No. _____
`
`IN THE
`
`________
`
`PEOPLECONNECT, INC.,
`Applicant,
`
`v.
`
`BARBARA KNAPKE, INDIVIDUALLY AND ON BEHALF OF
`ALL OTHERS SIMILARLY SITUATED,
`Respondent.
`
`________
`
`APPLICATION FOR STAY PENDING DISPOSITION OF
`PETITION FOR WRIT OF CERTIORARI
`
`________
`
`DEBBIE L. BERMAN
`WADE A. THOMSON
`CLIFFORD W. BERLOW
`GABRIEL K. GILLETT
`JENNER & BLOCK LLP
`353 N Clark St.
`Chicago, IL 20654
`(312) 222-9350
`
`IAN HEATH GERSHENGORN
`ADAM G. UNIKOWSKY
` Counsel of Record
`JENNER & BLOCK LLP
`1099 New York Ave., NW
`Suite 900
`Washington, DC 20001
`(202) 639-6000
`aunikowsky@jenner.com
`
`

`

`RULE 29.6 STATEMENT
`
`Pursuant to Supreme Court Rule 29.6, PeopleConnect, Inc. (“PeopleConnect”)
`
`hereby states that it is a wholly-owned subsidiary of PeopleConnect Holdings, Inc., a non-
`
`public Delaware corporation, and PCHI Parent, Inc., a non-public Delaware corporation.
`
`No publicly held corporation owns 10% or more of PeopleConnect’s stock.
`
`PeopleConnect, Inc. has no publicly held affiliates.
`
`i
`
`

`

`TABLE OF CONTENTS
`
`RULE 29.6 STATEMENT ......................................................................................................... i
`
`TABLE OF AUTHORITIES ................................................................................................... iv
`
`INTRODUCTION ........................................................................................................................1
`
`STATEMENT OF THE CASE .................................................................................................5
`
`A.
`
`B.
`
`PeopleConnect’s Motion to Compel Arbitration. .............................................5
`
`PeopleConnect’s Motion to Stay Pending Appeal. ...........................................7
`
`ARGUMENT ................................................................................................................................8
`
`I.
`
`THIS COURT IS LIKELY TO GRANT CERTIORARI TO REVIEW
`THE NINTH CIRCUIT’S DENIAL OF A STAY PENDING APPEAL. ............9
`
`A.
`
`The Circuits Are Split on Whether District Court Proceedings Must
`Be Stayed Pending Appeal of a Denial of a Motion to Compel
`Arbitration. ............................................................................................................9
`
`i.
`
`ii.
`
`Three circuits hold that district courts maintain jurisdiction
`while an appeal of the denial of motion to compel arbitration
`is pending. ................................................................................................10
`
`Five circuits hold that district courts maintain jurisdiction
`while an appeal of the denial of motion to compel arbitration
`is pending. ................................................................................................12
`
`B.
`
`The Court Should Grant Certiorari in this Case to Resolve the
`Split. ......................................................................................................................17
`
`II.
`
`THIS COURT IS LIKELY TO REVERSE THE NINTH CIRCUIT. ................19
`
`INCUR
`PEOPLECONNECT WILL
`STAY,
`III. ABSENT A
`IRREPARABLE HARM. ............................................................................................21
`
`IV. TO AVOID MOOTNESS, THE COURT SHOULD ENSURE THAT
`THIS CASE IS HEARD THIS TERM. .....................................................................24
`
`CONCLUSION ...........................................................................................................................26
`
`ii
`
`

