Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-05226/USCOURTS-cand-3_18-cv-05226-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DARIO MARTINEZ-GONZALEZ,

Plaintiff,

v.

ELKHORN PACKING CO., LLC, et al.,

Defendants.

Case No. 18-cv-05226-EMC 

ORDER GRANTING IN PART 

DEFENDANTS’ MOTION TO STAY

PROCEEDINGS PENDING APPEAL

Docket No. 74

I. INTRODUCTION

Plaintiff Dario Martinez-Gonzalez worked for Defendants Elkhorn Packing Co. LLC and 

D’Arrigo Bros. Co. as an agricultural laborer during the 2016 and 2017 lettuce seasons. In this 

lawsuit he alleges that the companies failed to pay him appropriately, failed to provide adequate 

meal or rest breaks, and breached the duty of care they owed to Plaintiff by providing food that 

was unsafe to eat. See First Amended Complaint, Docket No. 13. He also asserts collective 

claims under the Private Attorneys General Act and the Fair Labor Standards Act. Id. at ¶¶ 140–

49, 194–205. 

In December 2018, Defendants moved to compel arbitration. See Docket No. 24. On 

October 15 and 16, 2019, a bench trial was held to determine the enforceability of the Arbitration 

Agreement. At the conclusion of that trial, the Court concluded that the Arbitration Agreement 

executed between Dario Martinez-Gonzalez and Elkhorn Packing was the product of economic 

duress and undue influence. As a result, the Court found that the Agreement was neither valid nor 

enforceable and denied Defendants’ Motion to Compel Arbitration. See Docket No. 67. 

Defendants appealed. See Docket No. 68. They have filed a Motion to Stay Proceedings Pending

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 1 of 6
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Appeal, see Docket No. 74 (“Mot.”).

II. DISCUSSION

A. Legal Standard

While “[s]ome jurisdictions hold that the trial court must stay proceedings while a denial of 

a motion to compel arbitration is appealed, . . . the Ninth Circuit has held that a district court has 

discretion to decide whether to grant a stay.” Bradberry v. T-Mobile USA, Inc., No. C 06 6567 

CW, 2007 WL 2221076, at *1 (N.D. Cal. Aug. 2, 2007) (internal citations omitted) (emphasis 

added). In Britton v. Co-op Banking Grp., 916 F.2d 1405 (9th Cir. 1990), the Ninth Circuit 

described the question whether to stay a case pending appeal of a denial of a motion to compel 

arbitration as “a proper subject for the exercise of discretion by the trial court.”

1

 916 F.2d at 1412.

“Courts generally consider four factors when determining whether to grant a stay pending 

the appeal of a civil order: (1) the likelihood of the moving party’s success on the merits; (2) 

whether the moving party will be irreparably injured if a stay is not granted; (3) whether a stay 

will substantially injure the opposing party; and (4) the public interest.” Merkin v. Vonage Am. 

Inc., No. 213CV08026CASMRWX, 2014 WL 12701041, at *1 (C.D. Cal. Mar. 26, 2014) (citing 

Hilton v. Braunskill, 481 U.S. 770, 776 (1987)); see also Leiva-Perez v. Holder, 640 F.3d 962, 964 

(9th Cir. 2011) (discussing these same factors). 

1

See also Wilson v. Huuuge, Inc., No. 3:18-CV-05276-RBL, 2019 WL 998319, at *2 n.1 (W.D. 

Wash. Mar. 1, 2019) (internal citations omitted) (“There is a circuit split regarding whether denials 

of motions to compel arbitration automatically warrant a stay if the losing party appeals. Five 

circuits ruled . . . that a stay is mandatory, while three circuits have held the opposite. The Eighth 

Circuit has yet to weigh in. The Seventh Circuit explained that ‘whether the litigation may go 

forward in the district court is precisely what the court of appeals must decide.’ The Supreme 

Court has also observed that ‘[a] district court and a federal court of appeals should not attempt to 

assert jurisdiction over a case simultaneously.’ However, the Ninth Circuit has held that a stay is 

not automatic.”). 

