1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DAVID H. MARRON, Case No. 19-cv-01534-KAW
8 Plaintiff, ORDER DENYING MOTION TO 9 v. AMEND COMPLAINT
10 HEALTHSOURCE GLOBAL STAFFING, Re: Dkt. No. 28 INC., 11 Defendant. 12 13 Plaintiff David H. Marron filed the instant case against Defendant Healthsource Global 14 Staffing, Inc., asserting violations of various credit reporting laws and California labor laws. (See 15 Not. of Removal, Exh. A (“Compl.”), Dkt. No. 1.) On September 13, 2019, the Court compelled 16 Plaintiff’s individual claims to arbitration, and stayed the remaining case. (Dkt. No. 27 at 17.) 17 On June 24, 2020, Plaintiff filed the instant motion for leave to file a second amended 18 complaint. (Pl.’s Mot. to Amend, Dkt. No. 28.) Specifically, Plaintiff seeks to dismiss his 19 individual claims without prejudice, and proceed only on a cause of action under California’s 20 Private Attorneys General Act (“PAGA”). (Id. at 1.) On July 8, 2020, Defendant filed its 21 opposition. (Def.’s Opp’n, Dkt. No. 32.) On July 15, 2020, Plaintiff filed its reply. (Pl.’s Reply, 22 Dkt. No. 33.) 23 The Court deems the matter suitable for disposition without hearing pursuant to Civil 24 Local Rule 7-1(b) and VACATES the August 6, 2020 hearing. Having considered the parties’ 25 filings and the relevant legal authority, the Court DENIES Plaintiff’s motion. 26 I. LEGAL STANDARD 27 Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend a complaint should 1 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). The courts consider 2 five factors when determining whether leave to amend should be granted: “(1) bad faith, (2) undue 3 delay, (3) prejudice to the opposing party, (4) futility of amendment[,] and (5) whether plaintiff 4 has previously amended his complaint.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 5 1990). Not all factors carry equal weight. Eminence Capital, LLC, 316 F.3d at 1052. Prejudice to 6 the opposing party must be given the greatest weight. Id. Absent prejudice, or a strong showing 7 of bad faith, undue delay, or futility of amendment, there exists a presumption under Rule 15(a) in 8 favor of granting leave to amend. Id. (internal citation omitted). 9 II. DISCUSSION 10 Plaintiff argues that his motion to amend the complaint should be granted because of Rule 11 15(a)(2)’s liberal standard. (Pl.’s Mot. to Amend at 2.) Defendant responds that the Federal 12 Arbitration Act (“FAA”) requires that the case be stayed pending resolution of the arbitration of 13 Plaintiff’s individual claims. (Def.’s Opp’n at 4.) 14 The FAA states:
15 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an 16 agreement in writing for such arbitration, the court in which suit is pending, upon being satisfied that the issue involved in such suit or 17 proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until 18 such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default 19 in proceeding with such arbitration. 20 9 U.S.C. § 3 (emphasis added). 21 In Lovig v. Best Buy Stores LP, the plaintiff’s individual claims were compelled to 22 arbitration and the remainder of the action, including a PAGA claim, was stayed. Case No. 18-cv- 23 2807-PJH, 2019 WL 2568851, at *1 (N.D. Cal. June 21, 2019). The plaintiff then moved to 24 dismiss his individual claims without prejudice so that he could proceed on the PAGA claim. Id. 25 The district court found that the FAA did not allow the plaintiff to amend the complaint, 26 explaining that “[t]he plain language of the FAA seems to require that, if ‘any issue’ is referred to 27 arbitration, the court ‘shall’ stay the ‘action’ pending arbitration upon request.” Id. at *3. Thus, 1 proceed with or dismiss others.” Id. In short, “the court must continue to stay the entire action – 2 and cannot dismiss fewer than all of the claims – until the contracted-for ‘arbitration has been had 3 in accordance with the terms of the agreement.’” Id. (quoting 9 U.S.C. § 3). 4 Similarly, in Johnson v. JP Morgan Chase Bank, N.A., the plaintiffs moved to amend the 5 complaint after their claims were compelled to arbitration. Case No. EDCV 17-2477 JGB (SPx), 6 2019 WL 2004140, at *2 (C.D. Cal. Jan. 25, 2019). The plaintiffs sought to add facts showing 7 that they sought public injunctive relief, which could make the claims non-arbitrable. Id. The 8 district court denied the motion because the court “[wa]s not convinced it has the power to lift the 9 stay and allow the amendment before ‘arbitration has been had.’” Id. at *3 (quoting 9 U.S.C. § 3). 10 The district court further explained that even if it had the ability to lift the stay, it would not 11 because “[l]eaving the stay intact until the completion of arbitration serves the interests of judicial 12 economy and advances Congress’s purpose in enacting the FAA: to ensure the enforcement of 13 arbitration agreements according to their terms so as to facilitate streamlined proceedings.” Id. 14 (internal quotation omitted). 15 Here, the Court compelled Plaintiff’s individual claims to arbitration, and stayed the 16 remainder of the case as required by the FAA. While Plaintiff did not initiate arbitration, 17 Defendant has initiated arbitration of Plaintiff’s individual claims. (See Def.’s Opp’n at 1, 4.) By 18 the FAA’s plain terms, the stay of the action remains “until such arbitration has been had in 19 accordance with the terms of the agreement.” 