Julie Arcand v. Catalyst Brands LLC

Opinion

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5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT TACOMA 9 10 JULIE ARCAND, CASE NO. 2:25-cv-01445-DGE 11 Plaintiff, ORDER GRANTING IN PART 12 v. MOTION TO STAY ACTION PENDING RESOLUTION OF 13 CATALYST BRANDS LLC, APPEALS IN RELATED MATTERS (DKT. NO. 13) 14 Defendants. 15

16 This matter comes before the Court on Defendants’ motion to stay action pending 17 resolution of appeals in related matters. (Dkt. No. 13.) Having considered the motion, Plaintiff’s 18 response in opposition (Dkt. No. 17), and Defendants’ reply in support (Dkt. No. 27), the Court 19 GRANTS IN PART the motion and ORDERS a stay pending the Ninth Circuit’s decision in 20 Close v. Penney OpCo, LLC, 787 F. Supp. 3d 1166, appeal docketed, No. 25-4181 (9th Cir. July 21 7, 2025). 22 23 24 1 I BACKGROUND 2 On August 5, 2025, Plaintiff Julie Arcand filed an amended complaint against Defendants 3 Catalyst Brands LLC1 and Penney OpCo, LLC (together, “JCPenney” or “Defendants”), alleging 4 that “[f]or years, JCPenney has engaged in a massive false discount advertising scheme across

5 more than 90% of its products on the JCPenney website and in its retail stores.” (Dkt. No. 4 at 6 2.) Plaintiff alleges that between 2021 and 2025, JCPenney transmitted numerous commercial 7 emails with falsely advertised discounts and “free” offers to her and other consumers in 8 Washington. (Id. at 2–3, 12, 33–35.) Plaintiff seeks individual relief and relief on behalf of a 9 proposed class of Washington consumers who received an email from JCPenney which falsely 10 advertised either a percentage-off sale or a “free” offer. (Id. at 16.) She brings causes of action 11 under the Washington Consumer Protection Act (WCPA) and the Washington Commercial 12 Electronic Mail Act (CEMA) and seeks injunctive relief and money damages. (Id. at 18–25.) 13 On September 18, 2025, Defendants moved to compel arbitration, asserting that because 14 Plaintiff is a JCPenney Rewards member and had agreed to be bound by the arbitration provision

15 in JCPenney’s Rewards Program, this dispute must be pursued in arbitration. (Dkt. No. 12 at 2.) 16 Defendants also moved to stay this case pending resolution of appeals in Close v. Penney OpCo, 17 LLC and Montes v. Sparc Group, LLC, 136 F.4th 1168 (9th Cir. 2025). (Dkt. No. 13.) 18 A. Close v. Penney OpCo, LLC 19 The plaintiff filed suit under WCPA against the defendant for an allegedly “deceptive 20 pricing scheme” whereby JCPenney advertised sale prices along with reference prices that did 21 not accurately reflect prices at which the goods had been sold. Close, 787 F. Supp. 3d at 1168– 22

1 Plaintiff alleges Catalyst Brands LLC “is a limited liability company that was formed in 23 January 2025 following a merger between SPARC Group LLC and Penney OpCo LLC,” and is the “stated successor to Penney OpCo LLC.” (Dkt. No. 4 at 4–5.) 24 1 1169. JCPenney moved to compel arbitration because the plaintiff was a JCPenney Rewards 2 member and was bound by the arbitration provision, and because the plaintiff purchased a bag on 3 the JCPenney website, which included a link to terms and conditions containing an arbitration 4 agreement. Id. This Court denied the motion to compel arbitration, concluding that the

5 arbitration provision within the Rewards Program was illusory under Texas law, that the Court 6 was entitled to make the decision on arbitrability, and that the plaintiff’s claims did not fall 7 within the scope of the arbitration provision. Id. at 1170–1173. 8 B. Montes v. Sparc Grp., LLC 9 The Montes lawsuit is based on allegations of false discounting scheme in which the 10 plaintiff alleged that the defendant violated the WCPA by representing to consumers that 11 clothing items for sale were “deeply discounted prices when in fact they had not been discounted 12 at all.” Montes, 136 F.4th at 1169. The plaintiff alleged injury under the WCPA because she 13 purchased a pair of leggings at a misrepresented price. Id. at 1170. The Ninth Circuit certified 14 the following question to the Washington Supreme Court: “When a seller advertises a product’s

15 price, coupled with a misrepresentation about the product’s discounted price, comparative price, 16 or price history, does a consumer who purchases the product because of the misrepresentation 17 suffer an ‘injur[y] in his or her business or property’ under [Washington Revised Code] 18 §§ 19.86.020 and 19.86.090 if the consumer pays the advertised price?” Id. at 1171. 19 II DISCUSSION 20 “[T]he power to stay proceedings is incidental to the power inherent in every court to 21 control the disposition of the causes on its docket with economy of time and effort for itself, for 22 counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). This power includes 23 staying an action “pending resolution of independent proceedings which bear upon the case.”

