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Echevarria v. Aerotek, Inc.

United States District Court, N.D. California, San Jose Division

July 16, 2019

JAIME ECHEVARRIA, Plaintiff,
v.
AEROTEK, INC., Defendant.

          ORDER GRANTING MOTION TO STAY ALL PROCEEDINGS PENDING APPEAL [RE: ECF 99]

          BETH LAB SON FREEMAN UNITED STATES DISTRICT JUDGE

         For the reasons discussed below, the Court GRANTS Defendant Aerotek, Inc.'s motion to stay all proceedings pending appeal of this Court's order issued June 17, 2019.

         I. BACKGROUND

         Plaintiff Jaime Echevarria, a former temporary services employee of Defendant Aerotek, Inc., filed this action in the Santa Clara County Superior Court, asserting putative class claims on behalf of Aerotek's current and former temporary services employees for violations of state labor laws and unfair competition laws, as well as a representative claim under California's Private Attorneys General Act (“PAGA”). See Notice of Removal Exh. 1, ECF 1. Aerotek removed the action to federal district court, premising federal subject matter jurisdiction on the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Notice of Removal ¶¶ 3-5, ECF 1. After the Supreme Court issued Epic Sys. Corp. v. Lewis, 138 S.Ct. 1612 (2018), the parties stipulated to Echevarria's dismissal of his individual and putative class claims, leaving only his PAGA claim for disposition. Stipulation at 3, ECF 78.

         Aerotek thereafter filed a motion seeking dismissal of Echevarria's representative PAGA claim and seeking to compel arbitration of any individual PAGA claim. Echevarria opposed that motion and sought remand to the state court, arguing that the Court's jurisdiction over the PAGA claim was supplemental to its CAFA jurisdiction over the other claims, and that it would be appropriate for the Court to decline continued exercise of supplemental jurisdiction following dismissal of the claims giving rise to CAFA jurisdiction.

         On June 17, 2019, this Court issued an order (“June 17 Order”) denying Aerotek's motion and granting Echevarria's motion. See June 17 Order, ECF 96. The Court stayed its June 17 Order for thirty days to afford Aerotek an opportunity to file a notice of appeal before the case was remanded. See Id. Aerotek filed a timely notice of appeal on June 25, 2019, and a motion to stay pending appeal on July 3, 2019. On July 5, 2019, the Court granted Aerotek's unopposed administrative motion to shorten time for briefing the stay motion. See Order, ECF 102. The Court vacated the hearing on the stay motion and indicated that it would be submitted for decision without oral argument upon completion of the briefing. See Id. Briefing was completed on July 12, 2019. See Reply, ECF 104. The stay motion therefore is ripe for disposition.

         II. LEGAL STANDARD

         A stay pending appeal is a matter of judicial discretion that “‘is dependent upon the circumstances of the particular case.'” Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 2012) (quoting Nken v. Holder, 556 U.S. 418, 433 (2009)). “Judicial discretion in exercising a stay is to be guided by the following legal principles, as distilled into a four factor analysis in Nken: ‘(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.'” Lair, 697 F.3d at 1203 (quoting Nken, 556 U.S. at 434).

         The first factor does not require the movant to show that success on the merit is more likely than not. Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011). A demonstration of “a substantial case on the merits” or the existence of “serious legal questions” may be sufficient depending on the strength of the movant's showing on the other factors. Id. at 966-67. The burden is heavier with respect to the second factor, as the movant must show that absent a stay, “an irreparable injury is the more probable or likely outcome.” Id. at 968. “Once an applicant satisfies the first two factors, the traditional stay inquiry calls for assessing the harm to the opposing party and weighing the public interest.” Nken, 556 U.S. at 435. Where the movant has made a lesser showing on the first factor - establishing serious legal questions rather than a strong likelihood of success on the merits - the movant must show that the balance of hardships tips sharply in its favor. Leiva-Perez, 640 F.3d at 970.

         III. DISCUSSION

         A.

         Likely to Succeed / Serious Legal Questions

         Aerotek's appeal raises serious legal questions both with respect to the effect of Epic on the continuing validity of the Ninth Circuit's decision in Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015), and with respect to the interplay between CAFA jurisdiction and PAGA claims in the removal and remand contexts. On the first issue, regarding the effect of Epic, this Court recognized that circuit precedent can be effectively overruled by Supreme Court decisions that are closely on point, even where they do not expressly overrule the circuit decision. See June 17 Order at 6, ECF 96. This Court agreed “that the aspects of Epic highlighted by Aerotek may foreshadow a reversal of Sakkab were the Supreme Court to take up the interplay between the FAA and Iskanian at some future date, ” and acknowledged that at least one district court has applied Epic in a manner inconsistent with Sakkab. See Id. at 7. While this Court concluded that Sakkab remains good law, its June 17 Order reflects that Aerotek's argument to the contrary has substance. On the second issue, regarding a district court's continued jurisdiction over a PAGA claim once the claims giving rise to removal under CAFA have been dismissed, the Court was surprised to find only a few relevant cases. While this Court ultimately rejected Aerotek's argument that it lacked discretion to remand the PAGA claim, it did so in the absence of a Ninth Circuit case squarely on point. The Court therefore concludes that the first factor is met.

         Echevarria's arguments to the contrary are not well-taken. Echevarria mischaracterizes the first issue on appeal as “whether [ ] a PAGA claim can be compelled to arbitration.” Opp. at 6, ECF 103. According to Echevarria, that issue does not present a serious legal question, in part because the California Court of Appeal recently “reiterated that Iskanian's rule precluding arbitration of PAGA claims is not impacted in any way by Epic Systems.” Opp. at 7. Iskanian does not preclude arbitration of PAGA claims; it precludes waivers of representative PAGA claims. See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 384 (2014) (“We conclude that where, as here, an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”). In Sakkab, the Ninth Circuit held expressly that the Iskanian rule is not preempted by the Federal Arbitration Act in part because “[t]he Iskanian rule prohibiting waiver of representative PAGA claims does not diminish parties' freedom to select informal arbitration procedures.” Sakkab, 803 F.3d at 435. The critical question presented by Aerotek's motion was whether Sakkab, which clearly bars enforcement of the parties' express waiver of representative actions, remains good law after Epic. See June 17 Order at 3, ECF 96. This Court ...


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