Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-04297/USCOURTS-cand-3_06-cv-04297-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

BENJAMIN D. WINIG,

Plaintiff,

 v.

CINGULAR WIRELESS LLC,

Defendant.

 /

No. C-06-4297 MMC

ORDER GRANTING MOTION FOR STAY

PENDING APPEAL; VACATING

HEARING

(Docket No. 37)

Before the Court is the motion of defendant Cingular Wireless LLC (“Cingular”), filed

October 6, 2006, by which Cingular seeks a stay of the instant action pending resolution of

its appeal of the Court’s September 27, 2006 order denying Cingular’s motion to compel

arbitration. Plaintiff Benjamin D. Winig has filed opposition to the motion; Cingular has filed

a reply. Having considered the papers filed in support of and in opposition to the motion,

the Court finds the matter appropriate for resolution without oral argument, see Civil L.R. 7-

1(b), hereby VACATES the November 17, 2006 hearing, and rules as follows.

BACKGROUND

On September 27, 2006, the Court issued an order denying Cingular’s motion to

compel arbitration. On October 5, 2006, Cingular filed a notice of appeal of the Court’s

September 27, 2006 order.

Case 3:06-cv-04297-MMC Document 56 Filed 11/06/06 Page 1 of 6
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1

 In so ruling, the Ninth Circuit noted, without further discussion, that a district court

in the Western District of Tennessee had developed a test for determining whether a district

court should stay an action pending appeal of an order denying a motion to compel

arbitration. See id. (citing C.B.S. Employees Federal Credit Union v. Donaldson, 716 F.

Supp. 307 (W.D. Tenn. 1989)). In the Tennessee case, the district court applied the United

States Supreme Court’s “four-prong test [for] determining whether a movant is entitled to a

stay under Rule 62(c)” of the Federal Rules of Civil Procedure: “(1) whether the stay

applicant has made a strong showing that he is likely to succeed on the merits; (2) whether

the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will

substantially injure the other parties interested in the proceeding; and (4) whether public

interest favors a stay.” See C.B.S., 716 F. Supp. at 309 (internal quotation, alterations, and

citation omitted). The district court further held that the movant need not demonstrate a

“mathematical probability” of success on the merits of its appeal; rather, the first prong is

satisfied where the movant presents a “substantial case on the merits,” which the court

equated with the raising of a “serious legal question.” See id. at 309-310. Although the

Ninth Circuit did not expressly adopt the test set forth in C.B.S., this Court will discuss the

four prongs of the C.B.S. test in determining whether to stay the instant action pending

appeal.

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LEGAL STANDARD

The Federal Arbitration Act permits an immediate appeal of an order denying a

motion to compel arbitration. See 9 U.S.C. § 16(a)(1)(B) (“An appeal may be taken

from . . . an order . . . denying a petition . . . to order arbitration to proceed.”) Any such

appeal does not divest the district court of jurisdiction to proceed with the merits of the

case. See Britton v. Co-op Banking Group, 916 F.2d 1405, 1411-1412 (9th Cir. 1990). 

Nonetheless, once an appeal has been taken from a denial of a motion to compel

arbitration, “[t]he system created by the Federal Arbitration Act allows the district court to

evaluate the merits of the movant’s claim, and if, for instance, the court finds that the

motion presents a substantial question, to stay the proceedings pending an appeal from its

refusal to compel arbitration.”1

 See id. at 1412.

DISCUSSION

A. Substantial Question

As of the date of Cingular’s motion, district courts in California have granted stays

pending appeal of denials of motions to compel arbitration in at least four cases this year 

raising essentially the same issues as those presented herein. (See Motion to Stay,

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 The four opinions are Stern v. Cingular Wireless Group, CV-05-8842 CAS, slip op.

(C.D. Cal. Sept. 11, 2006); Laster v. T-Mobile USA, Inc., 05cv1167 DMS, slip op. (S.D. Cal.

March 14, 2006); Ford v. Verisign, Inc., 05 CV 0819 JM, slip op. (S.D. Cal. March 8, 2006);

and Cervantes v. Pacific Bell Wireless, 05 CV 01469 JM, slip op. (S.D. Cal. March 8, 2006).

3

 The Court notes that, on November 1, 2006, a stay pending appeal of the denial of

a motion to compel arbitration was granted, for the same reasons, in yet another California

district court case. (See Reply Addendum I (Sasik v. AT&T Wireless, CV 05-2346 ABC

(C.D. Cal. Nov. 1, 2006)).

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Addenda I-IV.)2 In each such case, the district court found a substantial question was

raised on appeal because the Ninth Circuit has not issued a published opinion adopting or

rejecting the California Supreme Court’s holding, in Discover Bank v. Superior Court, 36

Cal. 4th 148 (2005), that the Federal Arbitration Act does not preempt California law with

respect to the unconscionability of contractual class action/class arbitration waivers. (See

id. Addendum I at 3; Addendum II at 4; Addendum III at 3; Addendum IV at 2.)3 

Contrary to plaintiff’s argument, the state of the law has not changed since the most

recent of the above-referenced decisions. In support of his argument, plaintiff cites two

cases. The first, a decision by a California Court of Appeal, Merritt v. Cingular Wireless

LLC, 2006 WL 2744357 (Cal. Ct. App. Sept. 27, 2006), is unpublished and may not be

cited. See Cal. Ct. R. 977(a) (“an opinion of a California Court of Appeal or superior court

appellate division that is not certified for publication or ordered published must not be cited

or relied on by a court or a party in any other action”). The second, by the Illinois Supreme

Court, Kinkel v. Cingular Wireless, 2006 WL 2828664 (Ill. Oct. 5, 2006), does not address

FAA preemption of California law. 

