Antonelli et al v. Finish Line, Inc et al

Filing 60

ORDER granting 40 Motion to Stay. This case is hereby STAYED pending resolution of Defendants appeal of the Order denying the motion to compel arbitration, or until further order of this court, whichever occurs first. Within ten days of any dispo sition of Defendants appeal, either party may petition the court to dissolve the stay by filing an appropriate request. The hearing scheduled for 6/29/2012 is VACATED. Signed by Judge Edward J. Davila on 6/29/2012. (ejdlc1, COURT STAFF) (Filed on 6/27/2012) (Additional attachment(s) added on 6/27/2012: # 1 Certificate of Service) (ecg, COURT STAFF).

1
2
3
4
5
6
7

IN THE UNITED STATES DISTRICT COURT

8

FOR THE NORTHERN DISTRICT OF CALIFORNIA

9

SAN JOSE DIVISION
CASE NO. 5:11-cv-03874 EJD

CRYSTAL ANTONELLI, et. al.,

11

ORDER GRANTING DEFENDANT’S
MOTION TO STAY PROCEEDINGS

Plaintiff(s),
For the Northern District of California

United States District Court

10

12
13

v.
FINISH LINE, INC.,
[Docket Item No(s). 40]

14
Defendant(s).
15
16
17

/
I. INTRODUCTION
Plaintiffs Crystal Antonelli, Anny Chi, Alisha Elam, Analynn Foronda, and Karen Lopez

18

(collectively, “Plaintiffs”) filed the instant action for damages against their former employer, Finish

19

Line, Inc. (herein, “Defendant”), as well as their former manager David Meyer. In response,

20

Defendant moved to compel arbitration based on Defendant’s Employee Dispute Resolution Plan

21

(the “DRP”), which requires that all employment-related disputes be submitted to arbitration. In an

22

Order filed February 16, 2012, this court declined to enforce the DRP based on a finding that the

23

agreement was unconscionable. See Order, Docket item No. 33. Defendant appealed from that

24

decision (see Not. of Appeal, Docket Item No. 39), and now moves the court for an order staying

25

this action pending a determination by the Ninth Circuit Court of Appeals. See Docket Item No. 40.

26

Plaintiffs oppose Defendant’s request. The court has carefully reviewed the relevant

27

materials filed by the parties and finds this matter suitable for decision without oral argument

28

pursuant to Civil Local Rule 7-1(b). Accordingly, the hearing scheduled for June 29, 2012, will be
1
CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS

1

vacated and, for the reasons stated below, Defendant’s motion will be granted.

2
3

II.

DISCUSSION

As both parties recognize, whether to grant a stay of litigation pending appeal in this Circuit

4

depends on a discretionary analysis of four factors: “(1) whether the stay applicant has made a

5

strong showing that he is likely to succeed on the merits; (2) whether the applicant will be

6

irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other

7

parties interested in the proceeding; and (4) where the public interest lies.” Leiva-Perez v. Holder,

8

640 F.3d 962, 964 (2011) (quoting Nken v. Holder, 556 U.S. 418, 434 (2009)).

“continuum,” which is “essentially the same as the ‘sliding scale’ approach” applied to requests for

11
For the Northern District of California

The Ninth Circuit has held that these four factors should be examined on a flexible

10

United States District Court

9

preliminary injunctions. Id. at 964-66. Under this approach, “the elements . . . are balanced, so that

12

a stronger showing of one element may offset a weaker showing of another.” Id. at 964.

13

With this standard in mind, the court now examines the factors as they apply to this case.

14

A.

15

For this factor, “in order to justify a stay, a petitioner must show, at a minimum, that she has

Success on the Merits

16

a substantial case for relief on the merits.” Id. at 968. This does not require the petitioner to show

17

that “it is more likely than not that they will win on the merits,” but only that success is a

18

“reasonable probability,” or a “fair prospect,” or that “serious legal questions are raised.” Id. at 967-

19

68 (citing Hollingsworth v. Perry, 130 S. Ct. 705, 710 (2010); Hilton v. Braunskill, 481 U.S. 770,

20

778 (1987); Abbassi v. INS, 143 F.3d 513, 514 (9th Cir. 1998)).

21

Defendant has met this burden. In particular, whether the unconscionability analysis

22

designated by the California Supreme Court in Armendariz v. Foundation Health Psychcare

23

Services, Inc., 24 Cal. 4th 83 (2000), remains a viable one in light of the United States Supreme

24

Court’s opinion AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) is, indeed, a “serious

25

legal question.” This court determined that Concepcion did not displace traditional contract

26

theories, including unconscionability, as grounds available for the invalidation of an arbitration

27

agreement, citing a portion of Concepcion itself. See Order, at p. 6 n. 2 (“Concepcion is a case

28

involving class-action waivers in arbitration agreements . . . . the court specifically acknowledged
2
CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS

1

that the doctrine of unconscionability remains an operative basis for invalidating arbitration

2

agreements under the express language of the [Federal Arbitration Act (‘FAA’)].”). But other courts

3

in this Circuit have suggested otherwise, although have expressly avoided deciding the question

4

directly. See, e.g., Ruhe v. Masimo Corp., No. SACV 11-00734-CJC(JCGx), 2011 U.S. Dist.

