Paula Blair v. Rent-A-Center, Inc. ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PAULA L. BLAIR; ANDREA No. 17-17221
ROBINSON; HARRIS A. FALECHIA,
Plaintiffs-Appellees, D.C. No.
3:17-cv-02335-
v. WHA
RENT-A-CENTER, INC., a Delaware
corporation; RENT-A-CENTER WEST, OPINION
INC., a Delaware corporation,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
William Alsup, District Judge, Presiding
Argued and Submitted February 12, 2019
San Francisco, California
Filed June 28, 2019
Before: M. Margaret McKeown, William A. Fletcher,
and Mary H. Murguia, Circuit Judges.
Opinion by Judge W. Fletcher
2 BLAIR V. RENT-A-CENTER
SUMMARY*
Arbitration / Preemption
The panel affirmed the district court’s denial of Rent-A-
Center’s motion to compel arbitration and motion for a
mandatory stay in a putative class action alleging Rent-A-
Center charged excessive prices; and dismissed for lack of
jurisdiction Rent-A-Center’s appeals of the district court’s
denial of a discretionary stay and deferral on the motion to
strike class claims.
In McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017), the
California Supreme Court held that a contractual agreement
purporting to waive a party’s right to seek public injunctive
relief in any forum was unenforceable under California law.
The panel held that the Federal Arbitration Act does not
preempt California’s McGill rule.
Turning to the parties’ 2015 rent-to-own agreement for an
air conditioner, the panel held that its severance clause, which
severs plaintiff’s California’s Karnette Rental-Purchase Act,
Unfair Competition Law, and Consumer Legal Remedies Act
claims from the scope of arbitration, was triggered by the
McGill rule. The panel further held that the severance clause
permitted such claims to be brought in court.
The panel affirmed the district court’s refusal to impose
either a mandatory or discretionary stay on the non-arbitrable
claims pending arbitration of plaintiff’s usury claim.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BLAIR V. RENT-A-CENTER 3
The panel held that it lacked jurisdiction to review the
district court’s denial of a discretionary stay because
appellate jurisdiction under the Federal Arbitration Act over
interlocutory appeals is limited to the orders listed in 9 U.S.C.
§ 16(a)(1). The panel held that a discretionary stay that was
based on the district court’s inherent authority to manage its
docket was not a stay under section 3 of the Federal
Arbitration Act, and the exceptions that might justify
extension of appellate jurisdiction did not apply to the
denial of a stay. The panel also held that it lacked
jurisdiction to review the district court’s decision to defer
ruling on Rent-A-Center’s motion to strike because it was a
non-final appealable order not covered by one of the
categories set forth in 9 U.S.C. § 16(a)(1)(A).
COUNSEL
Robert F. Friedman (argued) and Vicki L. Gillete, Littler
Mendelson P.C., Dallas, Texas; Gregory G. Iskander, Littler
Mendelson P.C., Walnut Creek, California; Kaitlyn M.
Burke, Littler Mendelson P.C., Las Vegas, Nevada; Kirsten
F. Gallacher and Vickie Turner, Wilson Turner Kosmo LLP,
San Diego, California; Lily A. North and Henry J. Escher III,
Dechert LLP, San Francisco, California; Christina Sarchio,
Dechert LLP, Washington, D.C.; for Defendants-Appellants.
Michael Rubin (argued) and Eric P. Brown, Altshuler Berzon
LLP, San Francisco, California; Zach P. Dostart and James T.
Hannink, Dostart Hannink & Coveneny LLP, La Jolla,
California; for Plaintiffs-Appellees.
4 BLAIR V. RENT-A-CENTER
OPINION
W. FLETCHER, Circuit Judge:
In McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017), the
California Supreme Court decided that a contractual
agreement purporting to waive a party’s right to seek public
injunctive relief in any forum is unenforceable under
California law. We are asked to decide in this case whether
the Federal Arbitration Act (“FAA”) preempts California’s
McGill rule.1 We hold it does not.
Plaintiffs brought a putative class action alleging that
defendants Rent-A-Center, Inc. and Rent-A-Center West, Inc.
(collectively, “Rent-A-Center”) charged excessive prices for
its rent-to-own plans for household items. We affirm the
district court’s partial denial of Rent-A-Center’s motion to
compel arbitration. We also affirm the district court’s denial
of Rent-A-Center’s motion for a mandatory stay of plaintiffs’
non-arbitrable claims. Finally, we dismiss for lack of
jurisdiction Rent-A-Center’s appeal of the district court’s
denial of a discretionary stay and its decision to defer ruling
on a motion to strike class action claims.
I. Factual and Procedural Background
Rent-A-Center operates stores that rent household items
to consumers for set installment payments. If all payments
1
This panel received briefing and heard argument in two additional
cases raising this same question: McArdle v. AT&T Mobility LLC (No.