Defendants cite Steiner v. Apple Computer, Inc., No. C–07–4486 SBA, 2008 WL 1925197, at *5 

(N.D. Cal. Apr. 29, 2008), for the proposition that “almost every California district court to 

recently consider whether to stay a matter, pending appeal of an order denying a motion to compel 

arbitration has issued a stay.” However, seven years after Steiner, this Court concluded that “it is 

no longer accurate to say that most courts grant stays in these circumstances. In fact, according to 

this Court’s unofficial tally of decisions since Steiner, California district courts have denied stays 

pending appeal of an order denying a motion to compel arbitration twelve times, while California 

district courts have granted such motions eight times.” Mohamed v. Uber Techs., et al, 115 F. 

Supp. 3d 1024, 1028 (N.D. Cal. 2015). 

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 2 of 6
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

With respect to the first factor, a party “need not demonstrate that it is more likely than not 

that they will win on the merits.” Leiva-Perez, 640 F.3d at 966. A stay may be issued if the 

moving party establishes that “serious legal questions are raised.” Id. at 968. However, where a 

party relies on the existence of “serious legal questions” (as opposed to a likelihood of success on 

the merits), “the ‘balance of equities’ of the final three factors [must] strongly weigh in favor of 

granting a stay.” Eberle v. Smith, No. 07-CV-0120 W WMC, 2008 WL 238450, at *2 (S.D. Cal. 

Jan. 29, 2008); see also Echevarria v. Aerotek, Inc., No. 16-CV-04041-BLF, 2019 WL 3207812, 

at *2 (N.D. Cal. July 16, 2019) (citing Leiva-Perez, 640 F.3d at 970) (“Where the movant has 

made a lesser showing on the first factor – establishing serious legal questions rather than a strong 

likelihood of success on the merits – the movant must show that the balance of hardships tips 

sharply in its favor.”).

For a legal question to be “serious,” it must be a “question going to the merits so serious, 

substantial, difficult and doubtful, as to make the issues ripe for litigation and deserving of more 

deliberate investigation.” Guifu Li v. A Perfect Franchise, Inc., No. 5:10-CV-01189-LHK, 2011 

WL 2293221, at *3 (N.D. Cal. June 8, 2011) (citing Walmer v. United States DOD, 52 F.3d 851, 

854 (10th Cir. 1995)) (internal brackets omitted). “In the Ninth Circuit, serious legal questions 

often concern constitutionality.” Id. When it comes to cases dealing with enforcement of 

arbitration agreements, courts have also “found that a serious legal question was raised when the 

Supreme Court had granted certiorari . . . [and when] the appeal asked the Ninth Circuit to resolve 

a split in authority.” Id. (internal citations omitted); see also Morse v. Servicemaster Glob. 

Holdings, Inc., No. C 08-03894, 2013 WL 123610, at *3 (N.D. Cal. Jan. 8, 2013) (discussing 

cases that “raise[] genuine matters of first impression within the Ninth Circuit” as another 

example).

B. Analysis

As this Court has discretion whether to stay this case pending appeal of its denial of a 

motion to compel arbitration, Britton, 916 F.2d at 1412, it turns to the four factors discussed in 

Leiva-Perez. The Court looks first to the moving party’s likelihood of success on the merits. 

Here, Defendants do not argue that they are likely to succeed on the merits of their appeal, but 

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 3 of 6
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

instead contend that their appeal raises “serious legal questions.” Defendants’ appeal does not do

so. 

The bench trial herein involved the straightforward application of well-settled law to the 

facts of this case, and the facts clearly established that the Arbitration Agreement was the product 

of economic duress and undue influence. To the extent Defendant asks the Ninth Circuit to review 

this Court’s “[v]arious legal conclusions premised on factual findings,” Defendants’ Reply in 

Support of Motion to Stay (“Reply”) at 7, Docket No. 79, such a request does not raise serious 

legal questions. Defendants also suggest that the contract formation defenses of economic duress 

and undue influence required the Court to engage in unconscionability analysis and that this raises 

serious legal questions, but Defendants conflate the distinct and separate doctrines of 

unconscionability and duress. Their attempt to so manufacture a “serious legal question” fails.

