Engen v. Grocery Delivery E-Services USA Inc.

Background

Amanda Engen brought this action on behalf of herself and others similarly situated against Grocery Delivery E-Services USA Inc., doing business as Hello Fresh. The defendant had appealed an earlier order denying its motion to compel arbitration. It then moved to stay, or pause, the district-court proceedings while the appeal was pending.

Legal issue

The court considered whether an appeal from an order denying a motion to compel arbitration prevents the district court from continuing with the case, or at least requires a stay. The court noted that such an order is immediately appealable under 9 U.S.C. § 16(a)(1)(A). The Eighth Circuit had not decided whether that appeal removes the district court’s authority to proceed with the case. The court also described a split among other federal appeals courts and divided authority within the District of Minnesota.

Court’s reasoning

The court found persuasive the reasoning of the majority approach, which generally requires a stay unless the arbitration appeal is frivolous. The court relied on the principle that a district court and a court of appeals should not exercise authority over the same aspects of a case at the same time. Continuing the case while the appeal concerns whether the dispute belongs in arbitration could undermine the appeal and create inconsistent proceedings.

The court recognized an exception for a frivolous appeal—one lacking a legal basis or legal merit. It concluded that HelloFresh’s appeal was not frivolous.

Disposition

The court ordered that Defendant Grocery Delivery E-Services USA Inc.’s motion to stay proceedings, ECF No. 51, was GRANTED. The opinion did not decide the underlying dispute or resolve whether arbitration would ultimately be required.