Spread Your Wings, LLC v. AMZ Group

Background

Spread Your Wings, LLC, Blossom Hill Buildings, LLC, and Andrew S. Dumbaya sued AMZ Group LLC seeking rescission, or cancellation, of four agreements. On September 25, 2020, the court granted AMZ’s motion to dismiss and transferred the action to the Eastern District of New York under forum-selection clauses in the agreements. The court later stayed that transfer order after the plaintiffs said they wanted to seek review by the U.S. Court of Appeals for the Ninth Circuit.

The plaintiffs then moved for certification for an interlocutory appeal. An interlocutory appeal is an appeal before a case has reached a final judgment. AMZ opposed the motion.

Legal standard and analysis

Under 28 U.S.C. § 1292(b), a district court may certify a nonfinal order for immediate appellate review only if three requirements are met: the order involves a controlling legal question, there is substantial reason for disagreement about that question, and immediate review may materially advance the end of the litigation. The certification procedure is a narrow exception to the usual rule that appeals occur only after final judgment, and the party seeking certification has the burden of meeting all three requirements.

The plaintiffs identified three proposed legal questions concerning the forum-selection clauses: whether they had to show that New York was an inadequate forum because its public policy differed from California’s, whether the clauses improperly waived a nonwaivable right to a jury trial under California law, and whether the court first had to decide the enforceability of the agreements as a whole.

The court said these issues were not sufficiently fundamental to qualify as controlling questions for this type of immediate appeal. It also noted that the plaintiffs were raising new arguments, including the jury-trial issue, that they had not previously made or had not adequately developed in opposing AMZ’s motion to dismiss. The court said an interlocutory appeal was not the proper way to seek reconsideration of its earlier ruling.

The court further concluded that the plaintiffs had not shown substantial grounds for disagreement about the governing law. The court explained why its earlier decision did not conflict with the decisions the plaintiffs cited and found that disagreement with one nonbinding district court decision was not enough. The court also found that the plaintiffs had not shown substantial disagreement on the jury-trial issue or on whether the court had to decide the agreements’ overall enforceability before enforcing the forum-selection clauses.

Finally, the court rejected the plaintiffs’ argument that immediate review would materially advance the litigation. The plaintiffs said an appeal could prevent the parties from litigating to judgment in New York only to have the case later returned to California. The court found that the plaintiffs had not explained why proceeding in New York would prevent settlement or dismissal and noted that saving time and money could be asserted in nearly every case. It also questioned whether an appeal would promote efficiency because parallel proceedings would continue in federal court and in New York state court, where AMZ’s contract action was pending.

Disposition

The court held that the plaintiffs had not shown that the case presented exceptional circumstances warranting immediate appellate review. Judge Virginia K. Demarchi denied the plaintiffs’ motion for certification pursuant to 28 U.S.C. § 1292(b).