Judge: Bruce G. Iwasaki, Case: 24STCV24212, Date: 2024-10-21 Tentative Ruling

Case Number: 24STCV24212    Hearing Date: October 21, 2024    Dept: 58

Judge Bruce Iwasaki

Department 58 

Shape 

Hearing Date:             October 21, 2024         

Case Name:                    Minjarez v. Lloyds Manufacturing Services

Case No.:                    24STCV24212

Motion:                            Motion to Withdraw Claims from Arbitration 

Moving Party:               Plaintiff Arturo Minjarez

Responding Party:       Lloyds Manufacturing Services

 

 

Tentative Ruling:        Plaintiff’s Motion for Order to Withdraw Claims from Arbitration is granted. Defendant to pay sanctions of $6,620.20.

 

 

Background

 

Plaintiff Arturo Minjarez (“Plaintiff”) filed the operative Complaint on September 18, 2024 against Defendants Lloyds Manufacturing Services (“Defendant”) and Does 1-25, alleging four causes of action: (1) violation of Labor Code section 1102.5; (2) violation of Labor Code section 232.5; (3) unfair business practices in violation of Business and Professions Code section 17200 et seq.; and (4) wrongful termination. Plaintiff attended a convention as an employee of Defendant, and witnessed his manager and co-workers consuming controlled substances in violation of the law. Plaintiff informed Human Resources, and then was informed on February 24, 2023 that he was being laid off due to restructuring, which he alleges was pretextual, and he was actually being terminated in retaliation for his complaints about illegal activity.

 

On July 12, 2023, Plaintiff filed a demand with JAMS, pursuant to parties’ arbitration agreement. On August 25, 2023, JAMS notified the parties that Hon. Melinda Johnson had been selected as their Arbitrator. On April 29, 2024, JAMS invoiced Defendant $61,000 for anticipated arbitration compensation and expenses. Defendant’s deadline to submit payment was 30 days later, on May 29, 2024.

 

On May 31, 2024, JAMS notified Plaintiff that Defendant failed to submit payment as of that date. On July 11, 2024, Plaintiff notified JAMS he elected to withdraw his case from arbitration pursuant to Code of Civil Procedure section 1281.98 and would be proceeding to move his case to state court. The following day, JAMS confirmed that it would be closing the parties’ arbitration in accordance with Plaintiff’s decision pursuant to Code of Civil Procedure section 1281.98 to terminate arbitration.

 

On September 18, 2024, Plaintiff filed the operative Complaint and filed the instant Motion for Order to Withdraw Claims from Arbitration and for Sanctions the following day. On October 8, Defendant filed an Opposition. No Reply has been filed.

 

Discussion

“In an employment or consumer arbitration that requires . . . the drafting party to pay certain fees and costs before the arbitration can proceed, if 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.” (Code Civ. Proc., § 1281.97(a)(1).) “If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may . . . [w]ithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.” (Id., subd. (b).) The same applies to fees assessed during the pendency of an arbitration. (Id., § 1281.98.)

The statute is applied strictly, and the Court may not consider any other factors or mitigating circumstances. (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 775-76; DeLeon v. Juanita Foods (2022) 85 Cal.App.5th 740, 749.) A drafting party is in breach of the arbitration agreement simply if it does not pay the requisite fees within thirty days.

Plaintiff contends that Defendant is in material breach of the parties’ arbitration agreement because of its failure to pay for arbitration costs in a timely manner. (Motion to Withdraw, p. 7.) Plaintiff also seeks sanctions in the amount of $26,495.20. (Motion to Withdraw, p. 12.)

Defendant does not oppose the request to withdraw claims from arbitration. (Opposition to Motion, p. 3.) Defendant argues that it paid fees on May 29, 2024, so there was no failure under Code of Civil Procedure section 1281.98 and no corresponding obligation to pay attorney’s fees. (Declaration of Bonnie Hicks ¶ 3, Exhibit A.) Defendant contends that any delay in JAMS receiving the payment does not constitute a material breach. (Opposition to Motion, p. 4.) Furthermore, Defendant argues that Plaintiff’s claimed attorney’s fees are unreasonable. Defendant also argues that attorney’s fees should only be awarded for Plaintiff’s counsels time required to terminate the arbitration, or 1.75 hours at $500 per hour, which totals $875, plus the JAMS filing fee of $413, for a total of $1,288. (Opposition to Motion, p. 6.)