9 U.S.C. § 3. The FAA does not give the court 20 discretion to lift the stay to dismiss some of the claims, particularly now that arbitration has been 21 initiated. Rather, it explicitly mandates that the stay remain in place until arbitration is complete. 22 Plaintiff argues that he should not be required to pursue his individual claims. (Pl.’s Reply 23 at 2.) In support, Plaintiff cites Capon v. Ladenburg, Thalman Co. Inc. for the proposition that 24 “the FAA does not compel a plaintiff to pursue arbitration rather than not pursuing the claims at 25 all.” 92 Fed. Appx. 400, 402 (9th Cir. 2004). Capon, however, did not consider the effect of a 9 26 U.S.C. § 3 stay after arbitration was compelled. Instead, the Capon plaintiff voluntarily dismissed 27 his entire complaint before the district court ruled on the defendant’s motion to compel arbitration. 1 Plaintiff also argues that the Court should not consider Lovig because the district court 2 allowed oral arguments to proceed even though the plaintiff’s counsel – who is Plaintiff’s counsel 3 in the instant case – had been unable to attend. (Pl.’s Reply at 2-3.) Thus, Plaintiff suggests Lovig 4 “must be taken with a grain of salt given the biased circumstances surrounding it.” (Id. at 3.) 5 Plaintiff, however, does not challenge the reasoning in Lovig; regardless of what occurred at the 6 oral argument, Lovig explains that the FAA requires that a case remain stayed while arbitration 7 moves forward.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DAVID H. MARRON, Case No. 19-cv-01534-KAW
8 Plaintiff, ORDER DENYING MOTION TO 9 v. AMEND COMPLAINT
10 HEALTHSOURCE GLOBAL STAFFING, Re: Dkt. No. 28 INC., 11 Defendant. 12 13 Plaintiff David H. Marron filed the instant case against Defendant Healthsource Global 14 Staffing, Inc., asserting violations of various credit reporting laws and California labor laws. (See 15 Not. of Removal, Exh. A (“Compl.”), Dkt. No. 1.) On September 13, 2019, the Court compelled 16 Plaintiff’s individual claims to arbitration, and stayed the remaining case. (Dkt. No. 27 at 17.) 17 On June 24, 2020, Plaintiff filed the instant motion for leave to file a second amended 18 complaint. (Pl.’s Mot. to Amend, Dkt. No. 28.) Specifically, Plaintiff seeks to dismiss his 19 individual claims without prejudice, and proceed only on a cause of action under California’s 20 Private Attorneys General Act (“PAGA”). (Id. at 1.) On July 8, 2020, Defendant filed its 21 opposition. (Def.’s Opp’n, Dkt. No. 32.) On July 15, 2020, Plaintiff filed its reply. (Pl.’s Reply, 22 Dkt. No. 33.) 23 The Court deems the matter suitable for disposition without hearing pursuant to Civil 24 Local Rule 7-1(b) and VACATES the August 6, 2020 hearing. Having considered the parties’ 25 filings and the relevant legal authority, the Court DENIES Plaintiff’s motion. 26 I. LEGAL STANDARD 27 Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend a complaint should 1 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). The courts consider 2 five factors when determining whether leave to amend should be granted: “(1) bad faith, (2) undue 3 delay, (3) prejudice to the opposing party, (4) futility of amendment[,] and (5) whether plaintiff 4 has previously amended his complaint.” Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 5 1990). Not all factors carry equal weight. Eminence Capital, LLC, 316 F.3d at 1052. Prejudice to 6 the opposing party must be given the greatest weight. Id. Absent prejudice, or a strong showing 7 of bad faith, undue delay, or futility of amendment, there exists a presumption under Rule 15(a) in 8 favor of granting leave to amend. Id. (internal citation omitted). 9 II. DISCUSSION 10 Plaintiff argues that his motion to amend the complaint should be granted because of Rule 11 15(a)(2)’s liberal standard. (Pl.’s Mot. to Amend at 2.) Defendant responds that the Federal 12 Arbitration Act (“FAA”) requires that the case be stayed pending resolution of the arbitration of 13 Plaintiff’s individual claims. (Def.’s Opp’n at 4.) 14 The FAA states:
15 If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an 16 agreement in writing for such arbitration, the court in which suit is pending, upon being satisfied that the issue involved in such suit or 17 proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until 18 such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default 19 in proceeding with such arbitration. 20 9 U.S.C. § 3 (emphasis added). 21 In Lovig v. Best Buy Stores LP, the plaintiff’s individual claims were compelled to 22 arbitration and the remainder of the action, including a PAGA claim, was stayed. Case No. 18-cv- 23 2807-PJH, 2019 WL 2568851, at *1 (N.D. Cal. June 21, 2019). The plaintiff then moved to 24 dismiss his individual claims without prejudice so that he could proceed on the PAGA claim. Id. 25 The district court found that the FAA did not allow the plaintiff to amend the complaint, 26 explaining that “[t]he plain language of the FAA seems to require that, if ‘any issue’ is referred to 27 arbitration, the court ‘shall’ stay the ‘action’ pending arbitration upon request.” Id. at *3. Thus, 1 proceed with or dismiss others.” Id. In short, “the court must continue to stay the entire action – 2 and cannot dismiss fewer than all of the claims – until the contracted-for ‘arbitration has been had 3 in accordance with the terms of the agreement.’” Id. (quoting 9 U.S.C. § 3). 