The opinion of the court was delivered by: ARTHUR SPATT, District Judge
This case involves an action brought by Michael F. Adams on
behalf of the Nassau County Sheriff Officers Association ("SHOA"
or the "Plaintiffs") against the County of Nassau (the "County"),
County Executive Thomas Suozzi, and Comptroller Howard Weitzman
(collectively, the "Defendants"), seeking an injunction to
prevent Nassau County from implementing a "lag payroll," namely,
a deferral of salary with regard to the members of SHOA.
Presently before the Court is an objection by the Defendants to
an order of United States Magistrate Judge Arlene R. Lindsay that
denied their motion to stay the case pending an interlocultory
appeal to the Second Circuit.
The background of this case is incorporated in the Court's
Memorandum of Decision and Order of October 8, 2004, familiarity
with that decision is assumed. In that decision, the Court denied the motion of the Defendants to
stay the action pending arbitration. The Court reasoned that it
could not order a stay because there was no valid agreement among
the parties to arbitrate. On November 12, 2004, the Defendants
timely appealed this decision pursuant to section 16(a) of the
Federal Arbitration Act, which authorizes an appeal from a
district court's order denying a motion to stay a case pending
arbitration. 9 U.S.C. § 16(a).
On November 10, 2004, Judge Lindsay issued a scheduling order
setting June 21, 2005, as the last day to complete discovery.
However, by informal agreement, the parties independently decided
not to conduct discovery. On July 25, 2005, following the
expiration of the deadline for discovery, Judge Lindsay denied
the parties joint request to extend the discovery deadline until
ninety days after a decision on the pending appeal and ordered
that discovery be completed by October 28, 2005. On August 5,
2005, the Defendants timely requested that this Court reconsider
Judge Lindsay's decision denying their motion to stay discovery
pending the determination of the appeal.
Judge Lindsay's decision denying a stay discovery pending
appeal is a nondispositive pretrial matter. A district judge "may
reconsider any pretrial matter . . . where it has been shown that
the magistrate[judge's] order is clearly erroneous or contrary to
law." 28 U.S.C. § 636(b)(1)(A). For the following reasons the
Defendants cannot meet this difficult burden. First, the Defendants argue that the appeal divested the Court
of jurisdiction. In general, the filing of a notice of appeal
confers jurisdiction on the court of appeals and divests the
district court of jurisdiction. See Griggs v. Provident
Consumer Discount Co., 459 U.S. 56, 58, 74 L. Ed. 2d 225,
103 S. Ct. 400 (1982). However, this general rule is subject to many
exceptions because "[t]he filing of a notice of appeal only
divests the district court of jurisdiction respecting the
questions raised and decided in the order that is on appeal."
New York State NOW v. Terry, 886 F.2d 1339, 1350 (2d Cir.
In cases such as the one currently before the Court, the Second
Circuit has decided that the critical inquiry is whether a trial
on the merits is "involved in" an appeal of an order denying
arbitration. Motorola Credit Corp. v. Uzan, 388 F.3d 39, 53 (2d
Cir. 2004), cert. denied, 125 S. Ct. 2270, 161 L. Ed. 2d 1080
(2005); see also Gutfreund v. Weiner (In re Salomon Inc.
Shareholders Derivative Litig.), 68 F.3d 554, 556 (2d Cir.
1995). In deciding the issue, the Second Circuit noted that other
circuits are divided on the question, but adopted the position
that "further district court proceedings in a case are not
`involved in' the appeal of an order refusing arbitration, and
that a district court therefore has jurisdiction to proceed with
a case absent a stay from [the court of appeals]." Id. at 54.
Of particular significance to this case, the Second Circuit
also stated that, although the circuits are divided on how to
handle the precise issue, "[i]n no case has a Court of Appeals granted the relief that [the D]efendants now
seek undoing a trial because the district court lacked
jurisdiction to proceed after an appeal from an order denying
arbitration." Id. Given the clear precedent from the Second
Circuit directly on point on this issue, the Court finds that
Judge Lindsay's order denying the motion to stay pending appeal
was not "clearly erroneous or contrary to law."
In the alternative, the Defendants argue that if the Court does
have jurisdiction it should exercise discretion and stay all
proceedings. As discussed above, Judge Lindsay was well within
her discretion to deny the Defendants' motion to stay the case
pending appeal. In reviewing this decision, the Court is confined
to the statutory standard of review set forth in
28 U.S.C. § 636(b)(1)(A). The Court "may reconsider any pretrial matter . . .
where it has been shown that the magistrate [judge's] order is
clearly erroneous or contrary to law." Id. Accordingly, the
Court declines to second guess the Magistrate Judge's discretion
on a nondispositive pretrial matter regarding discovery that is
not "clearly erroneous or contrary to law."
Assuming this Court was deciding this issue de novo, the same
result would be reached. This action was commenced in New York
Supreme Court, Nassau County, on September 4, 2003, more than two
years ago. The case involves the validity of an agreement that
would allow the County to institute a "lag payroll" with regard
to the members of the SHOA during calendar year 2000.
Notwithstanding the lapse of almost five years since the events
in this case took place, the parties disregarded the Magistrate Judge's discovery schedule and independently stayed
the matter. To further delay the case would unfairly affect the
interest that the public has in seeing that there is an
expeditious resolution of the case, especially since this case
involves a public entity. On the other hand, with reasonable
certainty, no matter what the outcome of the appeal is whether
this case is heard by a federal judge or an arbitrator the
parties will need to conduct discovery to ensure an informed
resolution to the case.
In short, the Court finds nothing in Judge Lindsay's order that
is "clearly erroneous or contrary to law" to warrant
reconsideration of the issue and denies the Defendants' motion to
stay the case pending an interlocultory appeal to the Second
Circuit. Therefore, the parties are directed to comply with Judge
Lindsay's order setting a discovery deadline of October 28, 2005.
The parties are cautioned that further refusal to conduct
discovery may result in sanctions under Rule 37 of the Federal
Rules of Civil Procedure.
For all the foregoing reasons, it is hereby
ORDERED, that the Defendants' objections to the order of
United States Magistrate Judge Arlene R. Lindsay are OVERRULED;
and it is further
ORDERED, that the Defendants' motion to stay the case pending
resolution of the appeal is DENIED; and it is further ORDERED, that the parties are directed to complete discovery
by October 28, 2005, as ...