17-17221) and Tillage v. Comcast Corp. (No. 18-15288). Those cases are
resolved in separate memorandum dispositions filed simultaneously with
this opinion.
BLAIR V. RENT-A-CENTER 5
are made on time, the consumer takes ownership of the item.
Rent-A-Center also sets a cash price at which the consumer
can purchase the item before the rent-to-own period has
ended.
Paula Blair entered into rent-to-own agreements with
Rent-A-Center for an air conditioner in 2015 and for a used
Xbox in 2016. Blair, together with two other named
plaintiffs, filed a class action complaint on March 13, 2017,
on behalf of all individuals who, on or after March 13, 2013,
entered into rent-to-own transactions with Rent-A-Center in
California. The complaint alleged that Rent-A-Center
structured its rent-to-own pricing in violation of state law.
In 1994, the California Legislature enacted the Karnette
Rental-Purchase Act, Cal. Civ. Code §§ 1812.620 et seq.
(“Karnette Act”), to “prohibit unfair or unconscionable
conduct toward consumers” who enter into rent-to-own
agreements. Id. § 1812.621. The Karnette Act sets statutory
maximums for both the “total of payments” amount for
installment payments and the “cash price” for rent-to-own
items. Id. § 1812.644. These maximums are set in
proportion to the “documented actual cost” of the items to the
lessor/seller. Id. § 1812.622(k).
The operative complaint includes claims under the
Karnette Act, as well as the Unfair Competition Law, Cal.
Bus. & Prof. Code §§ 17200 et seq. (“UCL”), the Consumers
Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq.
(“CLRA”), and California’s anti-usury law, Cal. Const. art.
XV, § 1(1). Plaintiffs seek a “public injunction” on behalf of
the people of California to enjoin future violations of these
laws, and to require that Rent-A-Center provide an
accounting of monies obtained from California consumers
6 BLAIR V. RENT-A-CENTER
and individualized notice to those consumers of their
statutory rights. Plaintiffs also seek declaratory relief,
compensatory damages and restitution, and attorneys’ fees
and costs.
Of the named plaintiffs, Rent-A-Center has a valid
arbitration agreement only with Blair, and only with respect
to her 2015 air conditioner agreement. Blair opted out of
arbitration in her 2016 Xbox agreement, and Rent-A-Center
has been unable to locate signed arbitration agreements for
either of the other two named plaintiffs. In June 2017, Rent-
A-Center filed a motion to compel arbitration of all claims
arising out of Blair’s 2015 agreement, which reads in relevant
part:
(B) What Claims Are Covered: You and
RAC [Rent-A-Center] agree that, in the event
of any dispute or claim between us, either you
or RAC may elect to have that dispute or
claim resolved by binding arbitration. This
agreement to arbitrate is intended to be
interpreted as broadly as the FAA allows.
Claims subject to arbitration include . . .
claims that are based on any legal theory
whatsoever, including . . . any statute,
regulation or ordinance.
...
(D) Requirement of Individual Arbitration:
You and RAC agree that arbitration shall be
conducted on an individual basis, and that
neither you nor RAC may seek, nor may the
Arbitrator award, relief that would affect RAC
BLAIR V. RENT-A-CENTER 7
account holders other than you. There will be
no right or authority for any dispute to be
brought, heard, or arbitrated as a class,
collective, mass, private attorney general, or
representative action. . . . If there is a final
judicial determination that applicable law
precludes enforcement of this Paragraph’s
limitations as to a particular claim for relief,
then that claim (and only that claim) must be
severed from the arbitration and may be
brought in court.
The district court concluded that the agreement violates
California’s McGill rule because it constitutes a waiver of
Blair’s right to seek public injunctive relief in any forum.
The court also held the McGill rule was not preempted by
the FAA. Relying on the severance clause at the end of
Paragraph (D), the court held that Blair’s Karnette Act, UCL,
and CLRA claims “must be severed from the arbitration.”
The district court granted Rent-A-Center’s motion to compel
arbitration of Blair’s usury claim because California’s usury
law “is not amenable to public injunctive relief.”
The district court denied Rent-A-Center’s motion to stay
proceedings on claims not sent to arbitration—including
those of the other two named plaintiffs—pending the outcome
of arbitration. It also delayed ruling on Rent-A-Center’s
motion to strike class action claims.
Rent-A-Center appealed the district court’s denial of its
motion to compel arbitration of Blair’s Karnette Act, UCL,
and CLRA claims. Rent-A-Center also appealed the court’s
denial of the motion to stay proceedings and its delay in
ruling on the motion to strike.
