Judge Cherol J. Nellon, Case Number: 23STCV30486, Date: 2024-10-02 Tentative Ruling

Judge: Cherol J. Nellon, Case: 23STCV30486, Date: 2024-10-02 Tentative Ruling

Case Number: 23STCV30486 Hearing Date: October 2, 2024 Dept: 14

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Case Background

This is an action under the Private Attorneys’ General Act (PAGA).

On December 14, 2023, Plaintiff Jorge Rosales filed his Complaint against Defendant George Chevrolet.

On May 3, 2024, Plaintiff dismissed his individual PAGA causes of action.

On June 27, 2024, the Court denied Defendant’s motion to compel arbitration.

On August 6, 2024, Defendant filed this motion to stay proceedings pending appeal.

On August 28, 2024, the Court granted Plaintiff’s request for voluntary dismissal of his individual PAGA causes of action.

Instant Pleading

Defendant moves to stay proceedings pending appeal.

Decision

Defendant’s motion to stay proceedings is GRANTED.

Judicial Notice

Defendant requests judicial notice of Defendant’s petition to compel arbitration, the declaration Defendant submitted in support of the petition, a Report of the Senate Judiciary Committee for Senate Bill No. 365, and the Court’s July 25, 2024 ruling and order on the motion to compel arbitration. The requests are GRANTED.

Discussion

Defendant moves to stay proceedings pending arbitration. Defendant argues that the Federal Arbitration Act (FAA) preempts Code Civ. Proc., section 1294(a), which provides that “an aggrieved party may appeal from: (a) An order dismissing or denying a petition to compel arbitration. Notwithstanding Section 916, the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.”

Defendant argues that the Court must follow Code Civ. Proc., section 916, which provides “Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.”

The FAA provides that “an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C., section 2.) State law is preempted if it “interferes with fundamental attributes of arbitration” or has a “disproportionate impact on arbitration.” (Chamber of Commerce of the United States v. Bonta (9th Cir. 2023) 62 F.4th 473, 483.)

Here, the FAA applies to the arbitration agreement at issue because it states the agreement shall be governed by the FAA. The amended Code Civ. Proc., section 1294(a) does not conflict with any provision of the FAA because there are no provisions which state an underlying action must be stayed pending appeal. Because there is no conflict between Code Civ. Proc., section 1294(a) and the FAA, the section is not preempted. Moreover, even if the section did conflict with the FAA, it does not interfere with the fundamental attributes of arbitration or have a disproportionate impact on arbitration. Section 1294(a) does not prohibit a stay but specifies that an action is not automatically stayed by an appeal of a decision denying a petition to compel arbitration. Aside from the rule set forth in Code Civ. Proc., section 916, the courts have “the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489.) Here, a party appealing such a decision is free to move for a stay under a court’s discretionary authority to stay an action.

Defendant argues that section 1294(a) is preempted by Coinbase, Inc. v. Bielski (2023) 599 U.S. 736, where the U.S. Supreme Court held that a federal district court must stay its proceedings during an interlocutory appeal of an order denying a petition to compel arbitration. The court in Coinbase examined whether a district court was required to stay proceedings following the filing of an interlocutory appeal under 9 U.S.C., section 16(a). The court, following the judicially created Griggs principle articulated in Griggs v. Provident Consumer Discount Co. (1982) 459 U.S. 56, 59, held that an appeal divests a district court of its control over the aspects of a case involved in the appeal.

Here, the arbitration agreement at issue is governed by the FAA. Coinbase concerned an unrelated federal statute and did not examine the amended Code Civ. Proc., section 1294(a). Thus, the preemption analysis is limited to whether a state rule or statute conflicts with the FAA. There is no legal authority that the Griggs rule applies here or preempts section 1294(a).

Moreover, Coinbase does not conflict with the amended provision of section 1294(a). The court in Coinbase explained that if Congress intended to allow an interlocutory appeal without an automatic stay, it would have and did in other statutes enact non-stay provisions preventing an automatic stay. (Coinbase at p.744.) This means that if the statute allowing an interlocutory appeal contained a non-stay provision, an action would not have been stayed even if the Griggs rule applied. Here, section 1294(a) explicitly contains a non-stay provision, meaning the legislature intended to allow appeals of orders denying petitions for arbitration without automatically staying the action. Thus, Coinbase does not conflict with the amended section 1294(a) and would not preempt the section even if the Griggs rule applied here.

The Court finds that section 1294(a) is not preempted by the FAA or Coinbase. Therefore, Defendant’s appeal here did not trigger an automatic stay.

Defendant requests a discretionary stay on the grounds that it would be in the interests of justice to stay this action pending the outcome of appeal. Defendant argues that if it prevails on appeal, judicial resources would be wasted because the matter would go to arbitration. The Court agrees that staying this matter would promote judicial efficiency because the appeal concerns whether this matter should be litigated in court or in arbitration.

Because a stay will conserve judicial resources if Defendant prevails on appeal, the Court will stay this matter in its discretion.

Conclusion

Defendant’s motion to stay proceedings is GRANTED.