The court finds that Defendant did not pay the arbitrator’s fees by the statutory deadline, materially breaching the arbitration agreement. Therefore, Plaintiff has the unilateral right to withdraw the matter from arbitration. (Code Civ. Proc. § 1281.98, subd. (b)(1).) Though Defendant has shown evidence that it issued a payment in the full amount of $61,000 to JAMS on the due date of May 29, 2024, it was not received on that date. (Declaration of Bonnie Hicks ¶ 3, Exhibit A.) Code of Civil Procedure section 1281.98, subdivision (a)(2) sets forth that “[o]nce the invoice has been paid, the arbitration provider shall provide to all parties a document that reflects the date on which the invoice was paid.” (Code Civ. Proc. § 1281.98, subd. (a)(2).) This language indicates that the date of payment is the date payment is received. On May 31, 2024, JAMS notified Plaintiff that Defendant failed to submit payment as of that date. (Declaration of Parham Barkhordar, ¶ 12.) JAMS did not receive Defendant’s payment on May 29, 2024, thus, Defendant’s payment was untimely and Defendant materially breached the arbitration agreement.

            Because the court has found a material breach of the arbitration agreement, the court must impose sanctions pursuant to Code of Civil Procedure section § 1281.99 by ordering the drafting party to pay reasonable expenses, including attorney’s fees “incurred by the employee or consumer as a result of the material breach.” (Code Civ. Proc. § 1281.99, subd. (a).)

Plaintiff’s counsel testified by declaration that the costs incurred as a result of Defendant’s breach of the arbitration agreement total $1,870.20. (Declaration of Parham Barkhordar, ¶ 12, Exhibit M.) This includes the $413.00 JAMS filing fee and the $1,457.20 Jonnell Agnew fee for deposing Yvette Capra. (Id.) Plaintiff’s counsel notes that this amount does not include costs incurred in connection with filing the instant motion. (Id.)

The court finds that 9.5 hours of Plaintiff’s counsel’s work relate to work resulting from Defendant’s breach. (Declaration of Parham Barkhordar, ¶ 12, Exhibit L.) These are itemized as follows:

0.25 hours – Email correspondence to JAMS re Defendant’s failure to pay arbitration fees

0.75 hours – Updating/Discussion with Plaintiff over a phone call concerning what “remedy” to choose from options available under CCP §1281.98 (deciding on withdrawing from arbitration)

0.5 hours – Email to JAMS and Arbitrator Melinda Johnson notifying JAMS Claimant was electing to withdraw from arbitration and proceeding with his case in state court pursuant to CCP §1281.98

0.5 hours – Preparing/Transmitting Claimant’s Notice of Election of Withdrawal

7.0 hours – Preparing/Drafting Plaintiff’s Motion to Withdraw Claims from Arbitration and Ordering Fees/Sanctions

0.5 hours – Appearance at Hearing

The time sheet entry for the actual preparation of the motion sets forth one block bill entry over multiple days. This presentation fails to provide the Court with a sufficient basis to evaluate it. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1010 [trial courts may penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not].) Moreover, the Court find that upon review of the motion, the reasonable time for its preparation is seven hours.  As such, the court awards $4,750 in attorney’s fees (9.5 hours at $500 per hour). With respect to appearance at the hearing, no reply was filed, so the Court deducts one hour.

In total, the court awards sanctions of $6,620.20, which includes $4,750.00 in attorney’s fees, $413 for the JAMS filing fee, and $1,457.20 for Plaintiff’s out of pocket deposition fee.

Conclusion

Plaintiff’s Motion for Order to Withdraw Claims from Arbitration is GRANTED. Defendant is order to pay as sanctions $6,620.20 to Plaintiff’s counsel on or before November 15, 2024.