Belyea v. GreenSky, Inc.

Background

Elizabeth Belyea brought a proposed class action against GreenSky of Georgia, LLC and GreenSky, LLC, which the opinion collectively calls “GreenSky.” The plaintiffs alleged violations of California consumer-protection, lending, and credit-services laws. GreenSky removed the action from state court under the Class Action Fairness Act.

GreenSky moved to compel arbitration. The court previously denied that request, concluding that GreenSky had not shown that it was undisputed that the plaintiffs agreed to the arbitration provision. After an amended complaint added Heidi Barnes, Hazel Lodge, and David Ferguson as representative plaintiffs, GreenSky again sought arbitration for Belyea, Lodge, and Ferguson and moved to dismiss Barnes’s claims. The court granted in part and denied in part the motion to dismiss Barnes’s claims and denied the requests to compel arbitration of the other plaintiffs’ claims. The plaintiffs then filed a second amended complaint, which GreenSky answered.

GreenSky appealed the arbitration ruling and moved to stay, or pause, the district-court proceedings while the appeal was pending. Plaintiffs moved for permission to file a supplemental reply, and the court granted that request.

Reasons for the Partial Stay

A stay pending appeal is discretionary rather than automatic. The court considered whether GreenSky’s appeal raised a serious legal issue, whether GreenSky would suffer irreparable harm without a stay, whether a stay would substantially harm the other parties, and where the public interest lay.

The court rejected several arguments GreenSky offered as serious legal issues. It found that the court had not needed to address GreenSky’s equitable-estoppel argument because the court had found disputed facts about whether an arbitration agreement was formed. It also found that differences among district-court decisions did not establish a serious legal issue here because the cases involved different facts and agreement formation is governed by state law. The court further concluded that GreenSky’s disagreement with the court’s interpretation of Ninth Circuit precedent and its challenge to how the court applied the governing test did not independently establish serious legal questions.

The court nevertheless found a serious legal issue because it had applied the wrong legal standard when denying GreenSky’s motion to compel arbitration. The court had treated the motion like a summary-judgment motion and required GreenSky to show, based on undisputed evidence, that the parties had formed a valid arbitration agreement. The court explained that, under Section 4 of the Federal Arbitration Act, when the formation of an arbitration agreement is disputed, the court must proceed summarily to a trial on that issue. The court stated that, if permitted, it would vacate its earlier order denying arbitration, allow briefing under the proper standard, and hold a trial if necessary to resolve disputed facts.

The court also found that the time and expense of continuing to litigate during the appeal supported a stay for plaintiffs whose claims might be subject to arbitration. It reasoned that individualized disputes about whether proposed class members entered valid arbitration agreements could complicate class certification and that proceeding with litigation could undermine arbitration’s cost-saving purpose.

The court reached a different conclusion for Barnes and similarly situated class members whose claims were not subject to the arbitration order. GreenSky conceded that Barnes and others in the same position were not subject to arbitration, and the court found that GreenSky had not shown a basis to stay those claims. The court also found that the public interest supported pausing claims potentially subject to arbitration but did not support pausing claims that were not subject to the arbitration order.

Disposition

The court GRANTED IN PART GreenSky’s motion to stay pending appeal. The stay covered the claims of Elizabeth Belyea, Hazel Lodge, David Ferguson, and putative class members for whom there was a dispute about whether they entered a valid arbitration agreement with GreenSky. The claims of Heidi Barnes and similarly situated putative class members were not stayed.

The court also GRANTED plaintiffs’ motion for permission to file a supplemental reply. It ordered the parties to meet and confer by videoconference about GreenSky’s appeal and scheduled a further video status conference for August 19, 2021, at 1:30 p.m.

Judge

The order was issued by Jacquelyn Corley, United States Magistrate Judge.