1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MICHAEL SCRIBER, et al., individually Case No. 22-cv-1716-MMA-MMP and on behalf all others similarly situated, 12 ORDER DENYING MOTION FOR Plaintiffs, 13 LEAVE TO AMEND AND FOR v. INDICATIVE RULING 14
15 FORD MOTOR COMPANY, [Doc. No. 32] Defendant. 16 17 18 19 Plaintiffs Michael Scriber, Stacy Powell, Doug Harrigan, and Susan Wisner 20 Phillips (collectively, “Plaintiffs”) bring this putative class action against Ford Motor 21 Company (“Ford”). On November 7, 2023, the Court denied Ford’s motion to compel 22 arbitration, Doc. No. 27, and on December 1, 2023, Ford filed a Notice of Appeal, Doc. 23 No. 28, USCA Case No. 23-3966. Plaintiffs have since filed a motion seeking leave to 24 amend and asking the Court to issue an indicative ruling. Doc. No. 32. Ford filed a 25 response in opposition to the motion, to which Plaintiffs replied. Doc. Nos. 39, 40. The 26 Court found this motion suitable for determination on the papers and without oral 27 argument pursuant to Civil Local Rule 7.1.d.1 and Federal Rule of Civil Procedure 78(b). 28 Doc. No. 35. For the reasons set forth below, the Court DENIES the motion. 1 I. BACKGROUND 2 Plaintiffs are owners of Ford vehicles. Doc. No. 20 (“Second Amended 3 Complaint” or “SAC”) ¶¶ 6, 11, 16. Generally speaking, they allege that Ford continued 4 to manufacture and sell vehicles with a 3G modem despite being aware as early as 2019 5 that that AT&T intended to phase out the 3G network in 2022. See, e.g., id. ¶¶ 2, 31. As 6 a result, Plaintiffs contend they lost access to various features when the 3G modem in 7 their vehicles stopped working. Id. ¶¶ 2, 8, 13, 20, 25. Plaintiffs plead the following 8 claims: (1) breach of express warranty; (2) breach of the implied warranty of 9 merchantability; (3) violation of California’s Consumer Legal Remedies Act, Cal. Civ. 10 Code § 1750 et seq.; (4) violation of California’s Unfair Competition Law, Cal. Bus. & 11 Prof. Code § 17200 et seq.; and (5) fraudulent omission. 12 On June 29, 2023, Ford filed a motion to compel arbitration. Doc. No. 21. Ford’s 13 motion was based on arbitration provisions in three categories of agreements: the Sale 14 Contracts, the Lease Agreements, and the “Connected Services” Agreements. The Court 15 denied Ford’s motion in its entirety, Doc. No. 27, and the Court incorporates that order 16 by reference here. As to the Sale Contracts, the Court found that while Plaintiffs 17 “unambiguously plead an agency relationship,” id. at 7, between Ford and the dealerships 18 “in a perfunctory manner,” id. at 10, Ford failed to demonstrate that the dealerships were 19 acting as Ford’s agents when they sold the vehicles and entered into the Sale Contracts, 20 id. at 11. The Court also found that Ford could not compel arbitration under the Sale 21 Contracts under the theory of equitable estoppel. Id. at 13. Turning to the Lease 22 Agreements, the Court found that Ford’s agency and equitable estoppel theories failed for 23 the same reasons, and further rejected Ford’s argument that it was a third-party 24 beneficiary under these agreements. Id. at 15–17. Finally, the Court found that the 25 Connected Services Agreements did not contain a mandatory and binding arbitration 26 clause under Michigan law. Id. at 21. 27 Ford has appealed from the Court’s denial of its motion to compel arbitration. 28 USCA No. 23-3966. 