McGhee v. North American Bancard, LLC
3:17-cv-00586
| S.D. Cal. | Feb 6, 2018Background
- Plaintiff Gerald McGhee sued defendant North American Bancard (NAB) in district court; NAB moved to compel arbitration and the court denied that motion.
- NAB appealed the denial to the Ninth Circuit and then moved in district court for a stay of proceedings pending the appeal.
- The arbitration clause was contained on a hyperlinked page separate from the service agreement McGhee clicked through; the court previously found no assent to that hyperlinked arbitration clause.
- NAB argued the appeal raises novel, significant questions about enforceability of electronic clickwrap/linked agreements and that proceeding would irreparably deprive NAB of its contractual arbitration benefits.
- McGhee argued he would be harmed by delay due to advanced age, fragile health, and potential loss of evidence; the court found these concerns unsubstantiated.
- The district court applied Ninth Circuit stay factors (likelihood of success, irreparable harm, balance of hardships, public interest) and granted the stay, ordering 90‑day status reports.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a stay pending NAB's appeal should be granted | Stay would prejudice McGhee via delay, age/health concerns, possible loss of evidence | Denying stay would irreparably deprive NAB of arbitration’s speed and cost advantages and risk class litigation | Stay granted pending Ninth Circuit appeal |
| Whether the appeal raises a substantial/legal question about electronic assent | The court already found lack of assent here; issue not novel enough to block proceedings | Ninth Circuit has not settled whether click "I accept" or linked pages suffice; issue is novel and serious | Court finds issue sufficiently serious to favor stay |
| Whether NAB would suffer irreparable harm absent a stay | McGhee: litigating now is proper; no irreparable injury shown | Losing the arbitration forum (and benefits) is irreparable because advantages are lost if case proceeds to trial | Court finds NAB would suffer irreparable harm; weighs strongly for stay |
| Whether plaintiff/non‑party and public interests favor a stay | Delay would prejudice putative class and consumers; public interest in redress | FAA policy and judicial economy favor enforcing arbitration and conserving court resources | Public interest favors stay; concerns about consumer harm are speculative |
Key Cases Cited
- Britton v. Co-op Banking Grp., 916 F.2d 1405 (9th Cir. 1990) (district court has discretion to stay proceedings pending appeal)
- Golden Gate Restaurant Ass’n v. City & County of San Francisco, 512 F.3d 1112 (9th Cir. 2008) (articulating stay factors under Rule 62(c))
- Nken v. Holder, 556 U.S. 418 (2009) (first two stay factors—likelihood of success and irreparable harm—are most critical)
- Leiva‑Perez v. Holder, 640 F.3d 962 (9th Cir. 2011) (movant’s burden on irreparable harm is higher than on likelihood of success)
- Walmer v. United States Dep’t of Defense, 52 F.3d 851 (10th Cir. 1995) (definition of a "serious" legal question for stay purposes)
- Alascom, Inc. v. ITT North Elec. Co., 727 F.2d 1419 (9th Cir. 1984) (loss of arbitration’s speed and economy can constitute irreparable harm)