The Court finds the reasoning of the above-referenced California district court

decisions to be persuasive and that defendant has raised a substantial question of law to

be resolved on appeal. See C.B.S., 716 F. Supp. at 310 (noting court “may grant a stay

even though its own approach may be contrary to movant’s view of the merits”). 

Accordingly, the Court finds the first factor of the C.B.S. test weighs in favor of

granting the motion for a stay.

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B. Irreparable Harm to Movant

The second factor to be considered in determining whether to grant a stay pending

appeal is whether the party seeking a stay will be irreparably harmed by the absence of a

stay. See C.B.S., 716 F. Supp. at 309. As defendant correctly argues, the Ninth Circuit

has held that if a party “must undergo the expense and delay of a trial before being able to

appeal [an order denying a motion to compel arbitration], the advantages of arbitration –

speed and economy – are lost forever,” a loss the Ninth Circuit describes as “serious,

perhaps, irreparable.” See Alascom, Inc. v. ITT North Electric Co., 727 F.2d 1419, 1422

(9th Cir. 1984).

Accordingly, the Court finds the second factor weighs in favor of granting the motion

for a stay.

C. Harm to Opposing Party

The third factor is whether issuance of a stay “will substantially injure the other

parties interested in the proceeding.” See C.B.S., 716 F. Supp. at 309. Plaintiff argues

that he and the proposed class will be harmed because, if a stay is granted pending

appeal, Cingular will be able to continue its assertedly unlawful conduct. Even if such

conduct ultimately is determined to be unlawful, however, the proposed class will have

suffered little additional injury as a result of the stay, given what appears to be a small

amount of monetary damages assertedly suffered by the individual members of the

proposed class. (See, e.g., Amended Complaint ¶¶ 3, 5, 9 (setting forth asserted unlawful

change in defendant’s billing practice); see also id. ¶ 22 (“Plaintiff’s and each Nationwide

Class Member’s individual ascertainable losses and damages are not sufficiently large to

justify instituting individual actions.”). Moreover, any such injury can be redressed by an

award of damages if plaintiff ultimately prevails. 

With respect to plaintiff’s argument that the proposed class will be harmed by a stay

because Cingular has declined to agree to preserve evidence, Cingular, in a letter dated

October 18, 2006, expressly assured plaintiff that “consistent with law and applicable

standards, Cingular has taken steps to ensure that all relevant information pertinent to this

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4

 For this reason, and based on the showing made thus far, the Court denies

plaintiff’s request for a preservation order.

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case has been preserved as appropriate.” (See Nicholes Decl. Ex. C.) Additionally,

Cingular has expressed an intent to comply with the recent amendments to the Federal

Rules of Civil Procedure with respect to electronic data. (See Stortz Decl. Ex. A.) Under

such circumstances, the Court is not persuaded that plaintiff or the proposed class will

suffer harm in connection with the preservation of evidence.4

Accordingly, the Court finds the third factor weighs in favor of granting the motion for

a stay.

D. Public Interest

The fourth factor to be considered in determining whether to grant a stay pending

appeal is whether issuance of a stay is in the public interest. See C.B.S., 716 F. Supp. at

309. The Supreme Court has held the Federal Arbitration Act sets forth a “congressional

declaration of a liberal federal policy favoring arbitration agreements.” See Moses H. Cone

Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983). Consequently, a

stay would advance the public interest in arbitration by ensuring that Cingular is not

required to litigate the instant action in district court unless and until the Ninth Circuit

resolves the pending appeal in plaintiff’s favor. Although the Court is cognizant of the

public interest in “vindicating consumer rights,” see Discover Bank, 36 Cal. 4th at 159, the

Court finds the requested stay will not materially impact that interest. 

Moreover, as the district court in C.B.S. observed, it “does not make sense for this

Court to expend its time and energy preparing this case for trial and possibly trying it only to

learn at a later date from the court of appeals that it was not the proper forum to hear the

case.” See C.B.S., 716 F. Supp. at 310. A stay would promote the public interest in the

economical use of judicial resources.

Accordingly, the Court finds the fourth and final factor weighs in favor of granting the

motion for a stay.

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CONCLUSION

For the reasons set forth above, Cingular’s motion to stay the instant action pending

appeal is hereby GRANTED. No later than May 4, 2007, and at no greater than six-month

intervals thereafter, the parties shall file a joint status report advising the Court of the status

of the instant appeal, as well as the appeals in the following cases: Stern v. Cingular

Wireless Group, CV-05-8842 CAS (C.D. Cal.), Laster v. T-Mobile USA, Inc., 05cv1167

DMS (S.D. Cal.), Ford v. Verisign, Inc., 05 CV 0819 JM (S.D. Cal.), Cervantes v. Pacific

Bell Wireless, 05 CV 01469 JM (S.D. Cal.), Lozano v. AT&T Wireless, 02 CV 90 AHS (C.D.

Cal.), and Sasik v. AT&T Wireless, CV 05-2346 ABC (C.D. Cal.). 

This order terminates Docket No. 37.

IT IS SO ORDERED.

Dated: November 6, 2006 

MAXINE M. CHESNEY

United States District Judge

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