Judge: Armen Tamzarian, Case: 22STCV29580, Date: 2023-04-18 Tentative Ruling

Case Number: 22STCV29580    Hearing Date: April 18, 2023    Dept: 52

Plaintiff Antonietta Violante’s Motion to Vacate Order Compelling Arbitration

Plaintiff Antonietta Violante moves to vacate the court’s order compelling arbitration of this action under Code of Civil Procedure section 1281.97.

“[I]f the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.”  (CCP § 1281.97(a)(1).)  If the drafting party does not timely pay, the employee may “[w]ithdraw the claim from arbitration and proceed in” court.  (CCP § 1281.97(a)(2).) 

“[T]he Legislature intended courts to apply the statute’s payment deadline strictly.”  (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 771 (Espinoza).)  “[T]he triggering event is nothing more than nonpayment of fees within the 30-day period—the statute specifies no other required findings, such as whether the nonpayment was deliberate or inadvertent, or whether the delay prejudiced the nondrafting party.”  (Id. at p. 776.)  “[T]he legislative history indicates the Legislature considered and rejected the argument that section 1281.97 would unfairly penalize drafting parties for minor errors.”  (Id. at p. 777.)

Defendants Shippers Transport Express, Inc. and Kevin Baddeley did not pay arbitration fees within 30 days of the due date.  They argue, however, that plaintiff never initiated a valid arbitration, so the clock never started running.  Code of Civil Procedure section 1281.97, subdivision (a)(2) provides, “After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration.”

Defendants contend plaintiff never met the filing requirements and violated the parties’ arbitration agreement because she submitted a demand to JAMS without the parties first selecting an arbitrator.  The parties’ arbitration agreement provides, “[T]he arbitrator shall be a retired state or federal judge mutually agreed to by the parties or, if the parties are unable to reach agreement within thirty days of the demand for arbitration, a retired judge chosen by lot from a list of retired judges from the state’s highest trial court in the County in which the Employee is employed.”  (McMullen Decl., Ex. A, p. 1.)

Plaintiff met the filing requirements necessary to initiate arbitration.  That is why JAMS sent defendants an invoice.  (Lim Decl., Ex. B.)  Nothing in the parties’ arbitration agreement requires the parties to select an arbitrator before plaintiff makes an arbitration demand.  It would be a non sequitur to require selecting an arbitrator before anybody demanded arbitration in the first place.  The agreement even provides for an alternative method of selecting an arbitrator “if the parties are unable to reach agreement within thirty days of the demand for arbitration.”  The agreement itself therefore contemplates that the demand would precede the selection of an arbitrator.   

Defendants materially breached the arbitration agreement and waived their right to compel arbitration.  Courts strictly apply Code of Civil Procedure section 1281.97.  Its language is clear.  It permits no exceptions for “clerical error” (Espinoza, supra, 83 Cal.App.5th at p. 775) or other “minor errors” by the drafting party (id. at p. 777).  Defendants cite no authority finding an exception due to a purportedly “invalid invoice” from an arbitration provider.  Plaintiff met the filing requirements to initiate arbitration, and the arbitration provider sent an invoice to defendants.  JAMS’s invoice was facially valid.  Defendants had to pay it within 30 days.  Defendants could have paid and simultaneously challenged plaintiff’s demand or JAMS’s invoice.  The possibility that the parties might not agree to a retired judge affiliated with JAMS was a concern to be dealt with later—as the arbitration agreement expressly provides. 

Disposition

Plaintiff Antonietta Violante’s motion to vacate order compelling arbitration is granted.  The court hereby vacates its order compelling plaintiff to arbitrate this action.  Defendants Shippers Transport Express, Inc. and Kevin Baddeley shall respond to plaintiff’s complaint within 30 days.