Judge Alison Mackenzie, Case Number: 23STCP02986, Date: 2024-05-06 Tentative Ruling

In five related actions, Petitioners DON MUIR, ZACHARY PATRONE, RORY JACKSON, JORDAN HE, and MATTHEW PANGANIBAN (“Petitioners”) seek to compel XSET, INC. (“Respondent”) to arbitrate Petitioners’ claims against Respondent, pursuant to the arbitration agreement between the parties.

Petitioners each allege that they entered into a “Gamer Agreement” (“Agreement”) with Respondent, providing for Petitioners to competitively coach or play for the XSET team for Valorant—a video game released by Riot Games. Paragraph 19 of the Standard Terms & Conditions to the Agreement contains an arbitration clause. Respondent allegedly refused to pay Petitioners their share of revenue related to the Valorant game. Petitioners then filed demands for arbitration against Respondent before JAMS pursuant to the arbitration clause in the Agreement. Respondent failed to pay the arbitration fees and so ultimately JAMS closed the file.

In addition, before the Court is a pro hac vice application filed by New York attorney, Paul Niehaus, who seeks to appear as counsel pro hac vice. The application is unopposed. The Court addresses the motion and application in this tentative.

“[S]ection 1281.2 does require a party seeking to compel arbitration to plead and prove a prior demand for arbitration under the parties' arbitration agreement and a refusal to arbitrate under the agreement.” Mansouri v. Sup. Ct. (2010) 181 Cal.App.4th 633, 640, 642

Parties opposing arbitration have the burden to prove any fact necessary to a defense to arbitration enforcement. Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579. “‘The burden is on the party opposing arbitration to show the agreement cannot be interpreted to apply to the dispute.’” Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 772. “When … no conflicting extrinsic evidence is introduced to aid the interpretation of an agreement to arbitrate, the Court of Appeal reviews de novo a trial court's ruling on a petition to compel arbitration. California Correctional Peace Officers Ass'n v. State (2006) 142 Cal.App.4th 198, 204.

Respondent does not deny that Petitioners filed Demands for Arbitration with JAMS regarding their dispute with Respondent and that the parties’ dispute should go to arbitration with JAMS. Respondent contends it did not refuse to arbitrate with JAMS but the Court disagrees. Respondent failed to pay the arbitration filing fee as requested by JAMS, which resulted in JAMS closing the file and making arbitration unavailable. Tiffany Caterina Decl.. ¶¶ 6-7, Ex. F. Respondent, by refusing to follow JAMS’ directions for starting the arbitration, effectively refused to arbitrate.

Respondent’s other arguments to the motion center on the parties’ disagreement over arbitration fees, specifically arbitration filing fees. The portion of the Agreement regarding fees states: “XSET shall be responsible for all fees associated with the arbitrator’s fee, including associated travel expenses of the arbitrator, the rental of a room to hold the arbitration hearing and similar costs.” Tiffany Caterina Decl. ¶ 2, Exh. A (Agreement Standard Terms & Conditions), ¶ 19. Petitioners contend that the plain language of this provision means Respondent must pay the JAMS filing fee and Respondent contends that it does not have to pay that fee under the Agreement.

The Court agrees with Petitioners that the provision is clear and unambiguous and means that the parties intended for Respondent to pay all arbitrator-related expenses including JAMS filing fees and any other JAMS administrative fees. The provision plainly states that Respondent is responsible for “all” fees related to the arbitrator’s fees. It broadly encompasses those expenses that are “associated with the arbitrator’s fee.” Further, the specific listing of some types of expenses is not all-inclusive, but instead the provision is “including” those expenses as some examples. Additionally, the provision expansively includes “similar costs.” Because the arbitrator works in conjunction with the JAMS entity, the JAMS administrative expenses are part of “all fees” “associated with” the arbitrator fee and are “similar costs.”

The application to appear pro hac vice is granted, because it complies with California Rules of Court, rule 9.40, including the applicant’s declaration addressing the rule elements.

The motion to compel arbitration is granted. Each of the Petitioners and Respondent shall arbitrate the controversies between them, in accordance with their agreement to arbitrate. Respondent XSET, INC. is responsible for paying all of the JAMS administrative fees.