24 1 Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983) (quoting 2 Levya v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863–864 (9th Cir. 1979), cert denied, 444 3 U.S. 827 (1979)). To determine whether a stay is appropriate, “the competing interests which 4 will be affected by the granting or refusal to grant a stay must be weighed.” CMAX, Inc. v. Hall,

5 300 F.2d 265, 268 (9th Cir. 1962). Among those competing interests are (1) the possible damage 6 which may result from granting a stay; (2) the hardship or inequity which a party may suffer in 7 being required to go forward; and (3) the orderly course of justice measured in terms of the 8 simplifying or complicating of issues, proof, and questions of law which could be expected to 9 result from a stay. Id. “The party requesting a stay bears the burden of showing that the 10 circumstances justify an exercise of that discretion.” Nken v. Holder, 556 U.S. 418, 433–434 11 (2009). The moving party additionally bears the burden to “make out a clear case of hardship or 12 inequity in being required to go forward, if there is even a fair possibility that the stay for which 13 he prays will work damage to someone else.” CMAX, Inc., 300 F.2d at 255. 14 A. Stay Not Warranted Based on Montes

15 The Court DENIES entry of stay based on Montes. (Dkt. No. 13 at 5.) Montes contends 16 with a different question than at issue in this case, i.e., whether a consumer who purchases a 17 product because of a misrepresentation suffers an injury under the WCPA. Unlike the plaintiffs 18 in Close and Montes, Plaintiff does not contend she suffered an injury under the WCPA because 19 she was induced to purchase a product due to Defendants’ misrepresentations. Instead, 20 Plaintiff’s WCPA claim is based exclusively on a violation of CEMA, which Plaintiff alleges 21 constitutes a per se violation of the WCPA. (Dkt. No. 1 at 19–21.) Because a decision in 22 Montes is not likely to streamline any issues in the instant case, the Court DENIES the request to 23 stay based on Montes.

24 1 B. Stay Based on Close is Warranted 2 1. Possible Damage Resulting from Granting a Stay 3 Defendants argue no prejudice would result from a stay (Dkt. No. 13 at 6–7), while 4 Plaintiff argues she would be damaged because “[s]he will not be able to resolve her claims

5 (whether in court or in arbitration) in the timely and effective manner promised by Fed. R. Civ 1 6 or by the FAA.” (Dkt. No. 17 at 7.) 7 The Court agrees with Plaintiff that a stay would delay the instant litigation. However, 8 any delay is unlikely to be indefinite. The Ninth Circuit has held that “lengthy and indefinite 9 stays” weigh against granting a stay because they “place a plaintiff effectively out of court.” 10 Blue Cross & Blue Shield of Ala. v. Unity Outpatient Surgery Ctr., Inc., 490 F.3d 718, 724 (9th 11 Cir. 2007). Here, two of the briefing deadlines in the Close appeal have already passed— 12 JCPenney filed an opening brief on October 17, 2025, Plaintiff filed an answering brief on 13 January 16, 2026, and an optional reply brief is due 21 days after service of the answering brief. 14 (Dkt. No. 18 at 2.) These deadlines provide sufficiently definite markers, even if the Ninth

15 Circuit has not yet set a date for oral argument. Furthermore, it is extremely unlikely to be the 16 kind of lengthy delay that counsels against entry of a stay. See Blue Cross & Blue Shield of Ala., 17 490 F.3d at 724 (finding a potential delay of five or six years, or longer, as “indefinite” and 18 “lengthy”). 19 Additionally, the case is in the early stages of litigation, very little substantive work has 20 been done in this case, and there are no immediately pressing deadlines or trial dates. “Put 21 simply, ‘[c]onsidering the substantial amount of work that lies ahead of both parties,’ the Court 22 finds that this case is still in the early stages, and thus this factor ‘strongly favors’ granting a stay. 23 Capella Photonics, Inc. v. Cisco Sys., Inc., No. C-14-3348 EMC, 2015 WL 1006582, at *2 (N.D.

24 1 Cal. Mar. 6, 2015) (quoting Evolutionary Intel. LLC v. Millenial Media, Inc. No.5:13-CV-04206 2 EJD, 2014 WL 2738501, at *3 (N.D. Cal. June 11, 2014). 3 Even if Plaintiff may suffer some prejudice from a stay, the harm is not so great as to 4 deny a stay. Therefore, this factor weighs in favor of Defendants’ request.

5 2. Hardship or Inequity Suffered from Being Required to Go Forward 6 Defendants argue that they will suffer hardship without a stay because they will be forced 7 to engage in duplicative litigation without input from the Ninth Circuit. (Dkt. No. 13 at 7.) 8 “[B]eing required to defend a suit, without more, does not constitute a ‘clear case of 9 hardship or inequity’ within the meaning of Landis.’” Lockyer v. Mirant Corp., 398 F.3d 1098, 10 1112 (9th Cir. 2005) (quoting Landis, 299 U.S. at 255). However, courts routinely grant stays in 11 complex cases when a forthcoming appellate decision could reverse the proceedings below and 12 require the lower court to “consider [the] issue twice.” Robledo v. Randstad US, L.P., 2017 WL 13 4934205, at *4 (N.D. Cal. Nov. 1, 2017) (granting stay in “large class action,” which “could be 14 rendered moot” by a pending appellate ruling). The overlap between the merits of Plaintiff’s