4 Similarly, in Johnson v. JP Morgan Chase Bank, N.A., the plaintiffs moved to amend the 5 complaint after their claims were compelled to arbitration. Case No. EDCV 17-2477 JGB (SPx), 6 2019 WL 2004140, at *2 (C.D. Cal. Jan. 25, 2019). The plaintiffs sought to add facts showing 7 that they sought public injunctive relief, which could make the claims non-arbitrable. Id. The 8 district court denied the motion because the court “[wa]s not convinced it has the power to lift the 9 stay and allow the amendment before ‘arbitration has been had.’” Id. at *3 (quoting 9 U.S.C. § 3). 10 The district court further explained that even if it had the ability to lift the stay, it would not 11 because “[l]eaving the stay intact until the completion of arbitration serves the interests of judicial 12 economy and advances Congress’s purpose in enacting the FAA: to ensure the enforcement of 13 arbitration agreements according to their terms so as to facilitate streamlined proceedings.” Id. 14 (internal quotation omitted). 15 Here, the Court compelled Plaintiff’s individual claims to arbitration, and stayed the 16 remainder of the case as required by the FAA. While Plaintiff did not initiate arbitration, 17 Defendant has initiated arbitration of Plaintiff’s individual claims. (See Def.’s Opp’n at 1, 4.) By 18 the FAA’s plain terms, the stay of the action remains “until such arbitration has been had in 19 accordance with the terms of the agreement.” 9 U.S.C. § 3. The FAA does not give the court 20 discretion to lift the stay to dismiss some of the claims, particularly now that arbitration has been 21 initiated. Rather, it explicitly mandates that the stay remain in place until arbitration is complete. 22 Plaintiff argues that he should not be required to pursue his individual claims. (Pl.’s Reply 23 at 2.) In support, Plaintiff cites Capon v. Ladenburg, Thalman Co. Inc. for the proposition that 24 “the FAA does not compel a plaintiff to pursue arbitration rather than not pursuing the claims at 25 all.” 92 Fed. Appx. 400, 402 (9th Cir. 2004). Capon, however, did not consider the effect of a 9 26 U.S.C. § 3 stay after arbitration was compelled. Instead, the Capon plaintiff voluntarily dismissed 27 his entire complaint before the district court ruled on the defendant’s motion to compel arbitration. 1 Plaintiff also argues that the Court should not consider Lovig because the district court 2 allowed oral arguments to proceed even though the plaintiff’s counsel – who is Plaintiff’s counsel 3 in the instant case – had been unable to attend. (Pl.’s Reply at 2-3.) Thus, Plaintiff suggests Lovig 4 “must be taken with a grain of salt given the biased circumstances surrounding it.” (Id. at 3.) 5 Plaintiff, however, does not challenge the reasoning in Lovig; regardless of what occurred at the 6 oral argument, Lovig explains that the FAA requires that a case remain stayed while arbitration 7 moves forward. Likewise, Plaintiff argues that Johnson is distinguishable because there, the 8 plaintiffs sought to add facts to make their claims non-arbitrable. (Id.) This distinction does not 9 affect the district court’s reasoning, which, again, considered whether the FAA allowed the district 10 court to lift the stay once some claims were compelled to arbitration and the remainder of the 11 action stayed. 12 Further, the Court observes that, as a practical matter, if Plaintiff was to dismiss the 13 individual claims without prejudice, Plaintiff could proceed with the litigation of the PAGA 14 claims. After the PAGA claim is litigated, Plaintiff could then again bring his individual claims, 15 which would be compelled to arbitration. The FAA’s stay provision, however, requires that the 16 arbitrable claims be resolved first. Thus, allowing Plaintiff to dismiss the individual claims 17 without prejudice would circumvent the FAA’s stay provision. 18 In short, the Court concludes that the FAA does not permit the Court to lift the stay so that 19 Plaintiff can amend his complaint to avoid arbitration, particularly when Defendant has initiated 20 arbitration on Plaintiff’s individual claims. Whether Plaintiff proceeds with the arbitration is his 21 prerogative; he may choose not to vindicate his rights in the pending arbitration proceedings.1 The 22 Court, however, cannot lift the stay until that arbitration is completed or otherwise concluded. 23 /// 24 /// 25 /// 26
27 1 Defendant raises concerns that the individual Plaintiff may not be aware of the request to dismiss 1 Il. CONCLUSION 2 For the reasons stated above, the Court DENIES Plaintiffs motion to amend the 3 complaint. 4 IT IS SO ORDERED. 5 Dated: July 27, 2020 . 6 es A. WESTMORE United States Magistrate Judge 7 8 9 10 11 a 12
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