Opinion
04 Civ. 4991 (RJH).
November 23, 2004
OPINION AND ORDER
This application presents the question of whether this Court, having issued an Opinion and Order remanding the case to state court, has jurisdiction to consider a stay of the remand after the defendants who had sought removal (the "removing defendants") filed a notice of appeal. For the reasons set forth below, the Court finds that jurisdiction may be properly exercised to consider an application to stay the remand. However, the Court denies that request because removing defendants have failed to bear their burden in justifying the stay.
BACKGROUND
For the purposes of this Order, the Court shall assume familiarity with the facts of the case and summarize the most relevant facts. On May 11, 2004, Phoenix Global Ventures, LLC ("Phoenix Global") initiated a lawsuit against Phoenix Hotel Associates, Ltd. ("PHAL"), Condor Investment Group ("Condor"), Phoenix Hotel Associates ("PHA"), and Central Adams Management Co. ("Central Adams") to recover $15,600,000 owed on a note in the Supreme Court of the State of New York, County of New York in an action entitled Phoenix Global Ventures, LLC v. Phoenix Hotel Associates, Ltd., Condor Investment Group, Phoenix Hotel Associates Limited, and Central Adams Mgmt. Co., Index No. 107236/04. The removing defendants (PHAL, Condor, and PHA) then filed a notice of removal on June 25, 2004, seeking to remove the action from state court to the United States District Court of the Southern District of New York pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332.
Identifying two procedural defects in the removal papers, Phoenix Global sought to file a motion to remand this action to state court pursuant to 28 U.S.C. § 1447. However, because of technical problems with the electronic case filing ("ECF") system, that motion was electronically filed but then rejected by ECF on July 26, 2004 — the day on which the motion was due in compliance with the 30-day rule set forth in Section 1447(c). Phoenix Global's counsel discovered the technical failure and re-filed the motion the following morning on July 26, 2004. The removing defendants objected to remand on the ground that the motion was untimely.
On October 19, 2004, this Court issued an Order and Opinion (the "Remand Order") remanding the action to state court, finding that the unusual circumstances surrounding Phoenix Global's attempt to file its motion warranted excusal or tolling of Section 1447(c)'s 30-day rule. Phoenix Global Ventures, LLC v. Phoenix Hotel Associates, et al., No. 04 Civ. 4991, 2004 WL 2360033 (S.D.N.Y. Oct. 19, 2004). The removing defendants filed a notice of appeal to the Second Circuit on October 27, 2004. On October 29, 2004, the removing defendants also submitted a two-page letter application to this Court seeking a stay of the remand pending appeal pursuant to Rule 8(a) of the Federal Rules of Appellate Procedure ("Rule 8(a)"). This request implicates two issues: (1) whether this Court has jurisdiction to entertain the request to stay even though a notice of appeal has been filed; and (2) whether a stay is appropriate.
DISCUSSION
I. Jurisdiction to Consider the Request to Stay
As an initial matter, Phoenix Global asserts that this Court no longer has jurisdiction over the case and therefore cannot issue a stay of the Remand Order. Ordinarily, the filing of a notice of appeal "confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal." Kidder, Peabody Co., Inc. v. Maxus Energy Corp., 925 F.2d 556, 564 (2d Cir. 1991); Ryan v. United States Lines Co., 303 F.2d 430, 434 (S.D.N.Y. 1962) (the "docketing of an appeal ousts the district court of jurisdiction"). However, a district court may grant a stay of its own order in order to preserve the status quo, provided that it does not further adjudicate the underlying merits involved in the appeal. Id. at 564; Ivor B. Clark Co., Inc. v. Hogan, 296 F. Supp. 407, 409 (S.D.N.Y. 1969) (remarking that "[i]t appears beyond question that a district court has the power to grant a stay of its own order pending the determination of an appeal therefrom") (citing cases); see also Rakovich v. Wade, 834 F.2d 673, 674 (7th Cir. 1987) ("the trial court reserves the power to make orders appropriate to maintain the status quo while the appeal is pending").
Moreover, Rule 8(a) provides that a party "must ordinarily move first in the district court" for a stay of an order of the district court pending appeal. Fed.R.App.P. 8(a). As such, district courts should exercise their jurisdiction in adjudicating a request to stay on the merits. Hirschfeld v. City of New York, 984 F.2d 35, 38 (2d Cir. 1993) (finding willful disregard of Rule 8(a) where party seeking stay made "[n]o showing of impracticability of bringing such a motion in the district court"); Rakovich, 834 F.2d at 675 (denying motion to stay without prejudice to allow district court to "properly exercise its jurisdiction over such motion" despite filing of appeal); Maui Land Pineapple Co. v. Occidental Chemical Corp., et al., 24 F. Supp. 2d 1083, 1085 (D. Hawai'i 1998) (exercising jurisdiction over motion to stay remand despite appeal to Ninth Circuit and filing of certified copy of the remand order in state court). Accordingly, the Court may properly exercise jurisdiction over removing defendants' application to stay the Remand Order in order to preserve the status quo while the appeal is pending before the Second Circuit.
II. Merits of Defendants' Request to Stay the Remand Order
The district court's decision to issue a stay an order pending appeal lies within its discretion. Hayes v. City Univ. of New York, 503 F. Supp. 946, 962 (S.D.N.Y. 1980). In considering whether a stay of an order pending appeal is appropriate, the district court must evaluate several factors:
(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.Rodriguez v. DeBuono, 175 F.3d 227, 234 (2d Cir. 1998). The Second Circuit has further indicated that a court may properly "grant a stay pending appeal where the likelihood of success is not high but the balance of hardships favors the applicant . . . [or] where the probability of success is `high' and `some injury' has been shown." Mohammed v. Reno, 309 F.3d 95, 101 (2d Cir. 1999) (citations omitted). Moreover, the "probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury plaintiff will suffer absent the stay. Simply stated, more of one excuses less of the other." Id. (quoting Michigan Coalition of Radioactive Users. Inc v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991)).
The removing defendants have not even attempted to identify any "irreparable injury" they may suffer in the absence of a stay. Nor have they presented any arguments supporting the "likelihood" of success on the merits on appeal. Without further explanation, facts or case law to support their position, removing defendants simply suggest that they "may very well prevail on appeal." They also completely fail to address the public interest. Indeed, the sole proffered justification for a stay is speculation that the Second Circuit will decide the appeal quickly, and therefore, Phoenix Global will not be prejudiced.
Granting removing defendants a stay based solely on the possibility that the Second Circuit might decide the appeal quickly would remove the heavy burden placed on the moving party in justifying a stay by eliminating the rigor of the four-factor analysis. See U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., 44 F.3d 1082, 1084 (2d Cir. 1995) (noting that a party seeking a stay bears a "difficult burden"). Removing defendants' only contention is that any state proceedings that occur could be potentially duplicative, mooted or otherwise wasteful if the Second Circuit rules in their favor. This is simply too speculative to rise to the level of "irreparable injury." Jayaraj v. Scappini, 66 F.3d 36, 39 (2d Cir. 1995) (to constitute "irreparable injury," the harm must be "imminent or certain, not merely speculative"). And for the reasons set forth in the Remand Order, the Court also does not conclude that removing defendants have made a strong showing of the likelihood of success on appeal. Accordingly, the application to stay the Remand Order is denied.
SO ORDERED.