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Blair v. Rent-A-Center, Inc.

United States Court of Appeals for the Ninth Circuit

February 12, 2019, Argued and Submitted, San Francisco, California; June 28, 2019, Filed

No. 17-17221

Opinion

 [*822]  W. FLETCHER, Circuit Judge:

In McGill v. Citibank, N.A., 2 Cal. 5th 945, 216 Cal. Rptr. 3d 627, 393 P.3d 85 (Cal. 2017), the California Supreme Court decided that a contractual agreement purporting to waive a party's right to seek public injunctive relief in any forum is unenforceable under California law. We are asked to decide in this case whether the Federal Arbitration Act ("FAA") preempts California's McGill rule.2 We hold it does not.

Plaintiffs brought a putative class action alleging that defendants Rent-A-Center, Inc. and Rent-A-Center West, Inc. (collectively, "Rent-A-Center") charged excessive prices for its rent-to-own plans for household items. We affirm the district court's partial denial of [**4]  Rent-A-Center's motion to compel arbitration. We also affirm the district court's denial of Rent-A-Center's motion for a mandatory stay of plaintiffs' non-arbitrable claims. Finally, we dismiss for lack of jurisdiction Rent-A-Center's appeal of the district court's denial of a discretionary stay and its decision to defer ruling on a motion to strike class action claims.

I. Factual and Procedural Background

Rent-A-Center operates stores that rent household items to consumers for set installment payments. If all payments are made on time, the consumer takes ownership of the item. Rent-A-Center also sets a cash price at which the consumer can purchase the item before the rent-to-own period has ended.

Paula Blair entered into rent-to-own agreements with Rent-A-Center for an air conditioner in 2015 and for a used Xbox in 2016. Blair, together with two other named plaintiffs, filed a class action complaint on March 13, 2017, on behalf of all individuals who, on or after March 13, 2013, entered into rent-to-own transactions with Rent-A-Center in California. The complaint alleged that Rent-A-Center structured its rent-to-own pricing in violation of state law.

In 1994, the California Legislature [**5]  enacted the Karnette Rental-Purchase Act, Cal. Civ. Code §§ 1812.620 et seq. ("Karnette Act"), to "prohibit unfair or unconscionable conduct toward consumers" who enter into rent-to-own agreements. Id.  [*823]  § 1812.621. The Karnette Act sets statutory maximums for both the "total of payments" amount for installment payments and the "cash price" for rent-to-own items. Id. § 1812.644. These maximums are set in proportion to the "documented actual cost" of the items to the lessor/seller. Id. § 1812.622(k).

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928 F.3d 819 *; 2019 U.S. App. LEXIS 19476 **

PAULA L. BLAIR; ANDREA ROBINSON; HARRIS A. FALECHIA, Plaintiffs-Appellees, v. RENT-A-CENTER, INC., a Delaware corporation; RENT-A-CENTER WEST, INC., a Delaware corporation, Defendants-Appellants.

Subsequent History: As Corrected July 1, 2019.

Motion granted by Blair v. Rent-A-Ctr., Inc., 2019 U.S. App. LEXIS 23740 (9th Cir. Cal., Aug. 8, 2019)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of California. D.C. No. 3:17-cv-02335-WHA. William Alsup, District Judge, Presiding.

Blair v. Rent-A-Center, Inc., 2017 U.S. Dist. LEXIS 163979 (N.D. Cal., Oct. 3, 2017)

CORE TERMS

arbitration, injunction, injunctive relief, preempted, generally applicable, severance, arbitration agreement, consumer, parties, district court, waive, class action, invalidating, rent-to-own, bilateral, interfere, motion to compel arbitration, claim for relief, contract defense, discretionary, proceedings, preemption, rights, motion to strike, cause of action, saving clause, high stakes, state law, Blair's Karnette Act, non-arbitration

Antitrust & Trade Law, Consumer Protection, Deceptive & Unfair Trade Practices, State Regulation, Civil Procedure, Remedies, Injunctions, Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Judicial Review, Arbitration, Federal Arbitration Act, Orders to Compel Arbitration, Appeals, Standards of Review, De Novo Review, Federal & State Interrelationships, Federal Common Law, Preemption, Arbitration Agreements, Waiver, Federal Arbitration Act, Pleading & Practice, Pleadings, Complaints, Stay Pending Arbitration