5

LEXIS 104811, at *4-5, 2011 WL 4442790 (C.D. Cal. Sept. 16, 2011); see also Burnett v. Macy’s

6

West Stores, Inc., No. 1:11-cv-01277 LJO SMS, 2011 U.S. Dist. LEXIS 116479, at *11 n.3, 2011

7

WL 4770614 (E.D. Cal. Oct. 7, 2011); see also Oguejiofor v. Nissan, No. C-11-0544 EMC, 2011

8

U.S. Dist. LEXIS 99180, 2011 WL 3879482 at *3 (N.D. Cal. Sept. 2, 2011); see also Beard v.

9

Santander Consumer USA, Inc., No. 1:11-cv-11-1815 LJO-BAM, 2012 U.S. Dist. LEXIS 53882, at
*27-28, 2012 WL 1292576 (E.D. Cal. Apr. 16, 2012) (“The general Armendariz rule has been

11
For the Northern District of California

United States District Court

10

criticized following the Supreme Court’s ruling in Concepcion.”). As this court sees it, the “serious

12

legal question” at issue was aptly framed by one of this court’s contemporaries in Ruhe:

13

Plaintiffs first assert that the arbitration agreement is invalid because it
fails to meet one of the requirements for mandatory, employer-drafted
arbitration agreements under California law . . . . The parties dispute
whether Armendariz merely creates a test for the general contract
doctrine of unconscionability, or provides a separate set of
‘requirements that a mandatory employer-drafted arbitration
agreement must meet when an employee asserts claims based on
unwaivable public rights.’ If Armendariz does the latter, such a
requirement would appear to be preempted by the FAA under the
Supreme Court’s reasoning in Concepcion.

14
15
16
17
18

2011 U.S. Dist. LEXIS 104811, at *4-5.
19
The resulting split of district court authority surrounding this question demonstrates that it is
20
not “clear cut,” and direction from the appellate court would certainly “materially advance the
21
ultimate termination of this litigation.” Richard v. Ernst & Young LLP, No. C-08-04988 RMW,
22
2012 U.S. Dist LEXIS 3523, at *4, 2012 WL 92738 (N.D. Cal. Jan. 11, 2012); In re Apple &
23
AT&TM Antitrust Litig., No. C 07-05125 JW, 2012 U.S. Dist. LEXIS 16505, at *21 n. 27, 2012 WL
24

293703 (N.D. Cal. Feb. 1, 2012). This factor, therefore, weighs in favor of granting the stay.1

25
26
27
28

1

It is also worth noting that the Seventh Circuit Court of Appeal has previously affirmed a
district court order compelling arbitration under the same agreement at issue in this case. See
Baumann v. Finish Line, Inc., 421 Fed. Appx. 632 (7th Cir. 2011). Although Circuit Courts can
often disagree, this development at least raises a “reasonable probability” or a “fair prospect” that
Defendant’s appeal will be successful.
3
CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS

1

B.

Irreparable Injury

2

Defendant argues that, without a stay, it will suffer irreparable harm in the form of “the

3

trouble and costs of responding to the complaint and thereafter participating in what is likely to be a

4

contentious and burdensome discovery.” In addition, relying on Alascom, Inc. v. ITT N. Elec. Co.,

5

727 F.2d 1419, 1422 (9th Cir. 1984), Defendant contends it will be forever “deprived of the

6

inexpensive and expeditious means by which the parties had agreed to resolve their disputes,” even

7

if arbitration is subsequently compelled.

8

Plaintiffs disagree with Defendant’s articulation of irreparable injury in the form of litigation

arbitration would be seemingly identical, considering the DRP requires discovery in arbitration be

11
For the Northern District of California

costs. For their part, Plaintiffs point out the likelihood that discovery in litigation and discovery in

10

United States District Court

9

conducted according to the Federal Rules of Civil Procedure. Based on this, Plaintiffs conclude that

12

Defendants will incur no greater cost should the stay be denied.

13

Plaintiffs’ argument is well-taken as it cannot be ignored that the DRP allows for discovery

14

to the fullest extent allowed by the rules applicable in litigation. This necessarily lessens the impact

15

of any cost-based injury, since Defendant would potentially incur the same expenses in either forum.

16

At the same time, however, there is “no categorical rule that time and money spent in litigation can

17

never constitute an irreparable harm.” Richards, 2012 U.S. Dist LEXIS 3523, at *7. The actual

18

weight to be prescribed to this type of harm depends on the context in which it appears - “the

19

specific circumstances of each case.” See id.

20

The current procedural posture of this case reveals that Defendant will lose some of the

21

theoretical cost advantages inherent to the more-streamlined arbitration process without a stay.

