Judge: Christopher K. Lui, Case: 25STCV03872, Date: 2025-04-28 Tentative Ruling

Case Number: 25STCV03872    Hearing Date: April 28, 2025    Dept: 76

            Plaintiffs allege that they were terminated after writing audit reports finding Defendant start-up company’s suppliers’ practices were unsatisfactory.

            Defendant Cellares Corporation moves to stay proceedings and to consolidate the below motions. 

            Plaintiffs move for a finding that Defendant is in default of the arbitration agreement pursuant to Civ. Proc. Code, § 1281.98 and for sanctions. 

            Defendant moves to compel arbitration.

TENTATIVE RULING

On April 11, 2025, the Court granted Defendant’s ex parte application to shorten time to hearing Defendant’s motion to stay proceedings or, in the alternative, to consolidate motion hearings. The Court did not expressly advance the hearing on the motion to stay proceedings to this date—expressly setting Plaintiff’s motion to find Defendant in default of the arbitration agreement and for sanctions, and Defendant’s motion to compel arbitration for this date—the granting of the ex parte application implicitly also set the motion to stay for this date as well.

Pursuant to Defendant’s request, the Court orders the action STAYED pending the California Supreme Court’s decision in Hohenshelt v. Superior Court (2024) 99 Cal. App.5th 1319 regarding whether the Federal Arbitration Act preempts Civ. Proc. Code, § 1281.98. It serves the interest of judicial economy to await this decision, and the parties will not suffer prejudice from further delay, as the parties have already engaged in substantial discovery. Either those discovery efforts will be used in arbitration or may be utilized in litigation. The Supreme Court’s decision in Hohenshelt will determine in which forum the parties will proceed. A stay will avoid a waste of judicial resources if this action proceeds in litigation and the Supreme Court decides that § 1281.98 is in fact preempted by the Federal Arbitration Act. 

The Court sets a status conference for August 27, 2025 at 8:30 a.m. Status conference briefs are due August 20, 2025.