Judge: Holly J. Fujie, Case: 21STCV31959, Date: 2023-04-25 Tentative Ruling

Case Number: 21STCV31959    Hearing Date: April 25, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Plaintiff

RESPONDING PARTY: Defendant Parkway Motorcars Valencia Inc. (“Defendant”)

            The Court has considered the moving, opposition and reply papers.

BACKGROUND

            On January 5, 2023, the Court partially granted Defendant’s motion to compel arbitration (the “Arbitration Motion”) and ordered Plaintiff’s individual PAGA claims be sent to arbitration pursuant to a binding arbitration agreement (the “Agreement”).  The Court stayed the representative PAGA claims pending the California Supreme Court’s decision in Adolph v. Uber Technologies, Case No. S27467.

On April 3, 2023, Plaintiff filed a motion to lift the stay and impose sanctions (the “Motion”) on the grounds that Defendant breached the Agreement by failing to timely pay arbitration fees or costs. 

DISCUSSION

Under California Code of Civil Procedure (“CCP”) section 1281.97, subdivision (a), 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, 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.  (CCP § 1281.97, subd. (a).)  If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employer or consumer may do either of the following: (1) withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction; or (2) compel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.  (CCP § 1281.97, subd. (b)(1)-(b)(2).)  If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with CCP section 1281.99.  (CCP § 1281.97, subd. (d).) 

Under CCP section 1281.99, the court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of CCP section 1281.97 by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.  (CCP § 1281.99, subd. (a).)  Other types of sanctions are available in addition to monetary sanctions under certain circumstances.  (See CCP §¿1281.99, subd. (b).) 

CCP section 1281.97 establishes a simple bright-line rule that a drafting party's failure to pay outstanding arbitration fees within 30 days after the due date results in its material breach of the arbitration agreement.  (De Leon v. Juanita's Foods (2022) 85 Cal.App.5th 740, 753.)  Under the plain language of the statute, then, the event entitling the nondrafting party to remedies is nothing more than nonpayment of fees within the 30-day period—the statute specifies no other required findings, such as whether the nonpayment was deliberate or inadvertent, or whether the delay prejudiced the nondrafting party.  (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 776.)

            Plaintiff seeks to proceed on his claims in court under CCP section 1281.97, subdivision (b)(1) and receive sanctions under CCP section 1281.99.  In support of the Motion, Plaintiff provides evidence that Defendant did not make timely payments of outstanding arbitration fees owed to the American Arbitration Association (the “AAA”), which resulted in the AAA closing the file.  (See Declaration of Kelsey M. Szamet (“Szamet Decl.”) ¶¶ 9-14, Exhibits D-E.)  Although Defendant contends that its failure to timely submit the fee payment was the result of a misunderstanding, it does not dispute the strict construction of CCP section 1281.97.[1]  The Court therefore finds that Defendant materially breached the Agreement, thereby waiving its right to arbitration and entitling Plaintiff to sanctions under CCP section 1281.99.

Reasonableness of Hourly Rate

A court awards attorney’s fees based on the “lodestar” method, which is “the number of hours reasonably expended multiplied by the reasonable hourly rate.”  (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)  The trial court has broad authority to determine the amount of a reasonable fee.  (Id.)  The loadstar figure may be adjusted, based on a consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.  (Id.)  Generally, the reasonable hourly rate used for the lodestar calculation is that prevailing in the community for similar work.  (Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 616.)  Nevertheless, where an attorney has been awarded attorney’s fees for comparable work at comparable hourly rates in other actions, the hourly rate will be deemed reasonable.  (Goglin v. BMW of North America, LLC (2016) 4 Cal.App.5th 462, 473-74.)  Where a defendant does not produce evidence contradicting the reasonableness of plaintiff’s counsel’s hourly rates, the Court will deem an attorney’s hourly rate reasonable.  (Id. at 473.)

In determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorney’s efforts, his learning, his age and his experience in the particular type of work demanded.  (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 659.)  An award of attorney fees may be based on counsel’s declarations, without production of detailed time records.  (Raining Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363, 1375.)  The verified time statements of attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous.  (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.) 

Plaintiff seeks $22,406 in attorney’s fees.  (Szamet Decl. ¶ 17.)  This amount represents a total of 42.9 hours of work performed in connection to the Arbitration Motion and the ensuing AAA proceeding by timekeepers whose hourly rates are $415 per hour, $715 per hour, and $990 per hour.  (See Szamet Decl. ¶¶ 22-26.)  Szamet billed 11.7 hours at a partner’s rate of $715 per hour; Eric Kingsley (“Kingsley”) billed 1.9 hours at a partner’s rate of $990 per hour; and Jessi Bulaon (“Bulaon”) billed 29.3 hours at a rate of $425 per hour.  (See id., Exhibit F.)  

The Court find that Plaintiff’s counsels’ hourly rates are reasonable.  Although Bulaon’s hourly rate is two dollars higher than the comparable Laffey Matrix rate, the Court finds that her rate is reasonable in light of her qualifications and the complexity of the legal landscape concerning the arbitrability of PAGA claims under the unsettled state of California law.

Billing Entries

Where a party is challenging the reasonableness of attorney’s fees as excessive that party must attack itemized billing with evidence that the fees claimed were not appropriate or obtain the declaration of an attorney with expertise in the procedural and substantive law to demonstrate that the fees claimed were unreasonable.  (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 563-64.)  A reduced award might be fully justified by a general observation that an attorney overlitigated a case or submitted a padded bill or that the opposing party has stated valid objections.  (Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 101.)  Attorney billing records are given a presumption of credibility.  (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)

After reviewing Plaintiff’s billing records, the Court finds that Plaintiff’s bill is somewhat padded with duplicative and/or clerical work and inter-office communications.[2]  The Court therefore reduces Szamet’s compensable time to seven hours, Kingsley’s compensable time to 0.6 hours, and Bulaon’s compensable time to 18 hours. 

Costs

Although the Motion requests $631.10 in costs, the Reply provides evidence that the AAA reimbursed Plaintiff $350, thereby reducing Plaintiff’s costs to $281.  (See Supp. Szamet Decl. ¶ 38.) 

In light of the foregoing, the Court GRANTS the Motion and awards Plaintiff attorney’s fees in the reasonable amount of $12,354 and costs in the amount of $281.  The Court lifts the stay on this matter and schedules a case management conference on June 13, 2023 at 8:30 a.m. in this department.

Moving party is ordered to give notice of this ruling. 

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

         Dated this 25th day of April 2023