8 BLAIR V. RENT-A-CENTER
II. The McGill Rule
Several California consumer protection statutes make
available the remedy of a public injunction, which is defined
as “injunctive relief that has the primary purpose and effect
of prohibiting unlawful acts that threaten future injury to the
general public.” McGill, 393 P.3d at 87. One key difference
between a private and public injunction is the primary
beneficiary of the relief. Private injunctions “resolve a
private dispute” between the parties and “rectify individual
wrongs,” though they may benefit the general public
incidentally. Id. at 89 (internal alterations and citation
omitted). By contrast, public injunctions benefit “the public
directly by the elimination of deceptive practices,” but do not
otherwise benefit the plaintiff, who “has already been injured,
allegedly, by such practices and [is] aware of them.” Id. at 90
(internal citation and quotations omitted).
The California Supreme Court held in McGill that an
agreement to waive the right to seek public injunctive relief
violates California Civil Code § 3513, which provides that “a
law established for a public reason cannot be contravened by
a private agreement.” Id. at 93. Under § 3513, a party to a
private contract may waive a statutory right only if the
“statute does not prohibit doing so, the statute’s public benefit
is merely incidental to its primary purpose, and waiver does
not seriously compromise any public purpose that the statute
was intended to serve.” Id. at 94 (internal alterations and
citations omitted).
The California Supreme Court found that public
injunctive relief available under the UCL and CLRA, among
other statutes, is “[b]y definition . . . primarily ‘for the benefit
of the general public.’” Id. (citing Broughton v. Cigna
BLAIR V. RENT-A-CENTER 9
Healthplans of Cal., 988 P.2d 67 (Cal. 1999); Cruz v.
PacifiCare Health Sys., Inc., 66 P.3d 1157 (Cal. 2003)).
Waiver “of the right to seek public injunctive relief under
these statutes would seriously compromise the public
purposes the statutes were intended to serve.” Id. Therefore,
such waivers are “invalid and unenforceable under California
law.” Id.
The contract at issue in McGill was an arbitration
agreement waiving the plaintiff’s right to seek public
injunctive relief in arbitration and requiring arbitration of all
claims, thereby waiving the plaintiff’s right to seek a public
injunction through litigation. Id. at 87–88. Because this
waiver prevented the plaintiff from seeking a public
injunction in any forum, it was unenforceable under
California Civil Code § 3513. Id. at 94.
III. FAA Preemption
Rent-A-Center argues the district court erred in denying
its motion to compel arbitration of Blair’s Karnette Act, UCL,
and CLRA claims, contending that the McGill rule is
preempted by the FAA. We have appellate jurisdiction under
9 U.S.C. § 16(a)(1)(C), which allows an interlocutory appeal
of a district court’s denial of a motion to compel arbitration.
We review de novo such a denial. Kilgore v. KeyBank, Nat’l
Ass’n, 718 F.3d 1052, 1057 (9th Cir. 2013) (en banc). We
also review de novo a district court’s preemption analysis.
AGG Enters. v. Washington Cty., 281 F.3d 1324, 1327 (9th
Cir. 2002).
10 BLAIR V. RENT-A-CENTER
A. Federal Arbitration Act
The FAA directs courts to treat arbitration agreements as
“valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.”
9 U.S.C. § 2. The saving clause of § 2 “permits agreements
to arbitrate to be invalidated by generally applicable contract
defenses, such as fraud, duress, or unconscionability, but not
by defenses that apply only to arbitration or that derive their
meaning from the fact that an agreement to arbitrate is at
issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011) (internal quotation omitted). “[T]he saving clause
does not save defenses that target arbitration either by name
or by more subtle methods, such as by ‘interfer[ing] with
fundamental attributes of arbitration.’” Epic Sys. Corp. v.
Lewis, 138 S. Ct. 1612, 1622 (2018) (quoting Concepcion,
563 U.S. at 344).
The Supreme Court has described the FAA as establishing
“a liberal federal policy favoring arbitration agreements.”
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983). While the “FAA contains no express
pre-emptive provision,” it preempts state law “to the extent
that [the state law] stands as an obstacle to the
accomplishment and execution of the full purposes and
objectives of Congress.” Volt Info. Scis., Inc. v. Bd. of Trs. of
Leland Stanford Junior Univ., 489 U.S. 468, 477 (1989). A
state-law rule can be preempted by the FAA in two ways.
First, a state-law rule is preempted if it is not a “generally
applicable contract defense[]” and so does not fall within the
saving clause as a “ground[] . . . for the revocation of any
contract.” 9 U.S.C. § 2; Concepcion, 563 U.S. at 339. A rule
is generally applicable if it “appl[ies] equally to arbitration
BLAIR V. RENT-A-CENTER 11
and non-arbitration agreements.” Sakkab v. Luxottica Retail
N. Am., Inc., 803 F.3d 425, 432 (9th Cir. 2015). By contrast,
a rule is not generally applicable if it “prohibits outright the
arbitration of a particular type of claim.” Concepcion,
563 U.S. at 341.
Second, even a generally applicable rule may be
preempted if it “stand[s] as an obstacle to the accomplishment
of the FAA’s objectives.” Id. An “overarching purpose of
the FAA . . . is to ensure the enforcement of arbitration
agreements according to their terms so as to facilitate
streamlined proceedings.” Id. As the Supreme Court
recently restated, “[t]he general applicability of [a] rule [does]
not save it from preemption under the FAA” if the rule
“interferes with fundamental attributes of arbitration.” Lamps
Plus, Inc. v. Varela, 139 S. Ct. 1407, 1418 (2019) (citing
Concepcion, 563 U.S. at 344).2
B. Concepcion and Sakkab
The Supreme Court’s decision in Concepcion and our
decision in Sakkab guide our analysis. Indeed, our decision
in Sakkab all but decides this case.