22

Although the parties have engaged in some fact discovery, the current scheduling order allows for

23

discovery to continue until September 29, 2012. Moreover, the court has heard only one motion in

24

this case; the time for filing additional motions does not expire until October 26, 2012. With this

25

amount of time remaining, it is unlikely that either party has made significant trial preparations, and

26

the rather onerous burdens imposed on Defendant in preparing for dispositive motions and a

27

subsequent jury trial would be avoided if the decision on appeal is favorable to Defendant. The

28

court therefore finds that irreparable injury to Defendant would ensue should this case continue at
4
CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS

1

this point; a finding which favors Defendant’s abatement request.

2

C.

Injury to Other Parties

3

Plaintiffs argue the delay resulting from a stay of this case would cause them substantial

4

prejudice because it may “affect the availability of witnesses and documents and the quality of

5

testimony.” SEC v. Alexander, 2010 U.S. Dist. LEXIS 138547, at *13, 2010 WL 5388000 (N.D.

6

Cal. Dec. 22, 2010). Plaintiffs also believe that the delay “would have the unavoidable effect of

7

further dragging out a highly painful and provide matter.”

8
9

Plaintiffs’ reliance on general delay is insufficient to demonstrate a substantial injury or
prejudice. As this court has previously observed in a distinct but related context, “[w]hether good or
bad, delay is an unavoidable consequence to any stay, and numerous courts have determined that a

11
For the Northern District of California

United States District Court

10

general claim of delay is not enough on its own to constitute undue prejudice.” Convergence Techs.

12

(USA), LLC v. Microloops Corp., No. 5:10-cv-02051 EJD, 2012 U.S. Dist. LEXIS 51794, at *7,

13

2012 WL 1232187 (N.D. Cal. Apr. 12. 2012). Here, other than providing a string of case cites,

14

Plaintiffs have not connected their protestation of prejudicial delay to a specific witness or a specific

15

collection of documents that would become unavailable during a period of inactivity. That is fatal to

16

their argument.

17

In addition, the court is not convinced the risk of “dragging out” this action constitutes the

18

type of injury significant enough to preclude imposition of a stay. Again, Plaintiffs have not

19

identified anything specific to support this contention. Moreover, Plaintiffs’ choice to bring this

20

litigation has necessarily exposed them to its attendant procedures, including the possibility of an

21

interlocutory appeal. There is nothing unusual about these Plaintiffs or this case which would cause

22

the court to find that the normal litigation process works as a prejudice to Plaintiffs. Thus,

23

Plaintiffs’ concerns weigh only slightly against a stay.

24

D.

Public Interest

25

With regard to the final factor, Defendants believe that staying this action would promote the

26

policy favoring judicial efficiency and economy and serve the public’s interest in preserving

27

arbitration as a “prompt, economical and adequate method of dispute resolution.” A.G. Edwards &

28

Sons, Inc. v. McCollough, 967 F.2d 1401, 1404 n.2 (9th Cir. 1992) (internal quotations omitted). In
5
CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS

1

contrast, Plaintiffs contend a stay is inappropriate here because it runs afoul of the policy favoring

2

the efficient resolution of cases.

3

Although the policies cited by Plaintiffs and Defendant are equally important, “[c]ourts

4

considering public interest issues similar to those in this case have found that the federal policy

5

favoring arbitration embodied in the FAA and the economical use of judicial resources lead the

6

public interest to favor a stay, even when other interests are at play.” Richards, 2012 U.S. Dist

7

LEXIS 3523, at *12 (citing Winig v. Cingular Wireless LLC, 2006 U.S. Dist. LEXIS 83116, at *9-

8

10, 2006 WL 3201047 (N.D. Cal. Nov. 6, 2006); Del Rio v. CreditAnswers, LLC, 2010 U.S. Dist.

9

LEXIS 89181, at *12-13, 2010 WL 3418430 (S.D. Cal. Aug. 26, 2010)). Courts finding that the
public interest weighs against a stay do so when the appellant has failed to satisfy the “likelihood of

11
For the Northern District of California

United States District Court

10

success” factor. See id. In this case, Defendant has satisfied that element. That fact coupled with

12

the policy favoring arbitration compels the finding that the public interest supports Defendant.

13

In sum, three of the four factors weigh in favor of a stay, and do so in such as way as to

14

overcome the one factor which only slights disfavors Defendant’s request. Accordingly,

15

Defendant’s motion should be granted.
III.

16
17

ORDER

Based on the foregoing, Defendant’s Motion to Stay the Proceedings (Docket Item No. 40) is

18

GRANTED. This case is hereby STAYED pending resolution of Defendant’s appeal of the Order

19

denying the motion to compel arbitration, or until further order of this court, whichever occurs first.

20

Within ten days of any disposition of Defendant’s appeal, either party may petition the court to

21

dissolve the stay by filing an appropriate request.

22
23

The hearing scheduled for June 29, 2012, is VACATED.
IT IS SO ORDERED.

24
25

Dated: June 27, 2012
EDWARD J. DAVILA
United States District Judge

26
27
28
6

CASE NO. 5:11-cv-03874 EJD
ORDER GRANTING DEFENDANT’S MOTION TO STAY PROCEEDINGS