`

`Exhibit A - Order Denying a Stay Pending Appeal, Knapke v. PeopleConnect, Inc., No.
`21-35690 (9th Cir. Oct. 20, 2021), ECF No. 14
`
`Exhibit B - Order Denying Motion to Stay, Knapke v. PeopleConnect, Inc., No. 21-cv-
`00262 (W.D. Wash. Sept. 28, 2021), ECF No. 37
`
`Exhibit C - Order Denying Motion to Dismiss, Knapke v. PeopleConnect, Inc., No. 21-cv-
`00262 (W.D. Wash. Aug. 10, 2021), ECF No. 25
`
`Exhibit D - Complaint, Knapke v. PeopleConnect, Inc., No. 21-cv-00262 (W.D. Wash. Mar.
`2, 2021), ECF No. 1
`
`Exhibit E - Defendant’s Motion to Dismiss, Knapke v. PeopleConnect, Inc., No. 21-cv-
`00262 (W.D. Wash. May 3, 2021), ECF No. 13
`
`Exhibit F - Declaration of Tara McGuane in Support of Defendant’s Motion to Dismiss,
`Knapke v. PeopleConnect, Inc., No. 21-cv-00262 (W.D. Wash. May 3, 2021),
`ECF No. 13-1
`
`Exhibit G - Exhibit 1 to Defendant’s Motion to Dismiss, Knapke v. PeopleConnect, Inc.,
`No. 21-cv-00262 (W.D. Wash. May 3, 2021), ECF No. 13-1
`
`iii
`
`

`

`TABLE OF AUTHORITIES
`
`CASES
`
`Alascom, Inc. v. ITT North Electric Co., 727 F.2d 1419 (9th Cir. 1984) .............................23
`
`AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) .................................................7, 22
`
`Blinco v. Green Tree Servicing, LLC, 366 F.3d 1249 (11th Cir. 2004) .................2, 14, 15, 21
`
`Bombardier Corp. v. National Railroad Passenger Corp., 333 F.3d 250
`(D.C. Cir. 2003) ......................................................................................................................17
`
`Bombardier Corp. v. National Railroad Passenger Corp., No. 02-7125,
`2002 WL 31818924 (D.C. Cir. Dec. 12, 2002) .....................................................................17
`
`Bradford-Scott Data Corp. v. Physician Computer Network, Inc., 128
`F.3d 504 (7th Cir. 1997) ......................................................................................12, 13, 14, 20
`
`Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990) ....................7, 10, 11, 19, 20
`
`Christmas Lumber Co. v. NWH Roof & Floor Truss Systems, LLC, No.
`3:19-CV-55, 2020 WL 3052222 (E.D. Tenn. June 8, 2020)................................................18
`
`Combined Energies v. CCI, Inc., 495 F. Supp. 2d 142 (D. Me. 2007) ..................................18
`
`Conkright v. Frommert, 556 U.S. 1401 (2009) ........................................................................24
`
`Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207 (3d Cir. 2007)......................................16, 23
`
`Engen v. Grocery Delivery E-Services USA Inc., No. 19-cv-2433, 2020 WL
`3072316 (D. Minn. June 10, 2020) ........................................................................................18
`
`Kelleher v. Dream Cather, LLC, No. 1:16-cv-02092, 2017 WL 7279397
`(D.D.C. July 24, 2017) ...........................................................................................................18
`
`Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421 (2017) ......................7
`
`Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) ................................................................22
`
`Levin v. Alms & Associates, Inc., 634 F.3d 260 (4th Cir. 2011) .........................16, 17, 22, 23
`
`Maryland v. King, 133 S. Ct. 1 (2012) ........................................................................................9
`
`McCauley v. Halliburton Energy Services, Inc., 413 F.3d 1158 (10th Cir.
`2005) ..................................................................................................................................15, 18
`
`iv
`
`

`

`Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2d Cir. 2004) ..............................................2, 11
`
`Nken v. Holder, 556 U.S. 418 (2009) .....................................................................................4, 25
`
`Tamsco Properties, LLC v. Langemeier, 597 F. App’x 428 (9th Cir. 2015)..........................6
`
`Weingarten Realty Investors v. Miller, 661 F.3d 904 (5th Cir. 2011) .......................2, 11, 12
`
`STATUTES
`
`9 U.S.C. § 16(a) ............................................................................................................................20
`
`9 U.S.C. § 16(a)(1)..........................................................................................................................6
`
`OTHER AUTHORITIES
`
`Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17A859 ...........................................24
`
`Henry Schein, Inc. v. Archer & White Sales, Inc., No. 19A766 ...........................................24
`
`v
`
`

