Judge: Deborah C. Servino, Case: 30-2022-01260648, Date: 2023-09-01 Tentative Ruling
Plaintiff Zoie Dura’s motion for monetary sanctions under Code of Civil Procedure sections 1281.97 and 1281.99 is granted in the amount of $4,460.
Evidentiary Objections
Defendant Gordian Medical, Inc.’s evidentiary objections (ROA 62) to Hane’s declaration are overruled. Defendant’s evidentiary objection (ROA 70) to Hane’s declaration and request for request for judicial notice is sustained.
Merits
Under Code of Civil Procedure section 1281.97, if an employer who drafts an arbitration agreement does not pay its share of required fees or costs to initiate arbitration within 30 days after they are due, the employer is in “material breach” of the agreement, in default of the arbitration, and waives it right to compel arbitration. (Code Civ. Proc., § 1281.97, subd. (a).) In the event of that material breach by the employer, the employee can elect to withdraw her claim from arbitration and proceed in court. (Code Civ. Proc., § 1281.97, subd. (b)(1).) Furthermore, if the employee proceeds in court, the employee may seek monetary sanctions for that material breach. (Code Civ. Proc., § 1281.97, subd. (d).) The court “shall impose a monetary sanction . . . by ordering the [employer] to pay the reasonable expenses, including attorney's fees and costs, incurred by the employee or consumer as a result of the material breach.” (Code Civ. Proc., § 1281.99, subd. (a).)
Defendant does not dispute that it drafted the arbitration agreement, required Plaintiff to sign it as part of her employment, and materially breached the agreement by failing to timely pay the JAMS filing fee to commence the arbitration process. The parties dispute the amount of the expenses sought.
Plaintiff submitted her counsel’s time sheet and seeks $104,500 for fees incurred from the outset of this matter to the closing of the arbitration by JAMS, plus the time devoted to this motion. Plaintiff’s counsel claims an hourly rate of $1,000 per hour and a total of 104.5 hours expended. (Hane Decl., at ¶¶ 12, 19 and Exh. 12 [ROA 50].) Plaintiff does not cite any authority to support recovery of all the time requested.
Code of Civil Procedure section 1281.99, subdivision (a) states “reasonable expenses, including attorney's fees and costs, incurred by the employee . . . as a result of the material breach.” (Code Civ. Proc., § 1281.99, subd. (a), emphasis added.) The statutory language connotes a causal connection between the expenses incurred and the material breach by the employer. For example, in Code of Civil Procedure section 2023.030, subdivision (a) authorizes imposition of a monetary sanction to pay the ”reasonable expenses, including attorney’s fees, incurred by anyone as a result of” the “misuse of the discovery process.” (Code Civ. Proc., § 2023.030, subd. (a), emphasis added.) Courts have interpreted section 2023.030, subdivision (a) as requiring a causal connection, i.e., a court cannot award expenses incurred prior to, or were not the result of, the misuse of the discovery process. (See Cornerstone Realty Advisors, LLC v. Summit Healthcare REIT, Inc. (2020) 56 Cal.App.5th 771, 790-791; Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154, 194, disapproved on other grounds in Presbyterian Camp & Conference Centers, Inc. v. Superior Court (2021) 12 Cal.5th 493.)
Here, JAMS sent a letter to the parties on March 31, 2022 and notified Defendant that it was responsible for paying the $1,750 filing fee and that, upon receipt, JAMS would formally commence the matter. Attached to a letter was an invoice to Defendant for the filing fee, dated March 30, 2022, which stated that payment was due upon receipt. (Hane Decl., at ¶ 5 and Exh. 5 [ROA 50].) On May 19, 2022, the JAMS case manager sent defense counsel an email to follow up regarding the filing fee. (Hane Decl., at ¶ 9, Exh. 8 [ROA 50].) On July 14, 2022, Plaintiff’s counsel sent the JAMS case manager an email to request the case be closed due to Defendant’s failure to pay the filing fee and Plaintiff’s decision to proceed in court. (Hane Decl., at ¶ 10, Exh. 9 [ROA 50].) On August 19, 2022, the JAMS case manager acknowledged the email and closed the matter that day. (Hane Decl., at ¶ 11, Exh. 10 [ROA 50].)
There is no assertion by Plaintiff as to when Defendant breached the arbitration agreement. Under Code of Civil Procedure section 1281.97, subdivision (a), Defendant had 30 days from March 30, 2022, the invoice date, to pay the filing fee. As noted, Defendant admitted that it did not timely pay on the due date (which was April 29, 2022). However, Defendant’s counsel asserts that, beginning on March 31, 2022, the parties began communicating to discuss attending early mediation. (Macias Decl., at ¶ 3 [ROA 64].) On April 13, 2022, Plaintiff’s counsel provided a list of proposed mediators and, on May 23, 2022, he requested to stay the arbitration to allow for a potential negotiated resolution. (Macias Decl., at ¶ 3 and Exhs. A and B [ROA 64].) On June 15, 2022, Plaintiff’s counsel confirmed in an email to JAMS that the parties had agreed on a stay on the arbitration. (Macias Decl., at ¶ 5 and Exh. D [ROA 64].) The parties attended mediation on July 13, 2022. On July 14, 2022, Plaintiff’s counsel informed JAMS that he wished to withdraw from arbitration. (Macias Decl., at ¶ 6 [ROA 64].) Plaintiff did not dispute Defendant’s recitation of what transpired.
Based on the chronology of events between the parties, Plaintiff is not entitled to attorney's fees incurred prior to April 29, 2022, because they are for expenses prior to Defendant's breach of the arbitration agreement. In reviewing the remaining billing entries, the court excludes the expenses related to mediation because the parties separately contemplated mediation prior to Defendant’s breach. Those expenses were also not incurred as a result of Defendant’s breach of the arbitration agreement.
The only remaining billing entries are for expenses related to this motion, which are expenses incurred as a result of Defendant’s breach of the arbitration agreement. For that, Plaintiff’s counsel claims a total of 25.75 hours. There is limited case law on the statutes. The motion itself is straightforward and uncomplicated. The court finds the time claimed is excessive and reduces the time for the motion to a total of 11 hours. The hourly rate of $1,000 is unreasonable and is reduced to $400.
Within 30 days of the notice of ruling, Defendant shall pay monetary sanctions award is $4,460 to California Employment Counsel, APC.
Plaintiff shall give notice of ruling.