In Continental Automotive Systems, Inc. v. Nokia Corporation, the Court of Chancery confirmed that, “absent special circumstances, discovery will be stayed pending determination of a motion to dismiss the complaint where the ground for the motion offers a reasonable expectation that if the motion is granted litigation in this or another forum will be avoided.” The Court noted that the burden is placed on the party seeking a stay to show that there are practical reasons for staying discovery, however avoidance of potentially unnecessary discovery will usually satisfy the minimal burden.
Although the Court routinely directs that discovery be held in abeyance while a motion to dismiss is pending, Plaintiff opposed the stay of discovery based upon the procedural posture of the litigation. Continental filed its complaint in January of 2021. Nokia then removed the action to the U.S. District Court for the district of Delaware. Ten months after the initial complaint filing, following contested litigation in the District Court, the action was remanded back to the Court of Chancery by Opinion and Order dated November 15, 2021. Nokia filed its Motion to Dismiss on November 29, 2021 and then the Motion to Stay Discovery on December 3, 2021. Plaintiff argued that the stay should be denied based upon the delay caused by Nokia’s ill-fated removal bid. The Court of Chancery held that although Continental’s frustration is understandable, “the costs and hardship to defendants if discovery were to proceed outweighs plaintiffs’ need for discovery and the risks to plaintiffs if a stay were granted.” This holding confirms that absent special circumstances such as an expedited matter, litigants should expect that discovery will not go forward while a Rule 12 Motion to Dismiss is pending.
Seth is a commercial litigator in Fox Rothschild’s Delaware office and can be reached at Seth Niederman (302) 622-4238.