`

`TO THE HONORABLE ELENA KAGAN, ASSOCIATE JUSTICE OF THE
`
`SUPREME COURT AND CIRCUIT JUSTICE FOR THE NINTH CIRCUIT:
`
`INTRODUCTION
`
`Pursuant to 28 U.S.C. § 1651 and Supreme Court Rule 23, Applicant
`
`PeopleConnect, Inc. respectfully seeks an order staying proceedings in Knapke v.
`
`PeopleConnect, Inc., No. 21-cv-00262
`
`(W.D. Wash.), pending disposition of
`
`PeopleConnect’s petition for certiorari.
`
`This stay application arises from a putative class action filed by respondent
`
`Barbara Knapke against PeopleConnect. PeopleConnect filed a motion to compel
`
`arbitration, which the district court denied. PeopleConnect appealed that ruling. That
`
`appeal is currently pending in the Ninth Circuit.
`
`After filing its notice of appeal, PeopleConnect sought a stay of district court
`
`proceedings pending disposition of its appeal. The district court and Ninth Circuit both
`
`denied a stay.
`
`In PeopleConnect’s petition for certiorari, PeopleConnect is seeking review of the
`
`Ninth Circuit’s order denying PeopleConnect’s requested stay. In this application,
`
`PeopleConnect seeks a stay of district court proceedings pending disposition of that
`
`petition for certiorari. The Court should grant the stay application because the Court is
`
`likely to grant certiorari and reverse the Ninth Circuit, and a stay is necessary to avoid
`
`irreparable harm.
`
`1
`
`

`

`The Court is likely to grant certiorari because there is a longstanding circuit split
`
`on whether district courts are ousted of jurisdiction pending a non-frivolous appeal of the
`
`denial of a motion to compel arbitration. In the Second, Fifth, and Ninth Circuits, district
`
`courts are not ousted of jurisdiction. In those circuits, the movant must establish its
`
`entitlement to a stay under the traditional discretionary test. In the decision below, the
`
`Ninth Circuit applied that legal standard and concluded that PeopleConnect was not
`
`entitled to a stay.
`
`By contrast, in the Third, Fourth, Seventh, Tenth, and Eleventh Circuits, a stay
`
`of district court proceedings is automatic. Once a non-frivolous appeal is filed, the district
`
`court is ousted of jurisdiction, and district court proceedings must halt.
`
`This circuit split has been widely acknowledged. Indeed, aside from the Ninth
`
`Circuit (the first appellate court to consider the issue), every appellate decision has
`
`expressly noted the conflict of authority. See, e.g., Weingarten Realty Invs. v. Miller, 661
`
`F.3d 904, 907 (5th Cir. 2011) (noting that question presented is “the subject of a circuit
`
`split”); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 54 (2d Cir. 2004) (“Other circuits are
`
`divided on this question.”); Blinco v. Green Tree Servicing, LLC, 366 F.3d 1249, 1251 (11th
`
`Cir. 2004) (“The circuit courts that have considered the issue are split.”)
`
`This case is an ideal vehicle to resolve the circuit split because the Ninth Circuit’s
`
`legal standard was outcome-determinative. Had this case arisen in the Third, Fourth,
`
`Seventh, Tenth, and Eleventh Circuits, PeopleConnect’s appeal would have
`
`automatically halted proceedings in the district court. But because this case arose in the
`
`2
`
`

