Grigsby & Associates, Inc. (G&A) sued State Farm Fire and Casualty Company in state court for bad faith breach of contract of its policy of workers’ compensation insurance for the company. State Farm had the case removed to federal court. According to the allegations of his complaint, the employer had only one employee, Calvin Grigsby, whose wages comprise the entire payroll upon which the premium was based.
The dispute connects to separate proceedings before the California Workers’ Compensation Appeals Board (WCAB) involving Calvin Grigsby. On August 8,2021 Grigsby suffered an alleged work-related injury which required two separate prolonged hospitalizations for surgical procedures and operations approximately a year apart resulting in the permanent fusion of the first four vertebrae in his neck, permanent head injuries, permanent spinal injuries and permanent injuries to the left hand and foot.
The basis of his civil case for breach of contract and bad faith alleges State Farm initially decided to deny policy coverage. After Grigsby obtained an attorney, State Farm agreed Grigsby was covered under the policy. State Farm then use lack of medical information as a basis to “delay” the claim on the 14th day of the claim. However Grigsby had sent State Farm a complete medical report including imaging of about 12 pages prior to the 14th day. Grigsby therefore said that the State Farm delay notice for lack of medical information was an alleged “pretextual Delay Notice.”
Subsequently he alleges “the claim was denied in complete bad faith claiming Employee was being paid $7000 a month, post injury, which is over the state maximum. Grigsby allegedly he sent adjusters the QuickBooks accounting records showing he was paid $200, $921, $1062 and $799 per month for the months of August, September, October and November 2021. He claims the denial of paying benefits was therefore allegedly made with no objective evidence.The complaint continues to allege violations of the Labor Code procedures for processing his claim for similar irregularities.
As the federal civil case proceeded in the U.S. District Court for the Northern District of California, State Farm asked the district court to pause the federal contract case until WCAB proceedings concluded, and the district court agreed. G&A appealed that stay order.
In the unpublished case of Grigsby & Associates, Inc. v. State Farm Fire and Casualty Co., No. 25-7219 (9th Cir., filed Sept. 8, 2026) (unpublished mem. disp.). A three-judge Ninth Circuit panel affirmed the district court’s stay order, deciding the appeal without oral argument.
The panel first confirmed it had jurisdiction to hear the appeal at all. Ordinarily a stay order is not a final, appealable decision, but the panel found this stay was “lengthy and indefinite” and effectively put the litigants out of court, making it appealable as a final decision under Blue Cross & Blue Shield of Ala. v. Unity Outpatient Surgery Ctr., Inc. (2007) 490 F.3d 718, giving the court jurisdiction under 28 U.S.C. § 1291.
On the merits of the stay, the panel explained that district courts have discretion to stay a case pending resolution of independent proceedings that bear on it, citing Leyva v. Certified Grocers of Cal., Ltd. (1979) 593 F.2d 857, and that such a decision is evaluated against three non-exclusive factors drawn from Lockyer v. Mirant Corp. (2005) 398 F.3d 1098, as quoted in Ernest Bock, LLC v. Steelman (2023) 76 F.4th 827: the possible damage from granting a stay, the hardship or inequity a party would suffer if forced to proceed, and the orderly course of justice as measured by simplifying or complicating the issues, proof, and questions of law.
Applying those factors, the panel found no abuse of discretion. Because G&A seeks only money damages, any delay caused by the stay would not amount to irreparable harm weighing against it, citing In re PG&E Corp. Securities Litigation (2024) 100 F.4th 1076 and CMAX, Inc. v. Hall (1962) 300 F.2d 265. On hardship, the panel agreed that without a stay, State Farm could face pressure to waive attorney-client privilege over communications related to its defense before the WCAB in order to defend against G&A’s punitive damages claim, since California law bars punitive damages against a party that acted in good faith on advice of counsel under Fox v. Aced (1957) 317 P.2d 608 — a result the panel found would be inequitable to State Farm. The panel also agreed that resolving the related WCAB issues first would clarify G&A’s theory of damages in the federal case and promote efficient adjudication, again citing In re PG&E Corp.
Finally, the panel rejected any suggestion that the abstention framework from Colorado River Water Conservation Dist. v. United States (1976) 424 U.S. 800 governed the analysis, agreeing with the district court that Colorado River applies only where a federal court and a state court are contemporaneously exercising concurrent jurisdiction over the same dispute — a circumstance not present here, citing United States v. State Water Resources Control Board (2021) 988 F.3d 1194.