Judge: Jon R. Takasugi, Case: 20STCV10847, Date: 2023-04-13 Tentative Ruling

Case Number: 20STCV10847    Hearing Date: April 13, 2023    Dept: 17

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES 

DEPARTMENT 17 

Plaintiff’s PETITION TO CONFIRM ARBITRATION AWARD (“Petition”) is GRANTED.

            This is an employment action. Brett McCauley (“Plaintiff” or “Petitioner”) filed suit against INQBRANDS INC, FOCUS TECHNOLOGY USA, and ZHEN QIN (collectively, “Defendants” or “Respondents”) seeking damages, restitution, equitable relief, and attorney's fees and costs for Respondents' alleged failure to pay overtime wages, violations of Labor Code sections 203 and 226, failure to pay commissions on sales, failure to reimburse work-related expenses, hostile work environment, harassment, discrimination, wrongful termination, and unfair business practices.

On March 17, 2020, Plaintiff filed suit against Defendants.

On February 27, 2023, Plaintiff filed the instant Petition.

Legal Standard 

Any party to an arbitration in which an award has been made may petition the court for confirmation of the award. (Code Civ. Proc., § 1285.) The contents of a petition to confirm an arbitration award shall set forth the substance of or have attached a copy of the agreement to arbitrate, the names of the arbitrators, and shall set forth or have attached a copy of the award and the written opinion of the arbitrators.  (Code Civ. Proc., § 1285.4.)

Under Code of Civil Procedure (“CCP”) section 1286.2, a final arbitration award may be vacated only under very limited circumstances. (All further statutory references are to the Code of Civil Procedure.) One such instance is prescribed by CCP section 1286.2, which provides the court shall vacate the award if the court determines any of the following:

(1)               [t]he award was procured by corruption, fraud or other undue means; (2) There was corruption in any of the arbitrators; (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator; (4) The arbitrators exceeded their powers; (5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title; (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision.

(Code Civ. Proc., § 1286.2(a).)

In addition to vacating an award, the court has the power to correct an award if the court determines that: [¶] (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or [¶] (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”  (Code Civ. Proc., § 1286.6.) 

In sum, absent the foregoing narrow exceptions, every presumption is in favor of the arbitration award. (See Firestone Tire & Rubber Co. v. United Rubber Workers of America (1959) 168 Cal.App.2d 444, 449.)

Discussion  

1.       Basic Terms of Arbitration Award

On April 26, 2022 and April 27, 2022, arbitration took place before Joseph L. Paller Jr.

The arbitration award (“Final Award”) was made on December 30, 2022. (See Petition pp. 7-21 of 23 of PDF.) The Final Award provides that Defendants are to pay Plaintiff $83,689.83 (with interest), costs of $5,907.66, and attorney's fees of $164,137.50.

2.      Discussion of the Final Award

As for Plaintiff’s various claims pertaining to employment discrimination and harassment, the Arbitrator stated that Plaintiff’s evidence was “meager and unpersuasive” such that it did not support his unlawful discrimination claims. (Final Award p. 3, fn. 2.) With that, against the backdrop of Defendants’ “credibl[e] testi[mony],” the Arbitrator concluded that Plaintiff’s termination was made for a legitimate, nondiscriminatory reason. (Final Award p.4:11, see also p. 5.) As for Plaintiff’s claims for nonpayment of wages, including overtime premiums and continuing wages under Section 203, the Arbitrator deemed them to be “on much firmer ground.” (Petition p.5:23.) For example, the evidence established that Plaintiff regularly worked off the clock, and that management knew or reasonably should have known that he was doing so. (Final Award p. 7.) Based thereon, pursuant to Labor Code section 218.5, which mandates an award of reasonable costs and attorneys' fees to the prevailing party, the Arbitrator deemed Plaintiff as the prevailing party, entitled to an award of attorney’s fees. (Final Award p. 11.)

3.      Attorney Fees

Defendants advance the following arguments in opposition as to why the award should not be confirmed: (i) the Arbitrator erred in awarding 100% of attorneys' fees to Plaintiff when the Plaintiff prevailed in only four (4) of nine (9) claims; (ii) Plaintiff also did not prevail against two (2) of the Respondents (i.e., Focus Technology USA and Zhen Qin); and (iii) for the claims where evidence was offered, it was not compelling (i.e., self-serving testimony). Effectively, as Plaintiff was not successful in the matter, the attorney fees are unreasonable. In support of their contention, Defendants only cite to Erich v. Granoff (1980) 109 Cal. App. 3d 920.

However, Erich is inapposite because the case merely delineates the factors a court considers when determining what constitutes reasonable compensation for an attorney, but the case does not address the issue before the court. The issue here whether a trial court—absent undue means, substantial prejudice, fraud, or corruption—can amend an arbitrator’s award of attorney fees. The answer to that question is a well-established no.

Case law is clear that the recognized rule generally prohibits review of the merits of the arbitrator's award. As relied upon by Plaintiff in its Reply, California’s Supreme Court in Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1 clarified the law as to the limited scope of judicial review of arbitration awards.  More specifically, the Moncharsh court stated the following:

[T]he arbitrator's decision should be the end, not the beginning, of the dispute ...  More specifically, courts will not review the validity of the arbitrator's reasoning . . . Further, a court may not review the sufficiency of the evidence supporting an arbitrator's award . . .  we recognize there is a risk that the arbitrator will make a mistake . . . [but] it is within the power of the arbitrator to make a mistake either legally or factually

(Id. at pp. 10-12.)

Here, according to Defendants’ very own concession, they are attempting to relitigate the “success of the case,” an endeavor which inherently requires a review of the evidence, facts, and the law. (Opp. p. 4 [“This Opposition will focus on factor four (4), the success of the case.”]. But even if the Arbitrator decided the issue of attorney fees incorrectly, “he did decide it.” (Moncharsh, supra, 3 Cal.4th at p. 12.) What is more, an “award of attorney fees for the arbitration itself is within the arbitrator’s purview . . . [t]hus, the issue of the amount of attorney fees and costs to be awarded for the arbitration proceeding was properly a matter for the arbitrator.” (DiMarco v. Chaney (1995) 31 Cal.App.4th 1809, 1816) (italics original). “Further, not only is the determination as to the amount properly within the purview of the arbitrator, but [] it is the arbitrator, not the trial court, which is best situated to determine the amount of reasonable attorney fees and costs to be awarded for the conduct of the arbitration proceeding.” (Id.) (emphasis added).

Therefore, even if the Arbitrator made an error, this court cannot review the error.  

Based on the foregoing—notably that the issue of attorney fees was admitted before the Arbitrator and “[r]ight or wrong the parties have contracted that such a decision should be conclusive”(Id)—this court does not have the discretion nor authority on such a motion to amend that fee.

Dated: April     , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

            Due to Covid-19, the court is strongly discouraging in-person appearances.  Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk.  The court encourages the parties wishing to argue to appear via L.A. Court Connect.  For more information, please contact the court clerk at (213) 633-0517.  Your understanding during these difficult times is appreciated.