`

`Ninth Circuit, PeopleConnect was subjected to a less favorable legal standard that
`
`resulted in its stay motion being denied.
`
`If the Court grants certiorari, it is likely to reverse the Ninth Circuit. The
`
`majority rule is correct. As the Third, Fourth, Seventh, Tenth, and Eleventh Circuits
`
`have held, this case merely requires a straightforward application of the bedrock
`
`principle that an appeal divests a district court of jurisdiction over the case being
`
`appealed. Although there is an exception to that principle for matters that are collateral
`
`to the issue on appeal, that exception does not apply here. The purpose of the appeal is
`
`to determine whether the case should proceed to arbitration, or whether district court
`
`proceedings should instead occur. Those very proceedings are thus at the core of—not
`
`collateral to—the appeal.
`
`Moreover, the Ninth Circuit’s approach would nullify Congress’s decision to
`
`authorize immediate appeals of denials of motions to compel arbitration. Immediate
`
`appeals serve to avoid the prospect of litigating a case to judgment, only to be sent to
`
`arbitration following an appeal. Yet permitting litigation to proceed while an appeal is
`
`pending risks precisely that outcome.
`
`Finally, PeopleConnect would encounter irreparable harm if its stay application is
`
`denied. The purpose of arbitration is to avoid burdensome discovery and court
`
`procedures. PeopleConnect’s requested stay seeks to avoid those procedures pending a
`
`decision on whether to compel arbitration. If district court proceedings continue while
`
`PeopleConnect’s petition for certiorari is pending, PeopleConnect will encounter the very
`
`burdensome discovery procedures the stay is designed to avoid. That harm cannot be
`
`3
`
`

`

`undone even if PeopleConnect prevails in this Court. The Court has previously granted
`
`stays in closely similar procedural postures, and it should adhere to its prior practice.
`
`Because this case concerns the legal standard for stays pending appeal, it will
`
`become moot when the court of appeals issues its mandate. Hence, if the Court grants
`
`this stay application, PeopleConnect respectfully requests that the Court ensure the case
`
`is heard expeditiously.
`
`In particular, PeopleConnect proposes that the Court construe this stay
`
`application as a petition for certiorari, grant the stay application, grant certiorari, and
`
`issue an expedited briefing on the schedule. The Court took that path in a previous case
`
`that addressed the legal standard for stays pending appeal. In Nken v. Holder, 556 U.S.
`
`418 (2009), the applicant filed a stay application, seeking review of a circuit split on the
`
`appropriate legal standard for stays pending appeal in immigration cases. Like this case,
`
`Nken (and any other case raising the same issue) would become moot once the court of
`
`appeals ruled. The Court granted the stay application, treated the stay application as a
`
`petition for certiorari, granted certiorari, and set an expedited briefing schedule. If the
`
`Court proceeds in that fashion, PeopleConnect would dismiss its separately-filed petition
`
`for certiorari. Alternatively, if the Court declines to treat this stay application as a
`
`petition for certiorari, the Court should grant PeopleConnect’s motion to expedite
`
`consideration of PeopleConnect’s separately-filed petition for certiorari.
`
`4
`
`

`

`STATEMENT OF THE CASE
`
`A. PeopleConnect’s Motion to Compel Arbitration.
`
`PeopleConnect owns and operates Classmates.com, which includes an online
`
`library of over 450,000 school yearbooks viewable by its 70 million members. Respondent
`
`filed a putative class action against PeopleConnect, alleging that by presenting excerpts
`
`from her school yearbook on Classmates.com that include her “name and photo,”
`
`PeopleConnect improperly uses “her identity to advertise” its services in violation of the
`
`Ohio Right of Publicity Statute. Ex. D, ¶¶6, 14, 20, 33–41.
`
`No names or photos are displayed on Classmates.com unless and until a user
`
`enters such information into a search bar. So to create respondent’s claim, her counsel
`
`registered for a free Classmates.com account, upgraded to a paid subscription, and
`
`performed searches for respondent on the website. Ex. F, ¶¶12–13; Ex. D, ¶¶6–8. At
`
`each step, the website prompted counsel with the following message: “By accessing and
`
`using the Websites and Services you are agreeing to the following Terms of Service.” See
`
`Ex. F, ¶7. The Terms of Service, which are hyperlinked to that message, contain a
`
`mandatory arbitration provision stating the parties agree to arbitrate “any and all
`
`disputes.” See Ex. E at 2–3. The Terms of Service grant all users a right to opt out of
`
`the contractual arbitration agreement within 30 days of registration. See Ex. G, §13(D).
`
`Respondent’s counsel did not opt out. Instead, counsel included in respondent’s
`
`Complaint and in opposition to PeopleConnect’s motion to dismiss screenshots available
`
`only to a user that accepted the Terms of Service. See Ex. F, ¶¶12–14.
`
`PeopleConnect moved to dismiss respondent’s claim in favor of arbitration.
`
`5
`
`

