Bringing a Case to Arbitration Should be Easier Following Recent Ninth Circuit Decision

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Court Raises the Bar on Appeals Following Voluntary Dismissal

A plaintiff may not avoid arbitration and manufacture appellate jurisdiction simply by voluntarily dismissing his claims, the U.S. Ninth Circuit Court of Appeals recently decided. In doing so, the court stated that an earlier Ninth Circuit decision reaching the opposite conclusion had been effectively overruled by intervening U.S. Supreme Court precedent. The Ninth Circuit’s new ruling will make it easier for parties seeking to enforce arbitration agreements.

Damien Langere filed a class action lawsuit against Verizon Wireless after learning that the extended warranty program he purchased from Verizon for his cellphone was similar to protection already provided by the cellphone’s manufacturer. Langere sued in federal district court for violation of the federal and state consumer protection statutes. Verizon sought to arbitrate the dispute consistent with arbitration provisions of the warranty contract. The court granted Verizon’s motion to compel arbitration, putting further activity in the court on hold.

At that point Langere had two clear options for an appeal. Langere could arbitrate the claims to completion and then appeal. This is known as an appeal “as a matter of right,” meaning Langere could appeal the district court’s ruling (and anything that happened at the arbitration) to the Ninth Circuit. Alternatively, Langere could ask the district court and the Ninth Circuit to hear his appeal immediately. This “interlocutory” appeal would have been discretionary with the courts — they could have denied Langere’s request and made him wait until after the arbitration to hear his appeal. But Langere declined to try either of these options. Instead, in an effort to guarantee his appeal would be heard immediately, Langere voluntarily dismissed his claims with prejudice and appealed his own dismissal. Verizon filed a motion with the Ninth Circuit to dismiss Langere’s appeal, which the court granted.

In its decision, Langere v. Verizon Wireless Services, the Ninth Circuit acknowledged that in 2010 it had previously ruled that a party in Langere’s shoes could secure an immediate appeal by voluntary dismissal of that party’s claims. But since that earlier decision, Omstead v. Dell, was decided, the U.S. Supreme Court handed down Microsoft v. Baker. In Microsoft, the Supreme Court held that the federal courts of appeal are not required to hear immediate appeals from orders denying class certification after plaintiffs voluntarily dismissed their claims with prejudice. In Langere, the Ninth Circuit held that, though the facts were different (Microsoft addressed class certification, not arbitration), the Supreme Court’s reasoning applied with equal weight, effectively overruling Omstead.

A party seeking to appeal an order compelling arbitration now has one less arrow in their quiver.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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