United States District Court, D. Utah, Central Division
FLUENT HOME LTD, a Canadian corporation, and FLUENT HOME, LLC, a Delaware limited liability company, Plaintiffs,
JACK ELBAUM, an individual, CHAD BINGHAM, an individual, Defendants.
Campbell District Judge.
MEMORANDUM DECISION AND ORDER DENYING DEFENDANTS'
MOTION TO STAY
C. Wells United States Magistrate Judge.
matter is referred to the undersigned from Judge Tena
Campbell in accordance with 28 U.S.C.
636(b)(1)(A). Before the court is Defendants' Motion
to Stay. The court is not persuaded by Defendants
arguments. As discussed below, the court finds Defendants do
not meet the factors for a stay. Further, Defendants past
conduct and the circumstances in this case weigh against
granting Defendants' motion.
Fluent Home Ltd and Fluent Home (collectively Plaintiffs or
Fluent Home) are a home automation company that develops,
installs and services “state-of-the-art security,
technology, energy management, convenience and mobile
application for the home.”Defendants, Jack Elbaum and
Chad Bingham, were respectively Plaintiffs' former
President and Research and Development
managers. In their employment responsibilities
Defendants had access to information regarding a security
system named Gabriel. At the time Defendants ended their
employment relationship with Plaintiffs in March 2015,
Gabriel was nearly complete.
April 2018, Defendants attended a security industry trade
show in Las Vegas, Nevada, where they were introduced to
Michael Casperson. Mr. Casperson is a co-founder and
co-president of Crozar, LLC. Crozar designs and manufactures
security panels for use in home automation. Defendants told
Mr. Casperson about a panel and alarm system they had
developed, which was nearly ready to be manufactured. Mr.
Casperson expressed interest in the system. However, based on
rumors within the industry that Fluent Home was developing
its own panel system, Mr. Casperson repeatedly asked
Defendants whether they owned this new system. Defendants
continued to represent ownership rights in the system. Mr.
Casperson agreed to meet with Defendants further.
2018, Defendants came to Crozar's offices to discuss the
system further. They brought a laptop with them and showed
Mr. Casperson files and images of the new home security
system and panel. Some of the files shown by Defendants had
Fluent marked on them. Alarmed by what he saw, Mr. Casperson
decided to contact the owner of Fluent, Graham Wood.
Undeterred by his concerns, Defendants encouraged Mr.
Casperson to contact Mr. Wood and reassured him of their
ownership rights in the system.
Casperson contacted Mr. Wood to inquire about the system. Mr.
Wood informed him that the system belonged to Fluent Home.
Mr. Wood then initiated a three-way call with one of the
Defendants and Mr. Casperson. During the call one of the
Defendants denied trying to sell the system. Following the
phone call Mr. Casperson visited Fluent Home's offices
and verified that the system he was shown as available for
purchase by Defendants was the Gabriel home security system
and panel. This suit followed in July 2018.
court has inherent power to stay proceedings in matters
pending before it. This includes discretion to stay
discovery pending resolution of a motion to
dismiss. Reaching such a determination as to
whether or not to stay a matter “calls for the exercise
of judgment, which must weigh competing interests and
maintain an even balance.” In exercising this
judgment courts in this circuit have applied a variety of
factors. These include: (1) whether a stay would
promote judicial economy; (2) whether a stay would avoid
confusion and inconsistent results; (3) the interests and
burdens on the parties; (4) the interests of others, such as
nonparties or the public, in staying or proceeding with the
case and (5) the impact to the court of staying a
considered these factors, the court finds that Defendants
have failed to meet their burden. As to the first factor, a
stay could potentially promote judicial economy. The evidence
in this case concerning Defendants' conduct, however,
undermines this factor. Further, there is no suggestion that
a stay would avoid confusion or inconsistent results. Third,
the evidence before the court creates circumstances where
prompt discovery is warranted. Plaintiffs have demonstrated
serious concerns about the inappropriate distribution of
trade secrets surrounding the Gabriel home security system.
Defendants self-serving assertions that they “agree not
to disclose and to return any … trade secrets in their
possession in the future should they find they are in
possession of trade secrets” does not alleviate these
concerns. Next, the interests of others favor
denying a stay. The record demonstrates that third-parties
have expressed concern over the ownership of the Gabriel
system. Allowing discovery to proceed will help provide
certainty to other parties and the public regarding
ownership. And finally, the impact to the court in staying
this matter is minimal. In fact, allowing discovery may
expedite the settlement of this case.
therefore ORDERED that Defendants' Motion ...