Marron v. Healthsource Global Staffing, Inc.

Background

David H. Marron brought claims against Healthsource Global Staffing, Inc., alleging violations of various credit-reporting laws and California labor laws. On September 13, 2019, the court ordered Marron’s individual claims to arbitration and stayed the remaining case.

Marron later moved for leave to file a second amended complaint. He sought to dismiss his individual claims without prejudice and proceed only with a claim under California’s Private Attorneys General Act, commonly called PAGA. Healthsource opposed the motion. The court decided the matter without a hearing and vacated the scheduled hearing.

Parties’ Arguments

Marron argued that Federal Rule of Civil Procedure 15(a)(2) provides a liberal standard for amending a complaint. He also argued that he should not be required to pursue his individual claims in arbitration and challenged the court’s reliance on cases addressing similar attempts to amend after arbitration had been ordered.

Healthsource argued that the Federal Arbitration Act required the action to remain stayed while Marron’s individual claims proceeded through arbitration. Healthsource had initiated the arbitration, although Marron had not done so.

Court’s Analysis

The Federal Arbitration Act requires a court to stay an action involving an issue that has been referred to arbitration until the arbitration has occurred according to the parties’ agreement, unless the party requesting the stay is in default. The court relied on that language and on decisions holding that a court must continue to stay the entire action rather than dismiss fewer than all claims while arbitration is pending.

The court concluded that the stay remained in effect because Marron’s individual claims had been compelled to arbitration and Healthsource had initiated the arbitration. The court ruled that the Federal Arbitration Act did not give it discretion to lift the stay so Marron could dismiss some claims and proceed with the PAGA claim. Allowing that amendment could let Marron litigate the PAGA claim first and later bring the individual claims to arbitration, which the court said would circumvent the Act’s stay requirement.

The court also stated that Marron could choose not to pursue his rights in the pending arbitration. But the court could not lift the stay until the arbitration was completed or otherwise concluded.

Disposition

Judge Kandis A. Westmore denied Marron’s motion to amend the complaint. The order did not decide the underlying credit-reporting, labor-law, or PAGA claims.