McGovern v. U.S. Bank, N.A. ( 2020 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 REYNA MCGOVERN, on behalf of Case No.: 18-CV-1794-CAB-LL herself and all others similarly situated, 10 ORDER GRANTING MOTION FOR Plaintiff, 11 RECONSIDERATION v. 12 U.S. BANK N.A., [Doc No. 49] 13 Defendant. 14 15 16 On January 25, 2019, the Court granted Defendant’s motion to compel arbitration of 17 Plaintiff’s individual claims. [Doc. No. 28.] In doing so, the Court rejected Plaintiff’s 18 arguments that the arbitration provision in the Deposit Account Agreement between 19 Plaintiff and Defendant U.S. Bank, N.A. (“USB”) is invalid and unenforceable based on 20 the California Supreme Court’s holding in McGill v. Citibank, N.A., 2 Cal. 5th 945 (2017), 21 that waivers of the right to seek public injunctive relief in any forum are unenforceable. In 22 the order compelling arbitration, the court held that: (1) Plaintiff does not seek public 23 injunctive relief in this case; (2) Plaintiff lacks Article III standing to seek public injunctive 24 relief; and (3) and that even if Plaintiff seeks public injunctive relief, the holding in McGill 25 is preempted by the Federal Arbitration Act (“FAA”). 26 Plaintiff subsequently filed a motion to certify an interlocutory appeal. [Doc. No. 27 29.] Defendant opposed that motion, but before the Court issued its ruling, the parties filed 28 a joint motion asking the Court to hold Plaintiff’s motion in abeyance until the Ninth 1 Circuit issued its mandate in McArdle v. AT&T Mobility LLC, Ninth Circuit Case No. 17- 2 17246. [Doc. No. 35.] The Court granted the joint motion in part, denied Plaintiff’s motion 3 to certify an interlocutory appeal without prejudice, and stayed the case pending issuance 4 of the mandate in McArdle, in which the Ninth Circuit was presented with the question of 5 whether McGill is preempted by the FAA. [Doc. No. 37.] 6 The Ninth Circuit subsequently issued opinions in McArdle and Blair v. Rent-A- 7 Center, Inc. et al., Ninth Circuit Case No. 17-17221, affirming district court rulings that 8 the McGill rule was not preempted by the FAA. In a published opinion in Blair, the Ninth 9 Circuit held that “the FAA does not preempt the McGill rule.” Blair v. Rent-A-Ctr., Inc., 10 928 F.3d 819, 831 (9th Cir. 2019). Meanwhile, in an unpublished opinion in McArdle, the 11 Ninth Circuit held that because McGill is not preempted by the FAA: 12 the arbitration agreement between AT&T and plaintiff Steven McArdle is null and void in its entirety. Subsection 2.2(6) of the parties’ agreement purports 13 to waive McArdle’s right to pursue public injunctive relief in any forum and 14 so is unenforceable under California law. See McGill v. Citibank N.A., 2 Cal.5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85, 94 (2017). Subsection 2.2(6) 15 of the agreement continues: “If this specific provision is found to be 16 unenforceable, then the entirety of this arbitration provision shall be null and void.” 17 The text’s non-severability clause plainly invalidates the entire arbitration 18 agreement. Contrary to AT&T’s assertions, there are no “ambiguities about 19 the scope of [the] arbitration agreement.” See Lamps Plus, Inc. v. Varela, ––– U.S. ––––, 139 S. Ct. 1407, 1418, 203 L.Ed.2d 636 (2019) (citing Moses H. 20 Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25, 103 S.Ct. 21 927, 74 L.Ed.2d 765 (1983)); see also E.E.O.C v. Waffle House, Inc., 534 U.S. 279, 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (“[W]e do not override the 22 clear intent of the parties, or reach a result inconsistent with the plain text of 23 the contract, simply because the policy favoring arbitration is implicated.”). 24 McArdle v. AT&T Mobility LLC, 772 F. App'x 575 (9th Cir. 2019), cert. denied, No. 19- 25 1078, 2020 WL 2814785 (U.S. June 1, 2020). After the Supreme Court denied the 26 defendant’s petition for certiorari, the Ninth Circuit issued its mandate in McArdle on June 27 3, 2020. Plaintiff now moves for reconsideration of this court’s order compelling 28 1 Upon consideration of the parties’ briefs and the Ninth Circuit’s holdings in Blair 2 McArdle, the motion is granted. The public injunction waiver language in the 3 || arbitration provision in Plaintiff's Deposit Account Agreement is encompassed by McGill, 4 || meaning that the provision is invalid and unenforceable. Further, similar to the provision 5 McArdle, the arbitration section of the Deposit Account Agreement contains an 6 unambiguous non-severability clause stating: “If any provision of this section is ruled 7 ||invalid or unenforceable, this section shall be rendered null and void in its entirety.” [FAC 8 A at 18-19.] This clause plainly invalidates the entire arbitration agreement section as 9 ||a result of the invalidity and unenforceability of the public injunction waiver provision 10 || therein.' See McArdle, 772 F. App’x 575. 11 Accordingly, it is hereby ORDERED as follows: 12 1. Plaintiff’s motion for reconsideration [Doc. No. 49] is GRANTED; 13 2. The Court’s order compelling arbitration [Doc. No. 28] is RESCINDED; and, 14 3. Defendant’s motion to compel arbitration [Doc. No. 17] is DENIED. 15 Itis SO ORDERED. 16 || Dated: August 10, 2020 (ib 17 Hon. Cathy Ann Bencivengo 18 United States District Judge 19 20 21 22 23 || ——_____—__- 24 This conclusion does not require reconsideration of the Court’s analysis of whether the relief Plaintiff 25 || Seeks in this case qualifies as “public injunctive relief” or whether Plaintiff has Article III standing to seek “public injunctive relief.” Based on the holding in Blair, the public injunction waiver provision in the 26 || arbitration agreement here is invalid and unenforceable. Based on the holding in McArdle, the invalidity of the public injunction waiver provision renders the entire arbitration provision null and void due to the 27 non-severability provision. In light of the binding authority of Blair, and the Ninth Circuit’s application 28 of that authority in McArdle, whether Plaintiff seeks “public injunctive relief’ or has standing to do so are irrelevant to the enforceability of the arbitration section of her Deposit Account Agreement.