Even if Defendants’ appeal did raise serious legal questions, the balance of hardships does

not tilt sharply in favor of Defendants. Leiva-Perez, 640 F.3d at 970. This is so particularly since 

this Court is issuing a partial stay, at least initially, for a limited period. At this time, the stay does 

not permit trial, dispositive motions, the certification of a class, or adjudication of this case on the 

merits. The Court, for now, issues a partial stay which permits focused discovery designed to 

allow Plaintiffs to secure and preserve the evidence needed to pursue Plaintiffs’ Private Attorney 

General Act (“PAGA”) and Fair Labor Standards Act (“FLSA”) claims otherwise at risk due to 

delay. The Court contemplates that such discovery might include the production of a list of 

individuals that might be covered by the PAGA and FLSA claims, contact information for those 

individuals, time and pay records related to those claims, and depositions of witnesses whose 

testimony might be lost with the passage of time.

As the Court stays the filing of class certification and dispositive motions and trial, 

Defendants’ “right” to arbitration will not, at this juncture, be jeopardized. Given the permitted 

discovery focuses on preservation of evidence that could be lost if adjudication (by arbitration or 

court) is delayed, and much of the permitted discovery would likely be obtained in either 

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 4 of 6
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

arbitration or court given the unwaivable PAGA claim2, Defendants will not be unreasonably 

prejudiced or burdened by the partial stay.

Conversely, Plaintiff contends that a full stay might inflict irreparable harm stemming from 

the fact that “members of the collective will become harder to locate as time passes, preventing 

Plaintiff from issuing effective notice” to potential members of the class, and that “many 

supervisors and foreman with knowledge of Defendants’ employment practices may be long gone 

as well.” Opp. at PDF Pages 11–12. As Plaintiffs note, “given the transient nature of the migrant 

farmworker population, Defendant’s records of contact information for people who worked for 

them in 2016 and 2017 will already be highly unreliable, and that level of unreliability will only 

grow with the further passage of time.” Opp. at PDF Page 5. Potential class members are people 

who move between the United States and other countries each year, live in multiple locations 

throughout each calendar year, and may change phone numbers and addresses frequently. See

Ontiveros v. Zamora, No. CIV. S-08-567 LKK, 2013 WL 1785891, at *5 (E.D. Cal. Apr. 25, 

2013) (“Courts that have addressed this issue are generally concerned with undue loss or 

destruction of evidence stemming from a delay.”). 

Lastly, the public interest does not tilt strongly in Defendants’ favor. There are competing 

interests. While there is an interest under the Federal Arbitration Act in enforcing valid arbitration 

agreements, “the existence of a federal policy favoring arbitration does not, by itself, require a 

stay.” Jimenez v. Menzies Aviation Inc, No. 15-CV-02392-WHO, 2015 WL 5591722, at *4 (N.D. 

Cal. Sept. 23, 2015). The Court “must consider other public policies at issue, such as California’s 

interest in enforcing its wage and hour laws.” Id. at *4. 

///

///

///

2

See Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 436 (9th Cir. 2015) (“[T]he Iskanian

rule prohibiting waiver of representative PAGA claims does not diminish parties’ freedom to 

select informal arbitration procedures.”); Iskanian v. CLS Transportation Los Angeles, LLC, 59 

Cal. 4th 348, 383, 327 P.3d 129, 148 (2014) (“an employee’s right to bring a PAGA action is 

unwaivable”). 

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 5 of 6
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

As noted in the minute order, the parties are directed to meet and confer to establish a 

discovery plan for the next six months that focuses on preserving the relevant documents and 

testimony in this case. The Court also orders that the statute of limitations on the putative class 

member’s FLSA claim be equitably tolled until further order of this Court.

This order disposes of Docket No. 74. 

IT IS SO ORDERED.

Dated: February 13, 2020

______________________________________

EDWARD M. CHEN

United States District Judge

Case 3:18-cv-05226-EMC Document 82 Filed 02/13/20 Page 6 of 6