Judge: Douglas W. Stern, Case: 21STCV24515, Date: 2022-10-27 Tentative Ruling

Case Number: 21STCV24515    Hearing Date: October 27, 2022    Dept: 68

Danny Roman v. Tesla Motors, Inc., Case No. 21STCV24515

Tentative Ruling:  Motion to Vacate Order Compelling Arbitration Under CCP § 1281.98 and to Lift Stay

On September 7, 2022, Plaintiff Danny Roman filed a Motion to Vacate Order Compelling Arbitration Under California Code of Civil Procedure Section 1281.98 and to Lift Stay.  The motion is based on the claimed failure of Defendant to pay its arbitration fees.  See Code of Civil Procedure § 1281.98.  No Opposition has been filed.

Plaintiff filed this action on July 7, 2021.  On August 11, 2021, Defendant Tesla, Inc. filed its Motion to Compel Binding Arbitration.  The Motion was granted by this Court on December 6, 2021.  The Court also stayed this action pending the arbitration.

Plaintiff contends that Tesla has materially breached the arbitration agreement pursuant to C.C.P. § 1281.98.  That statute provides in part:

(a)(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach. * * *

(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:

(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. ***

(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:

(1) The employee or consumer may bring a motion, or a separate action, to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney’s fees shall be without regard to any findings on the merits in the underlying action or arbitration.

(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.”  (Bold added.)

On February 22, 2022, plaintiff filed for arbitration with the American Arbitration Association.  He paid the $200 filing fee.  (Conn Decl. ¶ 3.)  Defendant Tesla was invoiced at the $300 initial fee by AAA.  (Conn Decl. ¶ 5.)  Tesla paid this amount.  (Conn Decl. ¶ 6.)

Tesla was then invoiced for $3,900 on August 5, 2022, as the arbitrator had been appointed.  (Conn Decl. ¶ 8; Exh. F.)  On August 23, 2022, AAA issued another letter to Tesla seeking payment.  (Conn Decl. ¶ 9, Exh. G.)  On September 7, 2022, AAA issued a confirmation that Tesla had not paid the $3,900 fee.  (Conn Decl. ¶ 10, Exh. H.)  Based on the failure of Tesla to pay the $3,900 fee within 30 days, Plaintiff elected to withdraw from the arbitration.  (Conn Decl. ¶ 11, Exh. I.)

Plaintiff is entitled to withdraw from the arbitration and has done so.  The Motion is therefore GRANTED.

The statute also directs the Court to award the consumer monetary relief.  “The employee or consumer may bring a motion, or a separate action, to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney’s fees shall be without regard to any findings on the merits in the underlying action or arbitration.”  Also “The court shall impose sanctions on the drafting party in accordance with Section 1281.99.”  (Bold added.)

Plaintiff’s counsel states that he expended 4.1 hours drafting and submitting the Amended Statement of Claims and .8 hours corresponding with the AAA.  He also spent 3.5 hours on this Motion.  (Conn Decl. ¶ 12.)  (He also mentions anticipated time on a Reply but since no Opposition was filed the Court shall ignore that prediction.)  Counsel charges $500 per hour.  The Court anticipates that half an hour shall be spent for the hearing.  Thus, a total of 8.9 hours is claimed at $500 per hour, for a total of $4,450.  In addition, the $200 arbitration filing fee was paid by Plaintiff as well as this Court’s filing fee of $60.

Plaintiff is entitled to an award of $4,710.

Conclusion

The Court GRANTS the motion.

1.       Plaintiff is entitled to withdraw from the arbitration as Tesla is in material breach.

2.       The order compelling arbitration is vacated.

3.       The stay is terminated.

4.       The case is restored to this Court’s active calendar for all further proceedings.

5.       Defendant Tesla is ordered to file a responsive pleading within 20 days.

6.       Plaintiff is awarded recovery of arbitration fees, interest, and related attorney’s fees and sanctions in the amount of $4,710