The opinion of the court was delivered by: Hayes, Judge
The matter before the Court is Defendant's Motion to Stay Proceedings Pending Appeal ("Motion to Stay"). (Doc. # 25).
On February 11, 2010, Plaintiff Luis Del Rio ("Del Rio") initiated this action by filing a Complaint in this Court. (Doc. # 1). The Complaint alleges that Defendant CreditAnswers, LLC ("CreditAnswers") "operates a for-profit debt settlement company," which offers a "debt settlement program ... targeted to consumers with thousands of dollars of unsecured debt." (Id. ¶ 21).
The Complaint alleges that "[s]ometime before or during April 2008, Plaintiff contacted Defendant after viewing Defendant's website," (id. ¶ 33), and, after consultation with an employee of Defendant, "Plaintiff agreed to CreditAnswers' standard form contract of adhesion to enter CreditAnswers' Program." (Id. ¶ 42). The Complaint alleges that "CreditAnswers ... proceeded to conjure the illusion that Plaintiff's financial worries were a thing of the past, and all Plaintiff had to do was pay CreditAnswers over $4,000, before CreditAnswers resolved a single debt...." (Id. ¶ 32).
The Complaint asserts seven causes of action: (1) violation of California Business and Professions Code § 17200; (2) violation of the Consumer Legal Remedies Act, Cal. Civ. Code § 1770(a)(7), 1770(a)(19); (3) violation of the Credit Repair Organizations Act, 15 U.S.C. § 1678; (4) intentional interference with contractual relations; (5) tort in essence; (6) negligence per se; and (7) declaratory relief. The Complaint includes class action allegations related to three putative classes consisting of "all persons in California" who have "engaged the ... services of CreditAnswers" in the four years preceding the filing of the Complaint. (Id. ¶ 68). The Complaint seeks compensatory and punitive damages, a permanent injunction, attorney's fees, and "the Contract [between Plaintiff and Defendant] be adjudged rescinded and canceled." (Id. at 35). The Complaint alleges that "Plaintiff seeks actual, statutory and punitive damages in excess of $5,000...." (Id. ¶ 12).
Attached to the Complaint is a Debt Settlement Agreement ("Agreement"), which is dated June 19, 2009, and has the "electronic signature" of Plaintiff. (Swigart Decl., Ex. A, Doc. # 1 at 44 of 57). The Agreement contains the following arbitration clause:
9. Arbitration of Dispute. In the event of controversy, claim or dispute between the parties arising out of or relating to this agreement or the breach, termination, enforcement, interpretation or validity thereof, including the termination of the scope or applicability of this agreement to arbitrate, shall be determined exclusively by arbitration in Collin County, Texas, or in the county in which the Client resides, in accordance with the laws of the State of Texas or agreements to be made in and to be performed in Texas. The parties agree, the arbitration shall be administered by the American Arbitration Association ('AAA') pursuant to its rules and procedures.... The parties agree that either party may bring claims against the other only in his/her or its individual capacity and not as a plaintiff or class member in any purported class or representative proceeding. Further, the parties agree that the arbitrator may not consolidate proceedings of more than one person's claims, and may not preside over any form of representative or class proceeding. The parties shall share the cost of arbitration, not to include attorney's fees, equally. If the Client's share of the costs is greater than $1,000.00 (one thousand dollars), the company will pay the Client's share of costs in excess of that amount. In the event a party fails to proceed with arbitration, unsuccessfully challenges the arbitrator's award, or fails to comply with the arbitrator's award, the other party is entitled to costs of suit, including a reasonable attorney's fee for having to compel arbitration or defend or enforce the award. (Id. at 43 of 57).
On April 5, 2010, CreditAnswers filed a Petition to Compel Arbitration. (Doc. # 10). CreditAnswers moved, "pursuant to the Federal Arbitration Act, for an order (i) compelling arbitration of the instant action and (ii) staying this Federal Court action until arbitration is completed." (Id. at 1-2). CreditAnswers contended that "Plaintiff entered into a valid and enforceable arbitration agreement," and Plaintiff's "claims are within the scope of [the] arbitration agreement." (Doc. # 10-1 at 5).
On May 27, 2010, the Court issued an Order denying the Petition to Compel Arbitration. (Doc. # 16). The Court held: (1) the class action waiver in the Agreement's arbitration provision is unconscionable under California law; (2) the validity of the arbitration provision is governed by California law; and (3) the class action waiver renders the entire arbitration provision unenforceable.
On June 7, 2010, CreditAnswers filed a Notice of Appeal of the May 27, 2010 Order. (Doc. # 17).
On June 30, 2010, CreditAnswers filed the Motion to Stay. (Doc. # 25). CreditAnswers contends:
CreditAnswers' request for a stay should be granted because CreditAnswers raises not just one, but two, serious legal issues. In fact, one of the issues raised by CreditAnswers is so substantial that the United States Supreme Court has recently granted certiorari to review the Ninth Circuit's existing law on the very same issue. Additionally, as frequently recognized by district courts in the Ninth Circuit, the harm CreditAnswers will suffer if a stay is not granted and it is forced to incur the costs of litigating this action far exceeds any potential injury Del Rio may experience if this Court does issue a stay. Finally, the public interest in enforcing arbitration ...