1 II. DISCUSSION 2 “The filing of a notice of appeal divests the district court of jurisdiction.” Gould v. 3 Mutual Life Ins. Co., 790 F.2d 769, 772 (9th Cir. 1986); see also Griggs v. Provident 4 Consumer Discount Co., 459 U.S. 56, 58, (1982) (“The filing of a notice of appeal is an 5 event of jurisdictional significance — it confers jurisdiction on the court of appeals and 6 divests the district court of its control over those aspects of the case involved in the 7 appeal.”). This rule, sometimes referred to as the Griggs principle, “promote[s] judicial 8 economy and avoid[s] the confusion that would ensue from having the same issues before 9 two courts simultaneously.” Natural Res. Def. Council, Inc. v. Sw. Marine Inc., 242 F.3d 10 1163, 1166 (9th Cir. 2001). However, “[t]he principle of exclusive appellate jurisdiction 11 is not . . . absolute.” Id. Rather, the trial court retains the inherent power “during the 12 pendency of an appeal to act to preserve the status quo,” id., “and to ensure the 13 effectiveness of the eventual judgment,” Tribal Vill. of Akutan v. Hodel, 859 F.2d 662, 14 663 (9th Cir. 1988) (quoting 11 Charles Alan Wright et al., Federal Practice and 15 Procedure § 2904, at 315 (1973)). 16 Here, Plaintiffs do not ask the Court to preserve the status quo. And as the 17 Supreme Court has explained, when the denial of a motion to compel arbitration under 18 the Federal Arbitration Act is appealed, “[b]ecause the question on appeal is whether the 19 case belongs in arbitration or instead in the district court, the entire case is essentially 20 involved in the appeal.” Coinbase, Inc. v. Bielski, 599 U.S. 736, 741 (2023) (internal 21 quotation marks and citation omitted). Thus, pursuant to the Griggs principle, as applied 22 and discussed in Coinbase, these proceedings are stayed, and the Court lacks the 23 authority to issue an order concerning any matter “involved in the appeal,” Griggs, 459 24 U.S. at 58, which here means “the entire case[, ] essentially,” Coinbase, 599 U.S. at 741. 25 More specifically, the Court finds that because the precise matter involved in the appeal 26 is whether the claims in Plaintiffs’ Second Amended Complaint are subject to arbitration 27 based upon the applicable law, agreements, and allegations in Plaintiffs’ pleading, the 28 Court lacks the ability to grant Plaintiffs leave to file a Third Amended Complaint. 1 Seemingly recognizing that the Court lacks the present ability to grant leave to 2 amend, Plaintiffs ask the Court to issue an indicative ruling pursuant to Federal Rule of 3 Civil Procedure1 62.1. Rule 62.1 provides: 4 5 If a timely motion is made for relief that the court lacks authority to grant because of an appeal that has been docketed and is pending, the court may: 6 (1) defer considering the motion; 7 (2) deny the motion; or (3) state either that it would grant the motion if the court of appeals 8 remands for that purpose or that the motion raises a substantial issue. 9 10 Fed. R. Civ. P. 62.1(a). The corresponding Federal Rule of Appellate Procedure provides 11 that “[i]f the district court states that it would grant the motion or that the motion raises a 12 substantial issue, the court of appeals may remand for further proceedings but retains 13 jurisdiction unless it expressly dismisses the appeal. Fed. R. App. P. 12.1(b). “A district 14 court’s decision to make an indicative ruling is discretionary.” Silbersher v. Allergan 15 Inc., No. 18-cv-03018-JCS, 2024 U.S. Dist. LEXIS 83249, at *14 (N.D. Cal. May 7, 16 2024) (citation omitted). 17 Here, Plaintiffs ask the Court to issue an indicative ruling that it would grant 18 Plaintiffs’ motion for leave to amend. Doc. No. 32-1 at 6. Plaintiffs primarily argue that 19 amendment is appropriate under Rule 15. See generally Doc. No. 32-1.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MICHAEL SCRIBER, et al., individually Case No. 22-cv-1716-MMA-MMP and on behalf all others similarly situated, 12 ORDER DENYING MOTION FOR Plaintiffs, 13 LEAVE TO AMEND AND FOR v. INDICATIVE RULING 14
