United States District Court, D. Arizona
IN RE Sprouts Farmers Market, Inc. Employee Data Security Breach Litigation This Relates to All Actions
Douglas L. Rayes United States District Judge
the Court is Defendant Sprouts Farmers Market's motion to
stay this action until the Supreme Court decides a pending
case involving issues pertinent to the present action. (Doc.
42.) The motion is fully briefed and the Court has heard oral
argument. For reasons stated below, the motion is granted.
cases brought in this multi-district litigation arise out of
a data security breach at Sprouts from an email
"phishing" scam that resulted in the disclosure of
personal information, including W-2 tax forms and social
security numbers, of thousands of Sprouts employees. The
master class and collective action complaint asserts a host
of claims sounding in tort and breach of contract, as well as
statutory claims under both state and federal law. (Doc. 36.)
Defendant contends that the claims are subject to individual
arbitration agreements that contain class action waivers.
Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th
Cir. 2016), this Circuit found certain class action waivers
to be unenforceable under the National Labor Relations Act.
After this action was filed, the Supreme Court granted a
petition for certiorari in Morris. See Ernst & Young
v. Morris, 2017 WL 125665 (Jan. 13, 2017). The parties
agree that a primary issue in this case is whether the class
action waivers are enforceable under Morris and that
the Supreme Court's decision would greatly influence how
this case should proceed, either by way of litigation or
through arbitration. The parties disagree, however, whether a
stay is warranted pending the decision in Morris.
district court has discretionary power to stay proceedings in
its own court." Lockyer v. Mirant Corp., 398
F.3d 1098, 1109 (9th Cir. 2005) (citing Landis v. N. Am.
Co., 299 U.S. 248, 255 (1936)). The Court must weigh
competing interests affected by a grant or denial of a stay,
including (1) the possible damage caused by a stay, (2) the
hardship to the parties if the suit is allowed to go forward,
and (3) the orderly course of justice measured in terms of
the simplifying or complicating of issues from a stay.
Id. at 1110 (citing CMAX, Inc. v. Hall, 300
F.2d 265, 268 (9th Cir. 1962)). The Court may also consider
whether it is "efficient for its own docket and the
fairest course for the parties to enter a stay of an action
before it, pending resolution of independent proceedings
which bear upon the case." Leyva v. Certified
Grocers of Cal. Ltd., 593 F.2d 857, 863 (9th Cir. 1979).
Possible Damage from a Stay
contend that the delay caused by a stay will deprive them of
the relief they seek and would result in continuing harm
including the need to file taxes via mail rather than
electronically, a delay in receiving tax refunds and the
ability to spend the money on personal necessities, and the
loss of an identity theft protection service provided by
Defendant which expired in April 2017. In support of this
alleged harm, Plaintiffs have provided a declaration from
representative party Sandra Jean Esposito.
Circuit has made clear that monetary recovery cannot serve as
the foundation to deny a stay. Lockyer, 398 F.3d at
1110. Although Plaintiffs seek more than just an award of
damages and may suffer some continuing harm as a result of a
stay, Plaintiffs have not made a sufficient showing that they
"will suffer irreparable damage and a miscarriage of
justice" if the case were to be stayed. CMAX,
300 F.2d at 268. Despite the alleged ongoing harm, Plaintiffs
have not moved for preliminary injunctive relief. This is
significant given that Plaintiffs filed this action more than
a year ago and affirmatively sought injunctive relief in the
complaint, but did not seek a temporary restraining order or
a preliminary injunction to prevent the alleged harm. See
Whitworth v. SolarCity Corp., No. 16-cv-01540-JSC, 2017
WL 2081155, at *3 (N.D. Cal. May 15, 2017) (plaintiffs'
"argument as to delay in any monetary or injunctive
relief is unpersuasive").
Court finds that this factor does not weigh strongly against
a stay given that the decision in Morris will be
made "within a reasonable time in relation to the
urgency of the claims presented to the [C]ourt."
Leyva, 593 F.2d at 864. Moreover, to the extent the
arbitration agreements are determined to be unenforceable
after the stay is lifted, the Court intends to set a vigorous
schedule for resolution of this case and hold the parties to
that schedule. See In re First Solar Derivative
Litig., No. CV-12-00769-PHX-DGC, 2012 WL 6570914, at *2
(D. Ariz. Dec. 12, 2012) (granting stay where it would not
delay the litigation for years and would save overall
litigation costs and result in the clarification of issues).
Possible Hardship Absent a Stay
Court next considers the hardship to Defendant absent a stay.
As noted above, there is no dispute that the Supreme
Court's decision in Morris is central to the
arbitration issues present in this case. If the Supreme Court
were to overturn this Circuit's decision in
Morris, the arbitration agreements may be found
enforceable and Plaintiffs would be precluded from moving
forward with this class action litigation. Without a stay,
however, Defendant would be required to defend a large class
action that might be rendered moot and unnecessary by the
in another district have addressed this same issue, reaching
different conclusions. A few courts found an outright stay to
be unwarranted given that a decision in Morris is
months away and discovery would aid both the litigation and
any future arbitration. See Whitworth, 2017 WL
2081155, at *4; Daughtery v. SolarCity Corp., No.
16-5155-WHA, 2017 WL 386253, at *4 (N.D. Cal. Jan. 26, 2017);
Rivera, No. 16-CV-05966-LHK, 2017 WL 1862509, at *5
(N.D. Cal. May 9, 2017). Other courts, however, concluded
that the possible hardship to the defendant in litigating a
suit that may be subject to arbitration outweighs any delay
caused by a stay pending a decision in Morris.
See McElrath v. Uber Techs., Inc., No.
16-cv-07241-JSC, 2017 WL 1862509, at *6 (N.D. Cal. ...