`

`PeopleConnect argued, among other things, that respondent’s lawyer acted as
`
`respondent’s agent when the lawyer registered for an account on Classmates.com,
`
`searched for respondent’s name, and took screenshots of the resulting website.
`
`The district court, however, declined to compel arbitration. Ex. C. The district
`
`court found “no evidence” respondent’s counsel had acted at respondent’s direction,
`
`created a Classmates account on her behalf, or had been given “any authority to bind her”
`
`to the Terms of Service. Id. at 4–5.
`
`PeopleConnect immediately noticed an appeal, as authorized by the Federal
`
`Arbitration Act. 9 U.S.C. § 16(a)(1). That appeal remains pending. Knapke v.
`
`PeopleConnect, Inc., No. 21-35690 (9th Cir.).
`
`PeopleConnect respectfully disagrees with the district court’s decision denying
`
`arbitration and believes it has a strong chance of prevailing on appeal. Respondent’s
`
`attorney agreed to PeopleConnect’s Terms of Service by accessing the Classmates.com
`
`website, then used that access to procure screenshots used in the Complaint and
`
`opposition to PeopleConnect’s motion to dismiss. Because respondent’s attorney acted
`
`as respondent’s agent when agreeing to PeopleConnect’s Terms of Service, respondent
`
`should have been bound to arbitrate. See Tamsco Props., LLC v. Langemeier, 597 F.
`
`App’x 428, 429 (9th Cir. 2015) (principal bound by agent’s agreement to arbitrate). While
`
`the district court held that respondent’s attorney lacked apparent authority to enter into
`
`an agreement to arbitrate, the court ignored that the attorney had implied actual
`
`authority to do so, and that, in any event, respondent ratified the attorney’s agreement.
`
`Further, by effectively holding that attorneys require express authorization to
`
`6
`
`

`

`bind their clients to arbitration agreements, even though implied authorization suffices
`
`for other contracts, the court violated the Federal Arbitration Act’s ban on state-law
`
`contract “defenses that apply only to arbitration or that derive their meaning from the
`
`fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563
`
`U.S. 333, 339 (2011); see Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426,
`
`1429 (2017) (preempting state rule requiring express authority for arbitration
`
`agreements). In sum, bedrock contract principles and the Federal Arbitration Act bar
`
`respondent from escaping arbitration merely by delegating the task of signing an
`
`arbitration agreement to her lawyer.
`
`B. PeopleConnect’s Motion to Stay Pending Appeal.
`
`After PeopleConnect filed its notice of appeal, PeopleConnect moved the district
`
`court for a stay of litigation pending appeal. On September 28, 2021, the district court
`
`denied the stay motion. Ex. B. The court recognized PeopleConnect had “advanced a
`
`colorable claim of possible irreparable harm premised on the theory that defending
`
`against class claims that may have to [be] arbitrated on an individual basis poses an
`
`irreparable harm.” Id. at 6. The court nevertheless found “a stay is unwarranted on this
`
`record.” Id. at 8.
`
`On October 4, 2021, PeopleConnect moved the Ninth Circuit to stay the district
`
`court action. PeopleConnect sought a stay under the Ninth Circuit’s legal standard in
`
`Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990).
`
` However,
`
`PeopleConnect’s stay motion expressly noted the circuit conflict on the legal standard for
`
`a stay. Mot. for Stay at 5, 7 n.2, Knapke v. PeopleConnect, Inc., No. 21-35690 (9th Cir.
`
`7
`
`