In Concepcion, the Supreme Court considered whether
the FAA preempted California’s Discover Bank rule that class
waivers in most consumer arbitration agreements were
unconscionable under California law. See Discover Bank v.
2
The parties filed notices of supplemental authority pursuant to
Federal Rule of Appellate Procedure 28(j) informing this court of the
Supreme Court’s decision in Lamps Plus, which was published after oral
argument in this case. We have reviewed the Supreme Court’s decision
and considered it in our analysis.
12 BLAIR V. RENT-A-CENTER
Superior Court, 113 P.3d 1100 (Cal. 2005). The Court
recognized that unconscionability is “a doctrine normally
thought to be generally applicable.” Concepcion, 563 U.S.
at 341. The Court nonetheless held the Discover Bank rule
was preempted because it “interfere[d] with fundamental
attributes of arbitration and thus create[d] a scheme
inconsistent with the FAA.” Id. at 344. According to the
Court, “the switch from bilateral to class arbitration sacrifices
the principal advantage of arbitration—its informality—and
makes the process slower, more costly, and more likely to
generate procedural morass than final judgment.” Id. at 348.
The Court recognized that “class arbitration requires
procedural formality” because if “procedures are too
informal, absent class members would not be bound by the
arbitration”—that is, due process compels procedural
complexity in class arbitration. Id. at 349 (emphasis in
original). The Court noted that “class arbitration greatly
increases risks to defendants” because it combines high stakes
with limited appellate review. Id. at 350–51. The Court
concluded that classwide arbitration is therefore “not
arbitration as envisioned by the FAA” and “lacks its
benefits.” Id. at 351.
In the wake of Concepcion, we considered in Sakkab
whether the FAA preempts California’s Iskanian rule, which
bars contractual waiver in any fora of representative claims
under California’s Private Attorneys General Act of 2004
(“PAGA”), Cal. Lab. Code §§ 2698 et seq. See Sakkab,
803 F.3d at 427; Iskanian v. CLS Transp. L.A., LLC, 327 P.3d
129 (Cal. 2014). PAGA “authorizes an employee to bring an
action for civil penalties on behalf of the state against his or
her employer for Labor Code violations committed against
the employee and fellow employees, with most of the
BLAIR V. RENT-A-CENTER 13
proceeds of that litigation going to the state.” Iskanian,
327 P.3d at 133.
We concluded that the Iskanian rule is generally
applicable because it “bars any waiver of PAGA claims,
regardless of whether the waiver appears in an arbitration
agreement or a non-arbitration agreement.” Sakkab, 803 F.3d
at 432. We also noted that the rule does not “prohibit the
arbitration of any type of claim.” Id. at 434. We recognized
that although the purpose of the FAA is “to ensure that
private arbitration agreements are enforced according to their
terms,” the saving clause of § 2 would be rendered “wholly
ineffectual” if that purpose overrode all state-law contract
defenses. Id. (internal quotations and citations omitted).
Instead, “Congress plainly . . . intend[ed] to preempt . . . only
those [state contract defenses] that ‘interfere[] with
arbitration.’” Id. (quoting Concepcion, 563 U.S. at 346).
We held the Iskanian rule does not interfere with
arbitration. Id. at 435. Most important, the Iskanian rule
does “not diminish parties’ freedom to select informal
arbitration procedures.” Id. PAGA actions, unlike class
actions, do not “resolve[] the claims of other employees,” so
“there is no need to protect absent employees’ due process
rights in PAGA arbitrations.” Id. at 436. Nor does California
state law “purport[] to limit parties’ right to use informal
procedures, including limited discovery.” Id. at 438–39.
Finally, while PAGA actions “may . . . involve high stakes”
due to “hefty civil penalties,” the FAA does not preempt
causes of action merely because they impose substantial
liability. Id. at 437. We concluded that “the Iskanian rule
does not conflict with the FAA, because it leaves parties free
to adopt the kinds of informal procedures normally available
in arbitration.” Id. at 439.
14 BLAIR V. RENT-A-CENTER
C. Discussion
1. Generally Applicable Contract Defense
The McGill rule, like the Iskanian rule, is a generally
applicable contract defense. The California Supreme Court
specified that a waiver of public injunctive relief in “any
contract—even a contract that has no arbitration
provision”—is “unenforceable under California law.”