15 claims and Defendants’ challenges presented on appeal indicates that the Ninth Circuit’s decision 16 in Close will likely streamline the issues the parties must litigate moving forward in this action. 17 See Herbalife Int’l of Am. Inc. v. Ford, No. CV072529GAFFMOX, 2008 WL 11491587, at *2 18 (C.D. Cal. Mar. 12, 2008) (“Any determination from the Circuit, one way or the other, will go far 19 in streamlining the case.”). 20 The instant case involves a substantially similar arbitration agreement to what has been 21 appealed in Close. A Ninth Circuit ruling in either party’s favor on the terms of the contract, 22 whether arbitrability has been delegated to an arbitrator, and whether the plaintiff’s claims fall 23 within the scope of the arbitration provision will inform this Court’s consideration of

24 1 Defendants’ motion to compel arbitration. Thus, the Ninth Circuit proceedings will almost 2 certainly simplify the issues in this case and serve the goal of advancing judicial efficiency. 3 Accordingly, the second factor also weighs in favor of an entry of stay as to the Close appeal. 4 3. Orderly Course of Justice, Simplifying the Issues and Questions of Law

5 Finally, Defendants argue that a stay is appropriate because the Close appeal is 6 substantially similar to the instant case and would narrow the issues that must be determined. 7 (Dkt. No. 13 at 5–8.) 8 Whether disposition of a related case would “narrow the issues in the pending cases and 9 assist in the determination of the questions of law involved” is relevant under this factor. Landis, 10 299 U.S. at 253. Here, it is possible—and perhaps even likely—that a decision in the Close 11 appeal will narrow the issues in the instant case. In Close, this Court denied the motion to 12 compel arbitration (1) because the Rewards Program arbitration agreement was illusory and did 13 not cover the plaintiff’s claims, and (2) the plaintiff did not have notice of the JCPenney 14 website’s terms and conditions arbitration agreement, and thus there was no agreement to

15 arbitrate. Close, 787 F. Supp. 3d at 1171–1174. The Rewards Program arbitration agreement in 16 Close is nearly identical to the Rewards Program arbitration agreement in this matter. (Compare 17 Dkt. No. 12-3, 12-4 with Close, 787 F. Supp. 3d at 1170–1171.) While the causes of action in 18 Close and this matter are different, any guidance from the Ninth Circuit as to whether the 19 arbitration agreement in Close is illusory or required delegation to an arbitrator is relevant to this 20 instant case.2 21

22 2 Plaintiff argues the Ninth Circuit “may, for example, simply hold that Ms. Close’s claims are outside the scope of the relevant arbitration clause and decline to reach the illusoriness issue.” 23 (Dkt. No. 17 at 6.) However, “[f]irst, a court must resolve any challenge that an agreement to arbitrate was never formed, even in the presence of a delegation clause.” Caremark, LLC v. 24 1 A decision on the merits in the Close appeal will hold precedential value.3 Therefore, a 2 stay avoids the risk of relitigating the entire case a second time and is the most efficient course of 3 action. In sum, all three factors weight in favor of entry of a stay. 4 III CONCLUSION

5 Accordingly, and having considered Defendants’ motion, the briefing of the parties, and 6 the remainder of the record, the Court finds and ORDERS that Defendants’ motion to stay (Dkt. 7 No. 13) is GRANTED IN PART. This matter is STAYED pending the Ninth Circuit’s decision 8 in Close v. Penney OpCo, LLC, appeal docketed, No. 25-4181 (9th Cir. July 7, 2025). The 9 parties are ordered to file a joint report on the status of the case every 90 days, and within 10 10 days of the case being resolved. 11 The motion to compel arbitration (Dkt. No. 12) is DENIED without prejudice but may be 12 re-filed after the stay in this matter has been lifted. 13 Dated this 10th day of February, 2026. 14 A 15 David G. Estudillo 16 United States District Judge

18 Chickasaw Nation, 43 F.4th 1021, 1030 (9th Cir. 2022). “That principle follows from the fundamental premise that arbitration is strictly a matter of consent.” Id. (internal quotation 19 marks and citation omitted). 3 The Court notes two other similar cases are before the Ninth Circuit: Jones v. Penney Opco, 20 LLC, No. 2:24-CV-02468-DAD-AC, 2025 WL 2180560 (E.D. Cal. Aug. 1, 2025) (finding JCPenney’s Reward Program Terms and Conditions did not delegate arbitrability to the arbitrator 21 and the arbitration agreement did not cover the plaintiff’s claims), appeal docketed, No. 25-5634 (9th Cir. Sept. 5, 2025) and Gamble v. Penney Opco LLC, 791 F. Supp. 3d 1203, 1206, 1215– 22 1216 (D. Or. 2025) (the plaintiff argued the defendant violated Oregon’s Unlawful Trade Practices Act by conducting “a massive false discount advertising scheme across nearly all of its 23 products” and the court held the JCPenney Rewards Program arbitration agreement did not cover plaintiff’s claims), appeal docketed, No. 25-4343 (9th Cir. July 15, 2025). 24