Arroyo v. SHR Palo Alto, LLC

Background

Rafael Arroyo alleges that SHR Palo Alto, LLC violated the Americans with Disabilities Act and California’s Unruh Civil Rights Act. The complaint concerns the scope of federal regulations governing reservation systems for lodging facilities, which the court calls the “Reservations Rule.” SHR Palo Alto filed a motion to dismiss, and that motion was pending.

The Ninth Circuit had not yet interpreted the Reservations Rule. Appeals in two other cases involved the issues raised by Arroyo’s complaint, so the court issued an order asking why this action should not be paused while those appeals were decided.

Positions of the Parties

Arroyo did not oppose pausing the case. SHR Palo Alto opposed a pause. It argued that losing the case could deter Arroyo and his firm from filing similarly weak cases, and that keeping the case open would substantially injure the company because the case would be a cloud on its business and would have to be reported as a contingent liability.

Ruling

The court concluded that pausing the litigation was warranted because the pending appeals addressed the exact issue presented in Arroyo’s complaint. The court stated that Ninth Circuit guidance would likely materially affect its decision and that pausing the case would conserve the parties’ and the court’s resources. It also found that SHR Palo Alto would not suffer meaningful prejudice from the pause.

Rather than impose a formal stay, the court administratively closed the case for docketing reasons. Either party may reopen the case by filing a notice within 14 days after the Ninth Circuit issues its first mandate in Love, Garcia, or another currently pending Ninth Circuit appeal interpreting the Reservations Rule. The order did not decide the merits of Arroyo’s claims or the pending motion to dismiss. Magistrate Judge Donna M. Ryu entered the order.