McGill, 393 P.3d at 94 (emphasis in original). The McGill
rule thus applies “equally to arbitration and non-arbitration
agreements.” Sakkab, 803 F.3d at 432.
Rent-A-Center argues that the McGill rule is equivalent
to an earlier and now-preempted California rule called the
Broughton-Cruz rule. See Broughton, 988 P.2d 67; Cruz,
66 P.3d 1157. The Broughton-Cruz rule had established that
“[a]greements to arbitrate claims for public injunctive relief
. . . are not enforceable in California.” McGill, 393 P.3d at
90. We held in Ferguson v. Corinthian Colleges, Inc.,
733 F.3d 928, 934 (9th Cir. 2013), that the FAA preempted
the Broughton-Cruz rule because it “prohibits outright” the
arbitration of public injunctive relief. The McGill rule bears
no resemblance to the Broughton-Cruz rule. It shows no
hostility to, and does not prohibit, the arbitration of public
injunctions. It merely prohibits the waiver of the right to
pursue public injunctive relief in any forum; the Broughton-
Cruz rule specifically excluded public injunctive claims from
arbitration.
The McGill rule is also unlike the rule at issue in Kindred
Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421
(2017). In that case, the Supreme Court struck down a judge-
made Kentucky rule that an agent with general power of
BLAIR V. RENT-A-CENTER 15
attorney could not waive a principal’s right to a jury trial
without explicit consent of the principal. Id. at 1425. The
rule had been invoked to invalidate two arbitration
agreements. Id. Though the rule did not explicitly forbid
the arbitration of claims, the Court held that “a legal rule
hinging on the primary characteristic of an arbitration
agreement—namely, a waiver of the right to go to court and
receive a jury trial”—impermissibly targets arbitration. Id.
at 1427. Unlike the Kentucky rule, the McGill rule does not
“rely on the uniqueness of an agreement to arbitrate” to
categorically disfavor arbitration as a forum. See id. at 1426
(quoting Concepcion, 563 U.S. at 341). To the contrary, the
McGill rule expresses no preference as to whether public
injunction claims are litigated or arbitrated, it merely
prohibits the waiver of the right to pursue those claims in any
forum.
Moreover, the Court in Kindred noted that the underlying
principle behind the Kentucky rule—that an agent cannot
waive a principal’s “fundamental constitutional right”
without express consent—had never been applied outside the
context of arbitration. Id. at 1427–28. By contrast, the
McGill rule derives from a general and long-standing
prohibition on the private contractual waiver of public rights.
California courts have repeatedly invoked California Civil
Code § 3513 to invalidate waivers unrelated to arbitration.
See, e.g., County of Riverside v. Superior Court, 42 P.3d
1034, 1042 (Cal. 2002) (holding that a police officer’s
“blanket waiver” of his rights under the Public Safety
Officers Procedural Bill of Rights Act as a condition of his
employment would be inconsistent with § 3513); Covino v.
Governing Bd., 142 Cal. Rptr. 812, 817 (Ct. App. 1977)
(invalidating under § 3513 a teacher’s waiver of his right
under the Education Code to become a contract, rather than
16 BLAIR V. RENT-A-CENTER
temporary, employee); Benane v. Int’l Harvester Co.,
299 P.2d 750, 753 (Cal. Ct. App. 1956) (invalidating under
§ 3513 a collective bargaining agreement provision waiving
employees’ rights under the Election Code to be paid for time
taken off work to vote); De Haviland v. Warner Bros.
Pictures, 153 P.2d 983, 988 (Cal. Ct. App. 1944)
(invalidating under § 3513 a movie star’s contractual waiver
of the Labor Code’s seven-year limit on personal service
contracts); Cal. Powder Works v. Atl. & Pac. R.R. Co., 45 P.
691, 693 (Cal. 1896) (relying on § 3513 to construe a
common carrier’s contractual exemption from liability to
exclude liability caused by the carrier’s negligence because
that liability is “imposed upon it by law”).
In sum, the McGill rule is a generally applicable contract
defense derived from long-established California public
policy. It is a “ground[] . . . for the revocation of any
contract” and falls within the FAA’s saving clause at the first
step of the preemption analysis. 9 U.S.C. § 2.
2. Interference with Arbitration
“[A] doctrine normally thought to be generally
applicable” is nonetheless preempted by the FAA if it
“stand[s] as an obstacle to the accomplishment of the FAA’s
objectives.” Concepcion, 563 U.S. at 341, 343. One
objective of the FAA is to enforce arbitration agreements
according to their terms “so as to facilitate streamlined
proceedings.” Id. at 344. However, we “do not read
Concepcion to require the enforcement of all waivers of
representative claims in arbitration agreements.” Sakkab,
803 F.3d at 436. Instead, “Congress plainly . . . intend[ed] to
preempt . . . only those [state contract defenses] that
‘interfere[] with arbitration.’” Id. at 434 (quoting
BLAIR V. RENT-A-CENTER 17
Concepcion, 563 U.S. at 346). Accordingly, we look at
“whether refusing to enforce waivers” of a claim that is
“technically denominated” as representative “will deprive
parties of the benefits of arbitration.” Id. at 436.