15 FORD MOTOR COMPANY, [Doc. No. 32] Defendant. 16 17 18 19 Plaintiffs Michael Scriber, Stacy Powell, Doug Harrigan, and Susan Wisner 20 Phillips (collectively, “Plaintiffs”) bring this putative class action against Ford Motor 21 Company (“Ford”). On November 7, 2023, the Court denied Ford’s motion to compel 22 arbitration, Doc. No. 27, and on December 1, 2023, Ford filed a Notice of Appeal, Doc. 23 No. 28, USCA Case No. 23-3966. Plaintiffs have since filed a motion seeking leave to 24 amend and asking the Court to issue an indicative ruling. Doc. No. 32. Ford filed a 25 response in opposition to the motion, to which Plaintiffs replied. Doc. Nos. 39, 40. The 26 Court found this motion suitable for determination on the papers and without oral 27 argument pursuant to Civil Local Rule 7.1.d.1 and Federal Rule of Civil Procedure 78(b). 28 Doc. No. 35. For the reasons set forth below, the Court DENIES the motion. 1 I. BACKGROUND 2 Plaintiffs are owners of Ford vehicles. Doc. No. 20 (“Second Amended 3 Complaint” or “SAC”) ¶¶ 6, 11, 16. Generally speaking, they allege that Ford continued 4 to manufacture and sell vehicles with a 3G modem despite being aware as early as 2019 5 that that AT&T intended to phase out the 3G network in 2022. See, e.g., id. ¶¶ 2, 31. As 6 a result, Plaintiffs contend they lost access to various features when the 3G modem in 7 their vehicles stopped working. Id. ¶¶ 2, 8, 13, 20, 25. Plaintiffs plead the following 8 claims: (1) breach of express warranty; (2) breach of the implied warranty of 9 merchantability; (3) violation of California’s Consumer Legal Remedies Act, Cal. Civ. 10 Code § 1750 et seq.; (4) violation of California’s Unfair Competition Law, Cal. Bus. & 11 Prof. Code § 17200 et seq.; and (5) fraudulent omission. 12 On June 29, 2023, Ford filed a motion to compel arbitration. Doc. No. 21. Ford’s 13 motion was based on arbitration provisions in three categories of agreements: the Sale 14 Contracts, the Lease Agreements, and the “Connected Services” Agreements. The Court 15 denied Ford’s motion in its entirety, Doc. No. 27, and the Court incorporates that order 16 by reference here. As to the Sale Contracts, the Court found that while Plaintiffs 17 “unambiguously plead an agency relationship,” id. at 7, between Ford and the dealerships 18 “in a perfunctory manner,” id. at 10, Ford failed to demonstrate that the dealerships were 19 acting as Ford’s agents when they sold the vehicles and entered into the Sale Contracts, 20 id. at 11. The Court also found that Ford could not compel arbitration under the Sale 21 Contracts under the theory of equitable estoppel. Id. at 13. Turning to the Lease 22 Agreements, the Court found that Ford’s agency and equitable estoppel theories failed for 23 the same reasons, and further rejected Ford’s argument that it was a third-party 24 beneficiary under these agreements. Id. at 15–17. Finally, the Court found that the 25 Connected Services Agreements did not contain a mandatory and binding arbitration 26 clause under Michigan law. Id. at 21. 27 Ford has appealed from the Court’s denial of its motion to compel arbitration. 28 USCA No. 23-3966. 1 II. DISCUSSION 2 “The filing of a notice of appeal divests the district court of jurisdiction.” Gould v. 3 Mutual Life Ins. Co., 790 F.2d 769, 772 (9th Cir. 1986); see also Griggs v. Provident 4 Consumer Discount Co., 459 U.S. 56, 58, (1982) (“The filing of a notice of appeal is an 5 event of jurisdictional significance — it confers jurisdiction on the court of appeals and 6 divests the district court of its control over those aspects of the case involved in the 7 appeal.”). This rule, sometimes referred to as the Griggs principle, “promote[s] judicial 8 economy and avoid[s] the confusion that would ensue from having the same issues before 9 two courts simultaneously.” Natural Res. Def. Council, Inc. v. Sw. Marine Inc., 242 F.3d 10 1163, 1166 (9th Cir. 2001). However, “[t]he principle of exclusive appellate jurisdiction 11 is not . . . absolute.” Id. Rather, the trial court retains the inherent power “during the 12 pendency of an appeal to act to preserve the status quo,” id., “and to ensure the 13 effectiveness of the eventual judgment,” Tribal Vill. of Akutan v. Hodel, 859 F.2d 662, 14 663 (9th Cir. 1988) (quoting 11 Charles Alan Wright et al., Federal Practice and 15 Procedure § 2904, at 315 (1973)). 