`

`Oct. 4, 2021), ECF No. 8-1. It urged the Court to revisit Britton and join the view of the
`
`majority of courts of appeals that stays of district court proceedings are mandatory
`
`pending appeals of denials of motions to compel arbitration. Id. at 21–22.
`
`On October 20, 2021, the Ninth Circuit denied PeopleConnect’s motion for stay
`
`pending appeal. Ex. A. The court also denied PeopleConnect’s request for an
`
`administrative stay to permit en banc reconsideration of Britton. Id.
`
`ARGUMENT
`
`This case presents the question whether PeopleConnect is entitled to a stay as a
`
`matter of right of the district court’s proceedings pending appeal of the denial of
`
`PeopleConnect’s motion to compel arbitration. PeopleConnect’s position on the merits is
`
`that it is entitled to a stay as a matter of right, and hence need not establish the
`
`requirements of the traditional discretionary test for a stay.
`
`Nevertheless, PeopleConnect recognizes that the Court may be reluctant to
`
`resolve the merits of this case in connection with the antecedent inquiry of whether
`
`PeopleConnect is entitled to a stay pending review. PeopleConnect will therefore
`
`assume, for purposes of this application, that the more stringent discretionary test for a
`
`stay applies. If PeopleConnect satisfies that standard, then it would, a fortiori, be
`
`entitled to a stay under the position it intends to advance in this Court that it is entitled
`
`to a stay as a matter of right.
`
`Under the traditional discretionary standard, a stay is warranted when there is
`
`“(1) a reasonable probability that this Court will grant certiorari, (2) a fair prospect that
`
`the Court will then reverse the decision below, and (3) a likelihood that irreparable harm
`
`8
`
`

`

`[will] result from the denial of a stay.” Maryland v. King, 133 S. Ct. 1, 2 (2012) (Roberts,
`
`C.J., in chambers).
`
`These criteria are met in this case. There is a reasonable probability that the
`
`Court will grant certiorari to resolve the entrenched and well-recognized conflict of
`
`authority over whether a district court is ousted of jurisdiction pending appeal of the
`
`denial of a motion to compel arbitration. There is a fair prospect that the Court will
`
`reverse the Ninth Circuit’s decision and adopt the majority approach. Finally,
`
`PeopleConnect would be irreparably harmed if a stay is denied: it would suffer the very
`
`discovery burdens that the sought-after stay is designed to prevent.
`
`I.
`
`THIS COURT IS LIKELY TO GRANT CERTIORARI TO REVIEW THE
`NINTH CIRCUIT’S DENIAL OF A STAY PENDING APPEAL.
`
`This case meets all of the Court’s criteria for certiorari. There is a square and
`
`longstanding circuit split on the question presented, the issue is important and arises
`
`regularly, and this case is a perfect vehicle.
`
`A. The Circuits Are Split on Whether District Court Proceedings Must Be Stayed
`Pending Appeal of a Denial of a Motion to Compel Arbitration.
`
`There is an entrenched circuit split over whether district courts are ousted of
`
`jurisdiction pending appeal of the denial of a motion to compel arbitration. In the Second,
`
`Fifth, and Ninth Circuits, when an appeal is filed, the district court maintains jurisdiction
`
`over the case, and a stay is granted only if a movant can satisfy the traditional test for a
`
`stay. By contrast, in the Third, Fourth, Seventh, Tenth, and Eleventh Circuits, the filing
`
`of a non-frivolous appeal ousts the district court of jurisdiction, and district court
`
`proceedings must automatically halt.
`
`9
`
`