Our decision in Sakkab is squarely on point. The McGill
rule, like the Iskanian rule, does not “deprive parties of the
benefits of arbitration.” See id. This characteristic
distinguishes both rules from the Discover Bank rule barring
the waiver of class actions at issue in Concepcion. A major
concern in Concepcion was that compelling classwide
arbitration “requires procedural formality,” and, in so doing,
“makes the process slower, more costly, and more likely to
generate procedural morass than final judgment.”
Concepcion, 563 U.S. at 348–49. By contrast, neither state
law nor constitutional due process gives rise to, let alone
“requires[,] procedural formality” in the arbitration of public
injunctive relief.
Public injunctive relief under the Karnette Act, UCL, and
CLRA does not require formalities inconsistent with
arbitration. In McGill, the California Supreme Court
expressly held that claims for public injunctive relief need not
comply with state-law class procedures. McGill, 393 P.3d
at 93. We are bound by this ruling. See Hemmings v.
Tidyman’s Inc., 285 F.3d 1174, 1203 (9th Cir. 2002). Nor
does constitutional due process require unusual procedures
inconsistent with arbitration. In Sakkab, we held that the due
process rights of absent employees are not implicated by the
arbitration of a PAGA claim because the claim is brought on
behalf of the state, which is the “real part[y] in interest.”
Sakkab, 803 F.3d at 436. The small portion of a PAGA
penalty distributed to employees is incidental to the statute’s
public enforcement purpose and effect. Similarly, here,
18 BLAIR V. RENT-A-CENTER
public injunction claims are brought for the benefit of the
general public, not on behalf of specific absent parties.
Crucially, arbitration of a public injunction does not
interfere with the bilateral nature of a typical consumer
arbitration. The rules struck down in Concepcion and Epic
Systems “impermissibly disfavor[ed] arbitration” because
they rendered an agreement “unenforceable just because it
require[d] bilateral arbitration.” Epic Systems, 138 S. Ct.
at 1623 (emphasis removed). The McGill rule does no such
thing. The McGill rule leaves undisturbed an agreement that
both requires bilateral arbitration and permits public
injunctive claims. A plaintiff requesting a public injunction
files the lawsuit “on his or her own behalf” and retains sole
control over the suit. McGill, 393 P.3d at 92. Nothing in the
McGill rule requires a “switch from bilateral . . . arbitration”
to a multi-party action. Concepcion, 563 U.S. at 348.
It is possible that arbitration of a public injunction will in
some cases be more complex than arbitration of a
conventional individual action or a representative PAGA
claim. But as with PAGA actions, the complexity involved
in resolving a request for a public injunction “flows from the
substance of the claim itself, rather than any procedures
required to adjudicate it (as with class actions).” Sakkab,
803 F.3d at 438. The distinction between substantive and
procedural complexity is relevant to the preemption analysis
because the Court found in Concepcion that classwide
arbitration’s “procedural formality” frustrated the FAA’s
objective of ensuring speedy, cost-effective, and informal
arbitration. Concepcion, 563 U.S. at 348–49. But “potential
complexity should not suffice to ward off arbitration” of
substantively complex claims. Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 633 (1985). A
BLAIR V. RENT-A-CENTER 19
state-law rule that preserves the right to pursue a
substantively complex claim in arbitration without mandating
procedural complexity does not frustrate the FAA’s
objectives.
One theoretical distinction between arbitrating PAGA
claims and arbitrating public injunctive claims is the potential
for multiple injunctions against the same defendant imposing
conflicting obligations, a scenario without an obvious
analogue in the PAGA context. These concerns are
conjectural and unpersuasive. We are unaware of a single
such conflict in the decades public injunctive relief has been
available in California courts. Even assuming such conflicts
are (for some unidentified reason) imminent in the arbitral
forum, the defendant can always inform the arbitrator of its
existing obligations. We see no reason to believe that an
arbitrator would then impose an irreconcilable obligation on
the defendant. Nor would complex procedures be needed to
avoid such conflicts: the defendant need simply tell the
arbitrator. If the initial proceedings were confidential, the
defendant could, to the extent necessary, obtain permission
from the earlier arbitrator to make such a limited disclosure.
