bifurcate the proceedings, the seven alter-ego defendants were represented by counsel.
However, much has changed in the year since the court stayed and bifurcated the action as to the original contracting defendants. The seven alter-ego defendants are no longer represented by counsel because they did not pay their legal fees. (See doc. # 297). This court has granted default against some of the alter-ego defendants for, among other things, not defending themselves in the action and for ignoring court orders. (See doc. # 263). Some of the alter-ego defendants remain without counsel.
The original contracting defendants seek to unbifurcate the trial because the original contracting defendants want to contest the alter ego liability of the subcontractors. This is important because in order for the plaintiffs to be able to recover against the original contracting defendants pursuant to NRS 608.150, which makes original contractors liable for the indebtedness of their subcontractors in certain situations, the plaintiffs must first prove their alter-ego claims against the alter-ego defendants.
The original contracting defendants argue that plaintiffs should not be able to take advantage of the remaining pro se alter-ego defendants in a trial. The original contracting defendants argue that they should be able to contest alter-ego in the first instance since the alter-ego defendants are no longer represented.
The court agrees. Liability should attach to any defendant following resolution on the merits. Liability attaching to the original contracting defendants, based in large part by liability attaching to the pro se remaining alter-ego defendants because they do not know how to properly defend themselves, would not truly be on the merits. The court finds good cause to unbifurcate the trial.
Accordingly,
IT IS HEREBY ORDERED, ADJUDGED, DECREED that defendants' motion to lift stay (doc. # 303) be, and the same hereby, is GRANTED.
IT IS FURTHER ORDERED that defendants' motion to unbifurcate the trial (doc. # 304) be, and the same hereby, is GRANTED.
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UNITED STATES DISTRICT JUDGE