`

`i.
`
`Three circuits hold that district courts maintain jurisdiction while an appeal
`of the denial of motion to compel arbitration is pending.
`
`In the decision below, the Ninth Circuit followed its binding precedent in Britton
`
`v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990). In Britton, the Ninth Circuit
`
`concluded that a district court was not ousted of jurisdiction pending the appeal of a denial
`
`of a motion to compel arbitration. The court acknowledged “the general rule that the
`
`filing of a notice of appeal divests the district court of jurisdiction and transfers
`
`jurisdiction to the appellate court.” Id. at 1411. But the court also noted that “where an
`
`appeal is taken from a judgment which does not finally determine the entire action, the
`
`appeal does not prevent the district court from proceeding with matters not involved in
`
`the appeal.” Id. (quotation marks omitted). The court observed: “Absent a stay, an
`
`appeal seeking review of collateral orders does not deprive the trial court of jurisdiction
`
`over other proceedings in the case, and an appeal of an interlocutory order does not
`
`ordinarily deprive the district court of jurisdiction except with regard to the matters that
`
`are the subject of the appeal.” Id. at 1412. The court deemed the “issue of arbitrability”
`
`to be collateral to the merits, and hence held that notwithstanding the appeal, “the
`
`district court was not divested of jurisdiction to proceed with the case on the merits.” Id.
`
`The court further observed that a contrary rule “would allow a defendant to stall a trial
`
`simply by bringing a frivolous motion to compel arbitration.” Id.
`
`The Ninth Circuit instead held that the traditional discretionary test for a stay
`
`applies. In the Ninth Circuit’s view, a court should “evaluate the merits of the movant’s
`
`claim, and if, for instance, the court finds that the motion presents a substantial question,
`
`10
`
`

`

`to stay the proceedings pending an appeal from its refusal to compel arbitration.” Id.
`
`“This is a proper subject for the exercise of discretion by the trial court.” Id.
`
`The Second Circuit took the same view as the Ninth Circuit in Motorola Credit
`
`Corp. v. Uzan, 388 F.3d 39 (2d Cir. 2004). In that case, the Second Circuit denied the
`
`defendant’s motion for a stay of district court proceedings pending appeal. The court
`
`recognized that “[o]ther circuits are divided on this question.” Id. at 54. In the Ninth
`
`Circuit, “either the district court or the court of appeals may—but is not required to—
`
`stay the proceedings upon determining that the appeal presents a substantial question.”
`
`Id. By contrast, in other circuits, “a district court may not proceed after the filing of a
`
`nonfrivolous appeal from an order denying arbitration.” Id. The Second Circuit
`
`“explicitly adopt[ed] the Ninth Circuit’s position that further district court proceedings
`
`in a case are not ‘involved in’ the appeal of an order refusing arbitration, and that a district
`
`court therefore has jurisdiction to proceed with a case absent a stay from this Court.” Id.
`
`Finally, the Fifth Circuit adopted the same position as the Second and Ninth
`
`Circuits in Weingarten Realty Investors v. Miller, 661 F.3d 904 (5th Cir. 2011). The Fifth
`
`Circuit recognized that “[w]hether an appeal from a denial of a motion to compel
`
`arbitration divests the district court of jurisdiction to proceed to the merits is the subject
`
`of a circuit split.” Id. at 907. “The Second and Ninth Circuits have held that a stay is not
`
`automatic.” Id. By contrast, “[t]he Seventh Circuit, later joined by the Third, Fourth,
`
`Tenth, and Eleventh, has held that a notice of appeal automatically stays proceedings in
`
`the district court.” Id. at 908.
`
`11
`
`

