Burzdak v. Universal Screen Arts, Inc.
- Edward Chen
- 3:21-cv-02148
- U.S. District Court · Northern District of California
- 9
In Burzdak v. Universal Screen Arts, Judge Chen denied a stay pending appeal but staged discovery while the arbitration appeal proceeded.
Karen Burzdak, Universal Screen Arts, Inc., and the proposed California class whose class-certification discovery was deferred.
What happened
Karen Burzdak sued Universal Screen Arts, Inc. in a proposed class action, alleging that the company deceptively enrolled consumers in a paid, automatically renewing membership program. The court had previously denied Universal’s request to compel arbitration, and Universal appealed that decision.
Universal then asked the court to pause the case while the appeal was pending. It argued that continuing would force it to spend resources on class discovery and defend against claims that might later be sent to arbitration. Burzdak opposed the stay.
Judge Chen denied the motion to stay after weighing the parties’ likely harm, the strength of Universal’s appeal, and the public interest. The court nevertheless ordered discovery to begin with Burzdak’s individual claims and Universal’s policies and practices, while deferring discovery focused on class certification.
The detailed version
- Burzdak v. Universal Screen Arts, Inc. · No. 3:21-cv-02148
- Edward Chen
- Nov. 30, 2021
Background
Karen Burzdak brought a proposed class action against Universal Screen Arts, Inc. She alleges that Universal’s websites enrolled consumers in a seven-day free trial for a VIP Insider membership when they selected a free-shipping option, followed by automatic monthly charges of $14.95. She further alleges that the enrollment terms were not clear and conspicuous and that cancelling the membership was difficult. Her complaint asserts a claim under California Business and Professions Code section 17200, including an alleged violation of California’s Automatic Renewal Law.
Universal previously moved to compel arbitration. The court denied that motion, ruling that Universal’s pop-up screen did not put a reasonably prudent website user on notice of the linked Terms of Use and that Burzdak therefore was not bound by the arbitration provision. Universal appealed that ruling to the U.S. Court of Appeals for the Ninth Circuit.
Motion to Stay
Universal moved to stay, or pause, the district-court proceedings while its appeal was pending. The court applied four factors commonly considered for a stay pending appeal: the moving party’s likelihood of success or whether the appeal presents serious legal questions; possible irreparable injury if the stay is denied; possible injury to the opposing party if the stay is granted; and the public interest.
The court rejected Universal’s arguments that it was likely to succeed or that the appeal presented sufficiently serious legal questions. The court clarified that it had not treated Universal’s Terms of Use as a pure browsewrap agreement. Instead, it viewed the terms as falling between a pure browsewrap agreement, where terms are merely posted through a link, and a pure clickwrap agreement, where the user must affirmatively click an agreement box. The court also stated that it had applied the appropriate contract-formation analysis and had not improperly substituted the Automatic Renewal Law’s substantive standard for the notice standard relevant to whether Burzdak agreed to the Terms of Use.
The court also found that Universal’s claimed harm from proceeding could be reduced by deferring class discovery and beginning with discovery into Burzdak’s circumstances and Universal’s policies and practices. The public-interest factor did not favor Universal to the extent its position on the appeal was weak. The opinion does not decide the merits of Burzdak’s underlying consumer-protection claims.
Disposition
The court denied Universal’s motion to stay proceedings pending appeal. It gave Universal limited relief by staging discovery: the initial discovery would focus on Burzdak’s claims and Universal’s policies and practices across its websites, while class-certification discovery would be deferred. After that phase, the court would reconsider whether discovery should proceed on class claims, among other things in light of the status of Universal’s appeal. The order disposed of Docket No. 44.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.