Theodore v. American Express National Bank

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DIANA THEODORE, Case No. 23-cv-03710-AMO

8 Plaintiff, ORDER GRANTING MOTION FOR 9 v. INDICATIVE RULING AND TERMINATING AS MOOT 10 AMERICAN EXPRESS NATIONAL ADMINISTRATIVE MOTION TO BANK, EXPEDITE 11 Defendant. Re: Dkt. Nos. 48, 49 12 13 Before the Court are American Express National Bank’s (“AmEx”) (1) motion to modify 14 the Court’s order of April 4, 2024 to stay (rather than dismiss) this case pending completion of 15 arbitration, or alternatively, for an indicative ruling under Federal Rules of Civil Procedure 16 60(b)(6) and 62.1, ECF 48, and its (2) administrative motion to expedite the hearing on the 17 motion, ECF 49. 18 The motion to modify the April 4 order is DENIED. The filing of a notice of appeal, 19 which occurred in this case on April 29, 2024, ECF 46, is an “event of jurisdictional significance” 20 that “divests the district court of its control over those aspects of the case involved in the appeal.” 21 See Rodriguez v. Cnty. of Los Angeles, 891 F.3d 776, 790 (9th Cir. 2018) (internal quotations and 22 citation omitted); see also Trulis v. Barton, 107 F.3d 685, 695 (9th Cir. 1995). The Court’s 23 April 4 order granted AmEx’s motion to compel arbitration and dismissed this action instead of 24 staying it pending arbitration. ECF 45 at 4. “If a district court dismisses a suit subject to 25 arbitration even when a party requests a stay, that dismissal triggers the right to an immediate 26 appeal where Congress sought to forbid such an appeal.” Smith v. Spizzirri, 601 U.S. 472, 478 27 (2024). Modifying the April 4 order as AmEx requests would thus give AmEx potential grounds 1 order permitting either party to seek a stay (in lieu of dismissal) pending the then forthcoming 2 decision in Smith, see ECF 45 at 4, the Court lacks jurisdiction to modify its April 4 order because 3 the relief AmEx seeks bears directly on the pending appeal. See Daulatzai v. Maryland, 340 4 F.R.D. 99, 106 (D. Md. 2021) (finding a lack of jurisdiction over the plaintiff’s motion for leave to 5 file a third amended complaint while the appeal of the order granting the defendants’ unopposed 6 motion to dismiss the second amended complaint was pending). 7 The Court will, however, GRANT AmEx’s alternative request for an indicative ruling.1 8 “Rule 62.1(a) . . . applies when a ‘timely motion’ (typically a Rule 60(b) motion) has been made 9 for relief that the court lacks jurisdiction to grant, because of the pendency of an appeal.” Lawson 10 v. Grubhub, Inc., No. 15-CV-05128-JSC, 2018 WL 6190316, at *2 (N.D. Cal. Nov. 28, 2018) 11 (internal quotations and citations omitted); see also Fed. R. Civ. P. Rule 62.1 advisory 12 committee’s note (“This new rule adopts for any motion that the district court cannot grant 13 because of a pending appeal the practice that most courts follow when a party makes a Rule 60(b) 14 motion to vacate a judgment that is pending on appeal.”). Rule 62.1(a) “allows a party to ask the 15 district court for an ‘indicative ruling’ on an issue the court is without jurisdiction to decide 16 because of a pending appeal.” Mendia v. Garcia, 874 F.3d 1118, 1121 (9th Cir. 2017) (citations 17 omitted). The rule provides that: 18 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, 19 the court may: 20 (1) defer considering the motion; (2) deny the motion; or 21 (3) state either that it would grant the motion if the court of appeals remands for that purpose or that the motion raises a 22 substantial issue. 23 Fed. R. Civ. 62.1(a). Pursuant to Rule 62.1, the Court indicates that it would grant AmEx’s 24 motion to modify the April 4 order to stay (rather than dismiss) this action, in keeping with the 25 Supreme Court’s recent decision in Smith. See Gonzales Garcia v. Rosen, 513 F. Supp. 3d 329, 26

27 1 In light of this ruling, the administrative motion to expedite the hearing on the motion resolved 1 332 (W.D.N.Y. 2021) (indicating, under Rule 62.1, that the court would grant respondent’s motion 2 for reconsideration due to an intervening change of controlling law if the Second Circuit remanded 3 for that purpose). 4 AmEx seeks modification of the Court’s April 4 order under Rule 60(b)(6), the “catchall 5 provision permitting reopening for ‘any other reason that justifies relief.’ ” Ratha v. Rubicon Res., 6 LLC, No. 23-55299, --- F.4th ----, ----, 2024 WL 3589751, at *7 (9th Cir. July 31, 2024). This 7 provision “has been used sparingly as an equitable remedy to prevent manifest injustice and is to 8 be utilized only where extraordinary circumstances prevented a party from taking timely action to 9 prevent or correct an erroneous judgment.” Id. (citing United States v. Washington, 593 F.3d 790, 10 797 (9th Cir. 2010)). A party relying on Rule 60(b)(6) must meet three elements: (1) “[t]he 11 motion cannot be premised on another ground delineated in the Rule[,]” (2) the motion “must be 12 filed within a reasonable time,” and (3) the motion “must demonstrate ‘extraordinary 13 circumstances’ justifying reopening the judgment[.]” Bynoe v. Baca, 966 F.3d 972, 979 (9th Cir. 14 2020) (internal quotations and citations omitted). 15 Were the Ninth Circuit to remand for consideration of the issue, this Court would find that 16 AmEx meets each of these requirements. First, AmEx’s motion does not implicate any other 17 ground set out in Rule 60(b)(1)-(5), which include:

18 (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could 19 not have been discovered in time to move for a new trial under Rule 59(b); 20 (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; 21 (4) the judgment is void; [or] (5) the judgment has been satisfied, released, or discharged; it is 22 based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable[.] 23 24 Fed. R. Civ. P. 60(b)(1)-(5). Thus, AmEx has properly brought its motion under subsection (b)(6). 25 Second, AmEx filed its motion on July 17, 2024, two months after the Smith decision 26 issued on May 16, 2024. Its motion is therefore timely. See Bynoe, 966 F.3d at 981 (finding 27 timely a Rule 60(b)(6) motion filed less than seven months after the decision providing the basis 1 Third, extraordinary circumstances justify modifying the April 4 order in the manner 2 AmEx requests. “A ‘clear and authoritative’ change in the law governing the judgment in a . . . 3 case may present extraordinary circumstances.” Bynoe, 966 F.3d at 983 (citations omitted). 4 “[T]he extraordinary-circumstances requirement [has been distilled] into six factors, [to be] 5 considered flexibly and in their totality.” Id. The six factors are:

6 (1) the nature of the legal change, including whether the change in law resolved an unsettled legal question; (2) whether the movant 7 exercised diligence in pursuing reconsideration of his or her claim; (3) the parties’ reliance interests in the finality of the judgment; 8 (4) the delay between the finality of the judgment and the Rule 60(b)(6) motion; (5) the relationship between the change in law and 9 the challenged judgment; and (6) whether there are concerns of comity that would be disturbed by reopening a case. 10 11 Id. at 983 (citations omitted). 12 Based on these factors, the Supreme Court’s decision in Smith marks “[a] clear and 13 authoritative change in the law” presenting extraordinary circumstances justifying relief under 14 Rule 60(b)’s catchall provision. At issue in Smith was whether Section 3 of the Federal 15 Arbitration Act “permits a court to dismiss the case instead of issuing a stay when the dispute is 16 subject to arbitration and a party requests a stay pending arbitration.” Smith, 601 U.S. at 474. The 17 question had been “previously left open[,]” and the subject of a deepening “Circuit split.” Id. at 18 475 & n.1. Smith eliminates an exception long-recognized by the Ninth Circuit that 19 notwithstanding Section 3, a court retains jurisdiction to dismiss (rather than stay) an action in 20 which are claims are compelled to arbitration. See id. at 474, 478. This Court recognized that 21 such outcome was possible in its April 4 order, and AmEx seeks to modify the order accordingly. 22 As such, the first factor – the nature of the legal change – and the fifth factor – the relationship 23 between the change in law and the challenged judgment – weigh in AmEx’s favor. See Bynoe, 24 966 F.3d at 983 (explaining that “the resolution of unsettled law . . . or a remarkable – if limited 25 development in relevant settled law may present extraordinary circumstances”). 26 The second factor – whether the movant exercised diligence – and the fourth factor – the 27 delay between the challenged judgment and the Rule 60(b)(6) motion – also weigh in AmEx’s 1 months after Smith was decided, which supports a finding of diligence and cuts against a finding 2 || of delay. See Bynoe, 966 F.3d at 984 (explaining that “[t]he diligence analysis overlaps 3 significantly with the timeliness requirement in Rule 60(b); a petitioner who has filed his motion 4 || within a ‘reasonable time’ under the Rule has diligently pursued his claim.”) (citations omitted). 5 || The third factor — the parties’ reliance interests in the finality of the judgment — also favors AmEx. 6 || The April 4 order contemplated that either party could move to modify for the limited purpose of 7 seeking a stay in lieu of dismissal pending the outcome in Smith. The final factor — comity — does 8 || not counsel against granting relief under Rule 60(b)(6). While “considerations of comity for state 9 laws and other judicial decisions may sometimes warrant abstention from overturning well- 10 reasoned results,” see Bynoe, 966 F.3d at 986-87, here, AmEx seeks to bring the April 4 order into 11 compliance with recent Supreme Court precedent. 12 Considering these factors in their totality, the Court would find that AmEx is entitled to 13 relief under Rule 60(b)(6). IT IS SO ORDERED. 3 15 Dated: August 27, 2024 Quack : ARACELI MARTINEZ-OLGUIN 4 18 United States District Judge 19 20 21 22 23 24 25 26 27 28