Theodore v. American Express National Bank

Background

Diana Theodore brought a proposed class action against American Express National Bank under the Truth in Lending Act and California’s Unfair Competition Law. On April 4, 2024, the court granted American Express’s motion to compel arbitration and dismissed the case without prejudice. Theodore appealed that dismissal.

After the Supreme Court decided Smith v. Spizzirri, the Ninth Circuit remanded the case for the limited purpose of allowing this court to issue an indicative ruling under Federal Rule of Civil Procedure 60. The court then indicated that it would stay the case pending arbitration rather than dismiss it without prejudice. The appeal was voluntarily dismissed, and the court issued an amended order granting American Express’s motion to compel arbitration and staying the case.

Motion for Interlocutory Appeal

Theodore moved under 28 U.S.C. § 1292(b) for an interlocutory appeal, meaning an appeal before the district court enters a final judgment. That statute requires the order to involve a controlling legal question, present a substantial ground for difference of opinion, and offer an immediate appeal that may materially advance the end of the litigation. The requirements are conjunctive, so failure to satisfy any one of them defeats the motion.

The court addressed only whether there was a substantial ground for difference of opinion. It explained that this requirement concerns unclear controlling law, such as disagreement among courts or a novel and difficult legal question. A party’s strong disagreement with the court’s decision is not enough.

Court’s Analysis

The court had previously interpreted the 2018 cardholder agreement under Utah law. The agreement contained two Claims Resolution provisions. The court concluded that the provision for “Covered Borrowers” applied only to members of the Armed Forces and their dependents, while the other Claims Resolution provision applied to Theodore. Giving effect to all provisions, the court held that Theodore’s claims were subject to arbitration.

Theodore argued that reasonable judges could disagree about which Utah contract-interpretation rule should control. She relied on the rule that ambiguity is construed against the drafter rather than the rule requiring all contract provisions to be given effect. The court rejected that argument because it had not found the agreement ambiguous and therefore had not needed to apply the rule concerning ambiguity. In the court’s view, the agreement could be read sensibly without treating the two provisions as conflicting.

Theodore also argued that the two provisions showed there had been no “meeting of the minds,” meaning no mutual agreement sufficient to form a contract. The court rejected that argument as well. It had previously concluded that the two provisions clearly applied to different kinds of cardholders and did not create conflicting arbitration provisions.

Finally, the court concluded that certifying an appeal would not present the exceptional circumstances required by § 1292(b). It reasoned that allowing an interlocutory appeal of the straightforward contract-interpretation question would undermine the Federal Arbitration Act’s purpose of moving arbitrable disputes into arbitration quickly and would circumvent the Supreme Court’s decision in Smith v. Spizzirri.

Disposition

The court determined that there was no substantial ground for difference of opinion concerning the amended arbitration order. Judge Araceli Martinez-Olguin therefore denied Theodore’s motion for a certificate of appealability. The order disposed of Docket No. 61, and the case remained stayed pending arbitration.