Source: https://class-law.com/2010/09/25/central-district-denies-motion-to-compel-class-arbitration-but-grants-stay-pending-outcome-of-supreme-courts-decision-in-att-mobility-v-concepcion/
Timestamp: 2019-04-25 00:00:07+00:00

Document:
The United States District Court for the Central District of California denied a class action defendant’s motion to compel arbitration, but granted its motion to stay. Lopez v. American Express Bank, FSB, No. CV 09-07335 SJO (MANx), 2010 WL 3637755 (C.D. Cal. Sept. 17, 2010).
Plaintiffs sued Defendants American Express Bank, FSB, and American Express Centurion Bank’s (collectively, “Defendants”) alleging causes of action relating to the terms and conditions of credit cards. Id. *1. Defendants moved to compel arbitration. Id. The Court denied, finding that the class action waiver contained in the Agreement between the parties was unconscionable under California law, and therefore, the Plaintiffs could not be compelled to arbitrate. Id. Defendants brought the present motion to reconsider.
The Court determined that the Supreme Court’s grant of certiorari in AT & T Mobility LLC v. Concepcion, — U.S. —-, 130 S. Ct. 3322, — L. Ed. 2d —-, 2010 WL 303962 (May 24, 2010) constitutes a material difference in fact and law, potential change in controlling law, and justifiable reason to reconsider its prior. Id. *3.
The specific question that the Supreme Court will resolve is: “Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures–here, class-wide arbitration–when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.” (Defs.’ Mot. 6:22-27.) The grant of certiorari occurred after the issuance of the Order. See L.R. 7-18. Moreover, the Supreme Court’s decision in AT & T Mobility bears directly on the ruling in the Order. Therefore, AT & T Mobility constitutes a permissible ground to grant a motion to reconsider. Accordingly, the Court GRANTS the Defendants’ Motion. See McArdle v. AT & T Mobility LLC, 2010 WL 2867305, at *4 (N.D.Cal. July 20, 2010) (granting motion for reconsideration and staying action pending the decision in AT & T Mobility ).
But the court denied Defendants’ request to compel arbitration, finding it premature. Id.
A grant of certiorari is wholly different from a decision that invalidates California case law, such as Discover Bank v. Superior Court, 36 Cal.4th 148, 162-63, 30 Cal.Rptr.3d 76, 113 P.3d 1100 (2005), making class action waivers unconscionable. The Supreme Court could very well decide that the FAA does not preempt state law from conditioning enforcement of an arbitration clause on the availability of class action. Accordingly, the Court DENIES Defendants’ request for the Court to compel arbitration.
However, the court granted Defendants’ motion to stay, finding that staying the action was the fairest course for the parties. Id. *4.
Pursuant to its inherent power, the Court has the authority to stay this action until the Supreme Court issues its decision in AT & T Mobility. That case represents a separate judicial proceeding that will directly affect the case at hand. The Supreme Court is scheduled to hear AT & T Mobility on November 9, 2010 and will decide the matter no later than at the end of the 2010 term. Therefore, the stay of action would conclude within a reasonable period of time.
The court found that balancing the competing interests weighed in favor of the Defendants. Id.
The Defendants will suffer substantial hardship if this action is permitted to go forward. They will incur significant costs relating to fact and expert discovery, motion practice, and trial preparation to defend this action. See Carney v. Verizon Wireless Telecom, Inc., 2010 WL 3058106, at *3 (S.D. Cal. Aug.2, 2010); see also Kaltwasser v. Cingular Wireless LLC, 2010 WL 2557379, at *2 (N.D. Cal. June 21, 2010) (“[T]he nature and extent of discovery permissible in private arbitration is fundamentally different from that allowed in class-action litigation.”) These costs may be unnecessary if the Supreme Court finds that the FAA preempts state law from conditioning enforcement of an arbitration clause on the availability of class action, thereby requiring this action to be arbitrated. It would be burdensome for both parties to spend much time, energy, and resources on pre-trial and discovery issues, only to find those issues moot within less than a year. The public interest in preserving judicial resources also weighs in favor of staying the case.
District Judge S. James Otero.
Andrew S. Kierstead, Andrew S. Kierstead Law Offices, Portland, OR, John Koenig, Law Office of John Koenig, Michael D. Braun, Braun Law Group PC, Los Angeles, CA, Marc R. Stanley, Martin Woodward, Roger L. Mandel, Stanley Mandel & Iola LLP, Dallas, TX, Matthew J. Zevin, Stanley Iola, LLP, San Diego, CA, Peter N. Wasylyk, Peter N. Wasylyk Law Offices, Providence, RI, for Plaintiff.
Darius K.C. Zolnor, Joseph A. Escarez, David W. Moon, Stephen J. Newman, Stroock & Stroock & Lavan LLP, Los Angeles, CA, for Defendants.

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