Today’s cases give us two interesting considerations of stay issues during various stages of arbitration-related litigation and more discussion of the recurring question of contract formation v. scope.  NB – I’m writing today’s “Highlights” while out of the office and without a printer.  Frankly, I don’t proofread very well on screen, so please be patient with any typos.  Thanks.

Stay Pending a Decision on Motion to Compel

In Coinbase v. Bielski, 599 U. S. 736 (2023), SCOTUS held that the District Court must stay litigation during the pendency of an appeal from the court’s denial of a motion to compel arbitration.  Zamudio v. Aerotek, Inc., 2024 U. S. Dist. LEXIS 35427 (E.D. Cal. February 28, 2024)(Baker, M.J.), addresses the propriety of a stay while the trial court is deciding such a motion.

Plaintiff, who alleges that she was injured at work, brings various tort and statutory claims against Aerotek, a temporary staffing company that placed her with Caterpillar, Inc., where the injury occurred.  Aerotek sought to compel arbitration under Plaintiff’s employment agreement.  This decision addresses Aerotek’s request to stay the action pending a decision on that motion to compel. The court applies the traditional three-part test for a stay.  While opining that “a plaintiff may be able to show prejudice by citing particular witnesses or documents that may be adversely affected by a stay,” Magistrate Judge Baker finds that the Plaintiff here “does not identify any particularized concerns about why [certain witnesses’] testimony as to conversations that occurred in 2019 is susceptible to prejudicial deterioration should a stay be imposed.” (Internal citation omitted).  Accordingly, the court holds that Plaintiff has not shown any prejudice if a stay is not granted. Likewise, the court finds that the prejudice to the Defendant in “further litigation of claims which may ultimately be subject to arbitration” outweighs any demonstrated need for discovery.  Plaintiff, he finds, failed to demonstrate that she needed discovery within the context of the litigation, rather than relying upon that which would be permitted in any ultimate arbitration. (Internal citation omitted).  Again, the court highlights the lack of specificity in the Plaintiff’s claims of prejudice. Finally, in what he characterizes as “the orderly course of justice,” Magistrate Judge Baker holds that, in considering “the tangible concern about the potential for unnecessary expenditure of the parties’ (and the Court’s) limited resources, a chief consideration for the Court is whether those resources are being used intelligently.” “The main concern here is the potential waste of the litigants’ and the court’s resources,” quoting Roe v. SFBSC Management, LLC, 2015 U.S. Dist. LEXIS 51081 at *4 (N.D. Cal. April 17, 2015).  Based on those considerations, the Magistrate Judge denies the stay.

The lesson from the case – Be specific when you oppose a stay motion.  If there are witnesses who might die, leave the country, or otherwise become unavailable while the motion to compel is pending, identify them and provide evidence showing the specific risk. If you need discovery that you cannot get within the limited parameters of an arbitration, say exactly what that potential evidence will be. While you may not completely defeat the stay motion, you may at least get limited relief which will allow you to satisfy those identified needs.

Stay as to Litigation by Non-arbitrating Party

In In re: AME Church Employee Retirement Fund Litigation, 2024 U. S. Dist. LEXIS 36209 (W.D. Tenn. March 1, 2024), Symetra Financial moved to stay its litigation with the Church during the pending arbitration between the Church and Symetra Life.  Judge Anderson relies upon arguments of judicial efficiency similar to those in Zamudio and finding that, since two of the issues to be arbitrated are very similar to those which will be litigated, allowing both proceedings to go forward will waste resources.  If no stay were issued, he opines, “[t]he parties could face a scenario where AMEC and Symetra Financial are litigating their dispute in the [Multi-District Litigation] while AMEC and Symetra Life are simultaneously arbitrating almost identical issues in a separate forum. This raises the risk of inefficiency in the two parallel proceedings. . . .”  Therefore, the court exercises its discretion to stay the litigation.

The Distinction between Issues of Contract Formation and Arbitral Scope; Ride Share Motor Vehicle Accidents

Wakeman v. Uber Technologies, Inc., 2024 U.S. Dist. LEXIS 35578 (D. Kan. February 28, 2024), addresses the distinction between issue of whether the parties have formed a contract and the scope of any arbitration agreement contained therein.

The case arises out of a motor vehicle accident in which the Uber driver allegedly struck the Plaintiff-passenger. Uber sought to enforce the arbitration provision contained in the clickwrap agreement setting forth its Terms and Conditions.  Wakeman contended that a personal injury claim fell outside the “Services” for which she retained Uber; she characterized the disagreement over the applicability of the arbitration provisions as a question of whether she and Uber had a “meeting of the minds” over the scope of the arbitration obligation.  The Court, Crouse, J., grants the motion to compel, holding that the dispute is over the scope of the agreement, not the formation of a contract to arbitrate.  Mutuality of agreement, which is a contract formation question, is only absent, he holds, where “the parties, unbeknownst to each other, meant two different and equally plausible things by an essential term.”  Here, he holds, “there is no dispute as to the essential definition of services: actions provided in exchange for compensation.”  Thus, citing cases standing for the proposition that determining whether an agreement applies to a particular dispute is a question of arbitral scope, the court holds that the scope issue is delegated to an arbitrator by the terms of the agreement.

See also, Spain v. Johnson, 2024 U. S. Dist. LEXIS 36520 (D. Col. January 16, 2024)(Domenico, J.), for the proposition that Lyft’s arbitration agreement covers claims for a customer’s personal injuries from a motor vehicle accident.

Super Tuesday TV tonight, with the attendant hype from both sides of the political spectrum.  Maybe, a large bowl of popcorn and a movie might be on the docket, instead.

David Reif, FCIArb
Reif ADR
Dreif@reifadr.com
Reifadr.com