Judge: Jon R. Takasugi, Case: 21STCV44732, Date: 2022-10-24 Tentative Ruling

Case Number: 21STCV44732    Hearing Date: October 24, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiff’s motion to vacate the order to arbitrate is GRANTED.

On 12/8/2021, Plaintiff Christopher Callahan (Plaintiff) filed suit against the Wags Club, LLC (Defendant), alleging: (1) failure to pay wages; (2) failure to provide meal and rest periods; (3) failure to pay minimum wage; (4) failure to pay overtime wages; (5) failure to pay wages due upon termination: waiting time penalties; (6) failure to issue accurate itemized wage statements; (7) unlawful/unfair business practice; (8) wrongful termination; (9) retaliation; (10) failure to reimburse business expenses; and (11) failure to deliver personnel file.

            On 5/10/2022, the Court granted Defendant’s motion to compel arbitration.

            Now, Plaintiff moves to vacate the order to arbitrate.

Discussion

CCP section 1281.98(a)(1) provides:

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.

            Here, Plaintiff submitted evidence that on 7/8/2022, JAMS sent an invoice to Defendant in the amount of $8,000 as a deposit for the arbitrator’s compensation and set a due date for payment upon receipt, July 8, 2022. (Motion, Exh. 2.) Defendants failed to pay the invoices by the July 8, 2022 due date or within 30 days after the due date, and as of August 31, 2022, JAMS indicated they had still did received payment. (Motion, Exh. 3.)

            In opposition, Defendant does not dispute that it issued late payment. Rather, Defendant argues that Plaintiff’s reliance on CCP section 1281.98(a)(1) is misplaced because there is no evidence that Defendant was strategically withholding payment or acted inconsistently with an intent to arbitrate. However, the general standard to show a waiver of arbitration is separate and apart from CCP section 1281.98. Moreover, contrary to Defendant’s contention, the general standard for determining whether a material breach of contract has occurred is not applicable here given that CCP section 1281.98 itself defines what constitutes a material breach for purposes of the provision. CCP section 1281.98 states that 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 and the drafting party has waived its right to compel the employee to proceed with arbitration. CCP section 1281.98 leaves no discretion for this Court to determine whether or not the circumstances warrant vacating the arbitration order, and Defendant did not cite any published authority to indicate that any other Court has concluded otherwise.

            Given the Court’s lack of discretion to determine otherwise, the Court finds Defendant in material breach within the meaning of CCP section 1281.98.

            Based on the foregoing, Plaintiff’s motion to vacate the order to arbitrate is granted.

It is so ordered.

Dated:  October    , 2022

   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. 

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