Ongoing injunctions sometimes need monitoring or
modification. The need for monitoring and modification is
inherent in all injunctive relief, public and private, and such
monitoring and modification is not incompatible with
informal arbitration. Arbitrators have long had the authority
and ability to address requests for injunctive relief within
bilateral arbitration. See AAA Commercial Arbitration
Rule 47(a) (“The arbitrator may grant any remedy or relief
that the arbitrator deems just and equitable and within the
scope of the agreement of the parties[.]”). We are not
concerned that arbitrating public injunctions would produce
20 BLAIR V. RENT-A-CENTER
procedural complexities not already common to the
arbitration of private injunctions.
Nor are public injunctions unique because of the need to
weigh the public interest in deciding whether to grant an
injunction. Judges and arbitrators routinely consider the
public interest when issuing private injunctions. See, e.g.,
Sw. Voter Reg. Educ. Project v. Shelley, 344 F.3d 914, 917
(9th Cir. 2003) (en banc) (“The district court must also
consider whether the public interest favors issuance of the
injunction”). Injunctive relief in antitrust actions, for
example, requires “reconciliation between the public interest
and private needs as well as between competing private
claims.” See California v. Am. Stores Co., 495 U.S. 271, 284
(1990).
Rent-A-Center’s contention that arbitration of a public
injunction requires expansive discovery and presentation of
class-wide evidence is mistaken. We are unconvinced by
Rent-A-Center’s suggestion that under Cisneros v. U.D.
Registry, Inc., 46 Cal. Rptr. 2d 233 (Ct. App. 1995), a public
injunction claim “demands class-wide evidence.” That case
merely stands for the unremarkable notion that evidence of
“similar practices involving other members of the public who
are not parties to the action” may be relevant to and
admissible to support a public injunction claim. Id. at 244.
The Court of Appeal said nothing about the discoverability of
such evidence, nor did it limit parties’ ability to agree ex ante
on the scope of discovery.
The parties remain free to reasonably limit by ex ante
agreement discovery and presentation of evidence, as they
may with any other arbitrable claim. Rent-A-Center chose to
omit any such provision from the 2015 air conditioner
BLAIR V. RENT-A-CENTER 21
agreement, and, in the absence of such an agreement, the
breadth of discovery in a public injunctive action, as in a
PAGA action, “flows from the substance of the claim itself,
rather than any procedures required to adjudicate it.” Sakkab,
803 F.3d at 438. Such is the case in the antitrust context as
well, and, as we know, antitrust claims are unquestionably
arbitrable. See Mitsubishi Motors Corp., 473 U.S. at 628–40.
Finally, a public injunction may involve high stakes and
could affect a lucrative business practice. But so could a
private injunctive, declaratory, or damages action. As we
explained in Sakkab, “the FAA would not preempt a state
statutory cause of action that imposed substantial liability
merely because the action’s high stakes would arguably make
it poorly suited to arbitration.” Sakkab, 803 F.3d at 437
(citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)).
Where a public injunction does not interfere with the
informal, bilateral nature of traditional consumer arbitration,
high stakes alone do not warrant FAA preemption.
As we recognized in Sakkab, arbitration is “[i]n many
ways . . . well suited to resolving complex disputes, provided
that the parties are free to decide how the arbitration will be
conducted.” Id. at 438. Like the Iskanian rule, the McGill
rule does not “mandate procedures that interfere with
arbitration.” See id. Arbitration of public injunctive relief
accordingly need not “sacrifice[] the principal advantage of
arbitration—its informality.” See Concepcion, 563 U.S.
at 348. We hold that the FAA does not preempt the McGill
rule.
22 BLAIR V. RENT-A-CENTER
IV. Construction of the Arbitration Agreement
Having concluded that the FAA does not preempt the
McGill rule, we now turn to the 2015 air conditioner
agreement itself to determine its scope and effect. Rent-A-
Center contends that the agreement requires Blair to submit
her Karnette Act, UCL, and CLRA claims to arbitration for
determination of liability. According to Rent-A-Center, only
after the arbitrator has determined liability can Blair go to
court to seek the remedy of a public injunction.3 We
disagree.
The severance clause in the 2015 agreement instructs us
to sever Blair’s Karnette Act, UCL, and CLRA claims from
the scope of arbitration, and to permit such claims to be
brought in court. The clause reads:
If there is a final judicial determination that
applicable law precludes enforcement of this
Paragraph’s limitations as to a particular
claim for relief, then that claim (and only that
claim) must be severed from the arbitration
and may be brought in court.
The severance clause is triggered by the McGill rule.
Paragraph (D) of the agreement prohibits the arbitrator from
awarding “relief that would affect RAC account holders other
than you,” and eliminates any “right or authority for any
3
Rent-A-Center alternatively argues that the McGill rule does not
apply because Blair’s requested relief does not amount to a public
injunction. Not so. Blair seeks to enjoin future violations of California’s
consumer protection statutes, relief oriented to and for the benefit of the
general public.