16 Here, Plaintiffs do not ask the Court to preserve the status quo. And as the 17 Supreme Court has explained, when the denial of a motion to compel arbitration under 18 the Federal Arbitration Act is appealed, “[b]ecause the question on appeal is whether the 19 case belongs in arbitration or instead in the district court, the entire case is essentially 20 involved in the appeal.” Coinbase, Inc. v. Bielski, 599 U.S. 736, 741 (2023) (internal 21 quotation marks and citation omitted). Thus, pursuant to the Griggs principle, as applied 22 and discussed in Coinbase, these proceedings are stayed, and the Court lacks the 23 authority to issue an order concerning any matter “involved in the appeal,” Griggs, 459 24 U.S. at 58, which here means “the entire case[, ] essentially,” Coinbase, 599 U.S. at 741. 25 More specifically, the Court finds that because the precise matter involved in the appeal 26 is whether the claims in Plaintiffs’ Second Amended Complaint are subject to arbitration 27 based upon the applicable law, agreements, and allegations in Plaintiffs’ pleading, the 28 Court lacks the ability to grant Plaintiffs leave to file a Third Amended Complaint. 1 Seemingly recognizing that the Court lacks the present ability to grant leave to 2 amend, Plaintiffs ask the Court to issue an indicative ruling pursuant to Federal Rule of 3 Civil Procedure1 62.1. Rule 62.1 provides: 4 5 If a timely motion is made for relief that the court lacks authority to grant because of an appeal that has been docketed and is pending, the court may: 6 (1) defer considering the motion; 7 (2) deny the motion; or (3) state either that it would grant the motion if the court of appeals 8 remands for that purpose or that the motion raises a substantial issue. 9 10 Fed. R. Civ. P. 62.1(a). The corresponding Federal Rule of Appellate Procedure provides 11 that “[i]f the district court states that it would grant the motion or that the motion raises a 12 substantial issue, the court of appeals may remand for further proceedings but retains 13 jurisdiction unless it expressly dismisses the appeal. Fed. R. App. P. 12.1(b). “A district 14 court’s decision to make an indicative ruling is discretionary.” Silbersher v. Allergan 15 Inc., No. 18-cv-03018-JCS, 2024 U.S. Dist. LEXIS 83249, at *14 (N.D. Cal. May 7, 16 2024) (citation omitted). 17 Here, Plaintiffs ask the Court to issue an indicative ruling that it would grant 18 Plaintiffs’ motion for leave to amend. Doc. No. 32-1 at 6. Plaintiffs primarily argue that 19 amendment is appropriate under Rule 15. See generally Doc. No. 32-1. They submit to 20 the Court for consideration their proposed Third Amended Complaint. Doc. No. 32-2. A 21 review of the redline version, comparing the Second and Third Amended Complaints, 22 reveals only one substantive alteration: Plaintiffs have removed the first sentence of 23 paragraph 70, which reads “Plaintiffs and the other Class members had sufficient direct 24 dealings with Defendant and its agents (dealers) to establish privity of contract between 25 themselves and Defendant. As alleged supra, Plaintiffs purchased their Class Vehicles 26 27 28 1 from Ford dealerships, agents of Ford.” Doc. No. 32-3 at 17. According to Plaintiffs, 2 Ford relies on this agency allegation in arguing on appeal that the Court erroneously 3 determined the dealerships did not act as Ford’s agents. Doc. No. 32-1 at 7. 