Summary
The United States District Court for the Southern District of California denied Plaintiff Philip McGill’s motion to certify the court’s July 19, 2024 order for interlocutory appeal. The court held that there was no substantial ground for difference of opinion regarding its determination that the Federal Arbitration Act applies to the residential lease and preempts California Civil Code section 1953 to the extent it prohibits arbitration.
Topics
Practice areas
Questions Presented
- Whether the July 19, 2024 order compelling arbitration should be certified for interlocutory appeal under 28 U.S.C. § 1292(b).
- Whether the court's determination that the FAA applies to residential real-estate leases and preempts California Civil Code section 1953 presents a substantial ground for difference of opinion.
Holdings
- The order did not qualify for interlocutory certification because Plaintiff failed to show a substantial ground for difference of opinion concerning the FAA's application to the residential lease and its preemption of California's prohibition on arbitration clauses in residential leases.
- The court reaffirmed its prior determination that the FAA applies to the arbitration agreement in the residential lease because the rental of real estate affects or involves interstate commerce.
- To the extent California Civil Code section 1953 prohibits arbitration of claims covered by an enforceable arbitration agreement, it is preempted by the FAA.
Key quotations
“Under § 1292(b), a district court may only certify an order for interlocutory appeal if the moving party demonstrates that the order (1) “involves a controlling question of law,” (2) “as to which there is substantial ground for difference of opinion, and” (3) “that an immediate appeal from the order may materially advance the ultimate termination of the litigation.”” (at 6)
“The Court finds Russell is well-settled regarding its holding that the rental of real estate affects interstate commerce.” (at 8)
“The Court’s finding that the FAA preempts California Civil Code section 1953 prohibiting arbitration in residential leases was founded on three distinct but related controlling legal precedents, and Plaintiff does not show that courts have differed as to those three well-established findings.” (at 9)
Factual background
Plaintiffs alleged that Greystar unlawfully withheld portions of residential tenants' security deposits without providing required statutory disclosures. Plaintiff's apartment lease contained an arbitration agreement, and the court previously found that Plaintiff assented to arbitration and that the Federal Arbitration Act applied because residential real-estate rental affects interstate commerce. The court also concluded that the FAA preempted California Civil Code section 1953 to the extent that provision prohibits arbitration.
Procedural history
Plaintiff and other putative class representatives sued Greystar and numerous property-related entities over alleged unlawful withholding of security deposits. The court compelled arbitration of Plaintiff's individual claims but declined to stay the action. Plaintiff then sought certification of the arbitration order for interlocutory appeal. While the motion was pending, the court partially granted and partially denied Defendants' motion to strike and dismiss, and Plaintiffs filed a Second Amended Complaint. The court denied certification because Plaintiff failed to establish a substantial ground for difference of opinion under § 1292(b).