BLAIR V. RENT-A-CENTER 23
dispute to be brought, heard, or arbitrated as a class,
collective, mass, private attorney general, or representative
action.” Paragraph (D) thus precludes the arbitrator from
awarding public injunctive relief. Paragraph (B) of the
agreement permits Rent-A-Center to demand that all disputes
be resolved in arbitration, which precludes Blair from seeking
public injunctive relief in court. Read together, Paragraphs
(B) and (D) waive Blair’s right to seek a public injunction “in
any forum.” McGill, 393 P.3d at 87. The McGill rule is
“applicable law” that “precludes enforcement” of Paragraph
(D)’s limitations as to Blair’s Karnette Act, UCL, and CLRA
claims.
Rent-A-Center contends that the severance clause carves
out only the potential public injunctive remedy for these
causes of action, requiring the arbitrator to adjudicate liability
first. Rent-A-Center reads “claim for relief” in the severance
clause to refer only to a particular remedy, not to the
underlying claim. The district court found Rent-A-Center’s
reading “unnatural and unpersuasive,” and we agree. Parties
are welcome to agree to split decisionmaking between a court
and an arbitrator in this manner. Cf. Ferguson, 733 F.3d
at 937. But they did not do so here.
The severance clause refers to “a particular claim for
relief,” but it then goes on to require, a few words later in the
same sentence, severance of “that claim” from the arbitration
in order to allow it to “be brought in court.” A “claim for
relief,” as that term is ordinarily used, is synonymous with
“claim” or “cause of action.” See, e.g., Fed. R. Civ. P. 8(a)
(interchangeably using “claim” and “claim for relief,” and
using “demand for relief sought” to refer specifically to
requested remedy); Claim, Black’s Law Dictionary (10th ed.
2014) (noting that a “claim” is “[a]lso termed claim for
24 BLAIR V. RENT-A-CENTER
relief”); Claim for relief, Black’s Law Dictionary (10th ed.
2014) (referencing definition for “claim”); In re Ocwen Loan
Serv., LLC Mortg. Serv. Litig., 491 F.3d 638, 646 (7th Cir.
2007) (“The eighth claim is purely remedial; it seeks
injunctive relief. Of course it is not a claim, that is, a cause
of action, and should not have been labeled as such . . . .”);
Cannon v. Wells Fargo Bank N.A., 917 F. Supp. 2d 1025,
1031 (N.D. Cal. 2013) (“[E]quitable relief is not a claim for
relief but rather only a remedy.”). We read the clause, as did
the district court, to provide that the entire claim be severed
for judicial determination.
V. Other Issues
The district court refused to impose either a mandatory or
discretionary stay on the non-arbitrable claims pending
arbitration of Blair’s usury claim. We have jurisdiction under
9 U.S.C. § 16(a)(1)(A) to review the denial of a mandatory
stay, which is a question of law that we review de novo.
Under 9 U.S.C. § 3, a district court must stay proceedings for
claims and issues “referable to arbitration” pending resolution
of the arbitration. See Leyva v. Certified Grocers of Cal.,
Ltd., 593 F.2d 857, 863 (9th Cir. 1979). Only the usury claim
was “referable to arbitration,” so Rent-A-Center was not
entitled to a stay under § 3 for any of the other claims. See id.
We affirm the district court’s ruling.
We lack jurisdiction to review the district court’s denial
of a discretionary stay. See Portland Gen. Elec. Co. v.
Liberty Mut. Ins. Co., 862 F.3d 981, 986 (9th Cir. 2017). Our
appellate jurisdiction under the FAA over interlocutory
appeals is limited to the orders listed in 9 U.S.C. § 16(a)(1).
Kum Tat Ltd. v. Linden Ox Pasture, LLC, 845 F.3d 979, 982
(9th Cir. 2017). Relevant here, appellate jurisdiction extends
BLAIR V. RENT-A-CENTER 25
to orders “refusing a stay of any action under section 3 of this
title.” 9 U.S.C. § 16(a)(1)(A). A discretionary stay is based
on the district court’s inherent authority to manage its docket
and is not “a stay . . . under section 3” of the FAA. See
Portland Gen. Elec. Co., 862 F.3d at 984. The exceptions
that, at times, justify extension of appellate jurisdiction over
the imposition of a discretionary stay do not apply to the
denial of a stay. Cf. Dependable Highways Exp. Inc. v.
Navigators Ins. Co., 498 F.3d 1059, 1063–64 (9th Cir. 2007).
We also lack jurisdiction to review the district court’s
decision to defer ruling on Rent-A-Center’s motion to strike
because it is a non-final order not covered by one of the
categories set forth in 9 U.S.C. § 16(a)(1)(A). See Kum Tat
Ltd., 845 F.3d at 982.
Conclusion
The district court’s denials of Rent-A-Center’s motion to
compel arbitration and motion for a mandatory stay are
AFFIRMED.
Rent-A-Center’s appeals of the district court’s denial of
a discretionary stay and deferral on the motion to strike class
claims are DISMISSED for lack of jurisdiction.