Tabitha Sperring v. Llr, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 5, 2022
• Docket: 21-56138
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 5 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

TABITHA SPERRING; PAISLIE No. 21-56138 MARCHANT; SALLY POSTON, individually and on behalf of similarly D.C. No. situated persons, 5:19-cv-00433-AB-SHK

Plaintiffs-Appellants, MEMORANDUM* v.

LLR, INC., a Wyoming corporation; LULAROE, LLC, a California limited liability company; LENNON LEASING, LLC, a Wyoming limited liability company; MARK A. STIDHAM, an individual; DEANNE BRADY, an individual; DOES, 1- 30, inclusive,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California Andre Birotte, Jr., District Judge, Presiding

Argued and Submitted July 25, 2022 Pasadena, California

Before: TASHIMA, WATFORD, and FRIEDLAND, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Tabitha Sperring, Paislie Marchant, and Sally Poston (collectively

“Plaintiffs”) filed an action against LLR, Inc.; LuLaRoe, LLC; Lennon Leasing,

LLC; Mark Stidham; and Deanne Brady (collectively “LuLaRoe”), alleging that

LuLaRoe operated a pyramid scheme in violation of California and federal law

when it hired them as consultants to sell women’s clothing. After the district court

issued an order compelling arbitration, Plaintiffs voluntarily dismissed the case

with prejudice, with the goal of obtaining a final judgment that would enable them

to immediately appeal the order compelling arbitration. Plaintiffs appealed, and

we dismissed for lack of jurisdiction, relying on a recent case holding that

voluntarily dismissing claims to expedite review of an order compelling arbitration

does not create appellate jurisdiction. Plaintiffs then filed a motion for relief from

the dismissal pursuant to Federal Rule of Civil Procedure 60(b)(6), arguing that

they had unfairly suffered the consequences of an unfavorable change in law. The

district court denied the motion, and Plaintiffs appealed. We affirm.

To determine whether a plaintiff “should suffer the consequences of [an]

unfavorable change in the law,” Henson v. Fid. Nat’l Fin., Inc., 943 F.3d 434, 447

(9th Cir. 2019), courts must undertake a “case-by-case inquiry that requires . . .

intensively balanc[ing] numerous factors,” Phelps v. Alameida, 569 F.3d 1120,

1133 (9th Cir. 2009), and ultimately must determine whether the situation amounts

to the “extraordinary circumstances” necessary for Rule 60(b)(6) relief, Gonzalez

2 v. Crosby, 545 U.S. 524, 535 (2005). One important factor is the “nature of the

change in the law,” which can include “the extent to which the precedent upon

which [the plaintiff] relied was settled in the Circuit” and “the extent to which [the

plaintiff] should have known that the law might change in an unfavorable way.”

Henson, 943 F.3d at 446-47. Other factors include “whether the movant exercised

diligence in pursuing reconsideration of his or her claim,” “the parties’ reliance

interests in the finality of the judgment,” and “the relationship between the change

in law and the challenged judgment.” Martinez v. Shinn, 33 F.4th 1254, 1263

(9th Cir. 2022) (quoting Bynoe v. Baca, 966 F.3d 972, 983 (9th Cir. 2020)).

1. We reject Plaintiffs’ preliminary argument that the district court abused its

discretion by failing to explicitly address each factor commonly considered in the

multi-factor test for relief. Our caselaw is clear that the factors courts typically

balance do not constitute “a rigid or exhaustive checklist” requiring explicit

consideration. Henson, 943 F.3d at 445 (quoting Phelps, 569 F.3d at 1135).

Rather, some factors should be “skipped” if they are inapplicable, while some

situations may prompt consideration of entirely new factors. Henson, 943 F.3d. at

453. Indeed, we have explained that strictly applying the factors discussed in a

prior case—“and only those factors”—rather than completing the necessary “case-

by-case inquiry” constitutes error. Id. at 445-46; see also Lopez v. Ryan, 678 F.3d

3 1131, 1135 (9th Cir. 2012) (“[S]ix factors . . . may be considered, among others, to

evaluate whether extraordinary circumstances exist.” (emphasis added)).

2. The district court did not abuse its discretion in denying Plaintiffs’ Rule

60(b)(6) motion. Even adopting—for the sake of argument—Plaintiffs’

characterization of Langere v. Verizon Wireless Services, LLC, 983 F.3d 1115 (9th

Cir. 2020), as the relevant change in law, there is plenty of support for denying

Plaintiffs relief. For at least three reasons it was appropriate for the district court to

conclude that Plaintiffs should have known that the law might change in the way it

did. First, much of the reasoning in Microsoft Corp. v. Baker, 137 S. Ct. 1702

(2017), is equally applicable in the arbitration context. Second, in Lamps Plus,

Inc. v. Varela, 139 S. Ct. 1407 (2019), the Supreme Court suggested that Microsoft

would have applied had the plaintiffs voluntarily dismissed their claims to facilitate

an appeal of an order compelling arbitration. Id. at 1414 n.2; id. at 1422-27

(Breyer, J., dissenting). Third, other circuits had held that Microsoft extended

beyond the class certification context by the time Plaintiffs filed their voluntary

dismissal. See, e.g., Keena v. Groupon, Inc., 886 F.3d 360 (4th Cir. 2018); Board

of Trustees of Plumbers, Local Union No. 392 v. Humbert, 884 F.3d 624 (6th Cir.

2018). Where, as here, Plaintiffs clearly “should have known that the law might

change in an unfavorable way,” the district court was well within its discretion to

conclude that Plaintiffs were not entitled to relief. Henson, 943 F.3d at 447.

4 In response, Plaintiffs primarily argue that a post-Microsoft case, Rodriguez

v. Taco Bell Corp., 896 F.3d 952 (9th Cir. 2018), affirmed the validity of their

voluntary dismissal tactic, so they could not have known that the tactic was a risky

one. Although Rodriguez did state that because the dispute did not involve class

certification, Microsoft did not control, it also emphasized that there was no

discretionary appeal regime at issue that could have been subverted in the same

manner as Rule 23’s regime in Microsoft. Thus, Rodriguez can fairly be read to

mean that voluntary dismissals with prejudice can facilitate appellate jurisdiction

so long as that dismissal does not subvert a discretionary regime. In the current

dispute, there was clearly a “discretionary appellate-review scheme designed by

Congress in the [Federal Arbitration Act].” Langere, 983 F.3d at 1122 (citing

9 U.S.C. § 16). Plaintiffs’ dismissal tactic subverted that discretionary scheme for

appeals. Plaintiffs therefore should have known that Rodriguez did not definitively

condone their dismissal tactic.1

Plaintiffs argue that other factors favor relief, but even if so, it was

reasonable for the district court to conclude that those factors do not outweigh the

foreseeable nature of the dismissal for lack of jurisdiction. At bottom, Plaintiffs

should have known that they were undertaking a risky tactic by voluntarily

1 Even if Rodriguez sowed doubt about Microsoft’s scope, as Plaintiffs argue, Lamps Plus still should have served as a warning to Plaintiffs that Microsoft might be interpreted to preclude their appeal.

5 dismissing their claims with prejudice, and it was therefore not an abuse of

discretion for the district court to conclude that these circumstances are not

“extraordinary.”

AFFIRMED.