4 Ford opposes the motion on various grounds. See Doc. No. 39. As an initial 5 matter, the Court is not persuaded by Ford’s argument that Rule 62.1 does not apply to 6 motions for leave to amend. Id. at 3. Although Rule 62.1 arose from the practice of 7 handling Rule 60(b) motions to vacate orders already appealed, the rule plainly applies to 8 “any motion.” Fed. R. Civ. P. 62.1 advisory committee’s notes (“This new rule adopts 9 for any motion that the district court can-not grant because of a pending appeal the 10 practice that most courts follow when a party makes a Rule 60(b) motion to vacate a 11 judgment that is pending on appeal.”) (emphasis added). And here, Plaintiffs have filed a 12 motion that the Court lacks the authority to rule on because of Ford’s appeal. Plaintiffs’ 13 motion, thus, definitionally falls within the scope of Rule 62.1. And Ford’s discussion of 14 Plaintiffs’ ability to seek amendment at the appellate level, see Doc. No. 39 at 3, has no 15 bearing on how the Court should resolve the present situation. Plaintiffs have filed a 16 motion that the Court cannot grant due to Ford’s pending appeal. Thus, regardless of any 17 avenues of relief at the appellate level, the Court must either deny Plaintiffs’ motion, 18 defer consideration, or issue an indicative ruling pursuant to Rule 62.1. 19 That said, the Court will exercise its discretion here and deny Plaintiffs’ request for 20 an indicative ruling. Accepting Plaintiffs’ argument that removal of the agency 21 allegation would render Ford’s appeal moot seems to presume that this allegation is 22 dispositive on the issue of Ford’s agency with the dealerships, which the Court found not 23 to be the case. Thus, by asking the Court to indicate to the Ninth Circuit that it would 24 grant amendment in this respect, Plaintiffs essentially ask the Court to inform the Ninth 25 Circuit that it believes its own ruling is incorrect and subject to reversal in the absence of 26 amendment. Cf. Ret. Bd. of the Policemen’s Annuity & Benefit Fund of Chi. v. Bank of 27 N.Y. Mellon, 297 F.R.D. 218, 221 (S.D.N.Y. 2013); see also Silbersher, 2024 U.S. Dist. 28 LEXIS 83249, at *17–18. This hardly seems consistent with the purpose of Rule 62.1. 1 To that end, because the significance of Plaintiffs’ singular agency allegation is 2 || precisely before the Ninth Circuit, an indicative ruling here would not promote judicial 3 || efficiency or fairness but would “only interrupt[] the appellate process.” Ret. Bd., 297 4 ||F.R.D. at 221; Amarin Pharms. Ir., Ltd. v. FDA, 139 F. Supp. 3d 437, 447 (D.D.C. 2015); 5 || Silbersher, 2024 U.S. Dist. LEXIS 83249, at *19. Moreover, a review of Ford’s opening 6 || brief reveals that the agency allegation issue is only one of four issues presented on 7 |;appeal. Thus, issuing the requested indicative ruling, and assuming the Ninth Circuit 8 ||remands for that purpose, would not meaningfully further the appeal or obviate its 9 ||necessity. Ret. Bd., 297 F.R.D. at 221; Silbersher, 2024 U.S. Dist. LEXIS 83249, at *19. 10 Therefore, the Court finds that an indicative ruling would neither obviate the need 11 || for Ford’s appeal nor assist the Ninth Circuit with deciding the issues before it. 12 || Additionally, the Court finds that an indicative ruling would not promote judicial 13 |}economy but would needlessly interfere with appellate jurisdiction. For these reasons, 14 || the Court DENIES Plaintiffs’ motion. 15 III. CONCLUSION 16 Based on the foregoing, the Court DENIES Plaintiffs’ motion for an indicative 17 ||ruling. This case remains STAYED pending resolution of Ford’s appeal and the Court 18 || therefore DENIES Plaintiffs’ motion for leave to amend without prejudice. 19 IT IS SO ORDERED. 20 ||Dated: June 4, 2024 21 BMiidel M hillr 22 HON. MICHAEL M. ANELLO 33 United States District Judge 24 25 26 27 28