`

`The court explained that the debate turned on “whether the merits of an
`
`arbitration claim are an aspect of a denial of an order to compel arbitration.” Id. Under
`
`the Ninth Circuit’s approach, “because answering the question of arbitrability does not
`
`determine the merits of the case, the merits are not an aspect of the case that is involved
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`in the appeal on arbitrability.” Id. Under the Seventh Circuit’s approach, “because an
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`appeal on arbitrability concerns whether the case will be heard in the district court at all,
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`the merits in district court are an aspect of the case that is involved in the appeal.” Id.
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`The court adopted the Ninth Circuit’s approach, holding that “[a]n appeal of a denial of a
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`motion to compel arbitration does not involve the merits of the claims pending in the
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`district court.” Id. at 909. In the Fifth Circuit’s view, “[a] determination on the
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`arbitrability of a claim has an impact on what arbiter—judge or arbitrator—will decide
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`the merits, but that determination does not itself decide the merits.” Id.
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`ii.
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`Five circuits hold that district courts maintain jurisdiction while an appeal
`of the denial of motion to compel arbitration is pending.
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`Five circuits have reached the opposite conclusion from the Second, Fifth, and
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`Ninth Circuits. Those circuits have held that a non-frivolous appeal of a denial of a motion
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`to compel arbitration divests the district court of jurisdiction, and district court
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`proceedings must therefore halt.
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`In Bradford-Scott Data Corp. v. Physician Computer Network, LLC, 128 F.3d 504
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`(7th Cir. 1997) (Easterbrook, J.), the Seventh Circuit concluded that a district court is
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`automatically divested of jurisdiction over a case while a motion to compel arbitration is
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`pending. The court applied the principle that “‘a federal district court and a federal court
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`of appeals should not attempt to assert jurisdiction over a case simultaneously. The filing
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`of a notice of appeal is an event of jurisdictional significance—it confers jurisdiction on
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`the court of appeals and divests the district court of its control over those aspects of the
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`case involved in the appeal.” Id. at 505 (quoting Griggs v. Provident Consumer Discount
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`Co., 459 U.S. 56, 58 (1982)). The Seventh Circuit acknowledged that “[t]he qualification
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`‘involved in the appeal’ is essential—it is why the district court may award costs and
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`attorneys’ fees after the losing side has filed an appeal on the merits, why the court may
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`conduct proceedings looking toward permanent injunctive relief while an appeal about
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`the grant or denial of a preliminary injunction is pending.” Id. But the court explained
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`that “[w]hether the case should be litigated in the district court is not an issue collateral
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`to the question presented by an appeal under § 16(a)(1)(A), however; it is the mirror
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`image of the question presented on appeal.” Id. “Continuation of proceedings in the
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`district court largely defeats the point of the appeal and creates a risk of inconsistent
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`handling of the case by two tribunals.” Id.
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`The Seventh Circuit expressly rejected the Ninth Circuit’s reasoning in Britton.
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`As the Seventh Circuit noted, the Ninth Circuit gave two reasons for its conclusion,
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`“neither of which persuades.” Id. at 506. “The first is that arbitrability is distinct from
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`the merits of the litigation, which the ninth circuit took to imply that an appeal concerning
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`arbitrability does not affect proceedings to resolve the merits.” Id. According to the
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`Seventh Circuit, “[t]he premise may be correct, but the conclusion does not follow.” Id.
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`(citation omitted). The Seventh Circuit observed that “whether the litigation may go
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`forward in the district court is precisely what the court of appeals must decide.” Id. “The
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`ninth circuit’s second reason is that an automatic stay would give an obstinate or crafty
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`litigant too much ability to disrupt the district judge’s schedule by filing frivolous
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`appeals.” Id. In the Seventh Circuit’s view, “[t]hat is a serious concern, but one met by
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`the response that the appellee may ask the court of appeals to dismiss the appeal as
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`frivolous or to affirm summarily.” Id.
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`The Eleventh Circuit adopted the Seventh Circuit’s approach in Blinco v. Green
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`Tree Servicing, LLC, 366 F.3d 1249 (11th Cir. 2004). The Eleventh Circuit observed that
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`“[w]hether a party is entitled to a stay of all proceedings in the district court until
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`resolution of an appeal from a denial of arbitration is an issue of first impression for this
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`Court. The circuit courts that have considered the issue are split.” Id. at 1251. The court
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`was “persuaded by the reasoning of the Seventh Circuit.” Id. In the Eleventh Circuit’s
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`view, “[t]he only aspect of the case involved in an appeal from an order denying a motion
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`to compel arbitration is whether the case should be litigated at all in the district court.”
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`Id. “The issue of continued litigation in the district court” is not “collateral to” the appeal:
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`it is “the mirror image of the question presented on appeal.” Id. (quotation marks
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`omitted).
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`The Eleventh Circuit further noted that “the Federal Arbitration Act grants a
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`party the right to file an interlocutory appeal from the denial of a motion to compel
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`arbitration.”