637 F.Supp.3d 745
N.D. Cal.2022Background
- Belyea filed a JAMS demand; JAMS invoiced GreenSky on June 24, 2022 for $1,500; JAMS requested payment again on July 15, 2022.
- GreenSky had not paid within 30 days; Belyea moved on August 3, 2022 to set aside the district court’s final judgment under Rule 60(b)(6); GreenSky paid JAMS on August 4, 2022.
- Belyea argued GreenSky materially breached the arbitration delegation clause by missing the 30‑day payment deadline required by California CCP § 1281.97, which she says causes waiver of the right to arbitrate.
- The arbitration agreement contains a delegation clause assigning arbitrability (validity/enforceability/scope) to the arbitrator. Belyea challenged enforcement of that delegation clause under CCP § 1281.97.
- The court considered (1) whether it retained jurisdiction to hear the post‑judgment motion and (2) whether the delegation clause required the arbitrator to decide the § 1281.97 dispute; it then addressed preemption and traditional waiver/breach principles.
- Holding: the court denied relief under Rule 60(b)(6), concluding the FAA preempts CCP § 1281.97 and, on the record, GreenSky’s late payment did not constitute breach or waiver under general principles.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction to hear post‑judgment Rule 60(b) motion | Court lost authority after final judgment; motion is barred | Rule 60(b) preserves power to reopen final judgments; court can hear motion | Court has jurisdiction to consider the Rule 60(b) motion |
| Who decides § 1281.97 breach/waiver (delegation)** | §1281.97 breach/waiver prevents enforcement of delegation; court should adjudicate enforceability of delegation clause | Delegation clause clearly and unmistakably commits arbitrability (including §1281.97 disputes) to the arbitrator | Court may decide the enforceability of the delegation clause itself under 9 U.S.C. § 2 before sending threshold issues to arbitration |
| FAA preemption of CCP § 1281.97 | §1281.97 valid under California law; it preserves rights of consumers/employees to litigate if drafting party fails to pay | FAA preempts state rules that single out arbitration for special unenforceability rules | Court held §1281.97 is arbitration‑specific and violates the FAA’s equal‑treatment principle; FAA preempts §1281.97 here |
| Breach/waiver under general contract principles | Late payment violated §1281.97 and thus waived GreenSky’s right to enforce delegation/arbitration | Late payment was not a complete refusal to arbitrate; GreenSky participated and paid before termination; no prejudice or bad faith | Court found GreenSky’s conduct did not amount to material breach or waiver under ordinary waiver/breach doctrines |
**(Delegation issue narrowed: plaintiff challenged enforceability of the delegation clause itself, which a court must decide under Rent‑A‑Center/FAA §2.)
Key Cases Cited
- United States v. Alpine Land & Reservoir Co., 984 F.2d 1047 (9th Cir. 1993) (Rule 60(b)(6) used sparingly; requires extraordinary circumstances)
- Henson v. Fidelity Nat’l Fin., Inc., 943 F.3d 434 (9th Cir. 2019) (movant must show extraordinary circumstances for Rule 60(b)(6) relief)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (distinguishes arbitrability questions for courts from procedural questions for arbitrators)
- Cox v. Ocean View Hotel Corp., 533 F.3d 1114 (9th Cir. 2008) (waiver by litigation conduct and breach bear on whether parties are bound and are for judicial determination)
- Martin v. Yasuda, 829 F.3d 1118 (9th Cir. 2016) (addresses waiver/breach in arbitrability context and limits Howsam’s scope)
- Rent‑A‑Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010) (court must decide challenges to the delegation clause itself under 9 U.S.C. § 2)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) (describes FAA’s equal‑treatment principle limiting state rules that single out arbitration)
- Kindred Nursing Centers L.P. v. Clark, 137 S. Ct. 1421 (2017) (same equal‑treatment principle; rules cannot be tailor‑made to arbitration)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (state rules that conflict with FAA’s objectives may be preempted)
- Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022) (addresses waiver doctrine and reiterates equal‑treatment constraints)
- Brown v. Dillard’s, Inc., 430 F.3d 1004 (9th Cir. 2005) (failure to pay or refusal to arbitrate can constitute waiver/breach in some facts)
- Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) (FAA does not preempt state arbitration law entirely; parties may incorporate state law by contract)