Judge: Joseph Lipner, Case: 23STCV01601, Date: 2023-08-15 Tentative Ruling

Case Number: 23STCV01601    Hearing Date: October 2, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendants Weiss Accountancy Corporation, Weiss Accountancy LLP and Scott Weiss (“Defendants”) have moved to compel arbitration and stay proceedings.

Defendants’ Motion to Compel Arbitration and Stay the Action is GRANTED.  The case management conference and informal discovery conference scheduled for today shall go off calendar.  The Court sets a status conference regarding status of arbitration for June 28, 2024 at 8:30 a.m.

Background

On January 25, 2023, Plaintiff Kay Adams (“Plaintiff”) filed a complaint against Defendants alleging causes of action for disability, sex and national origin discrimination, sexual harassment and failure to prevent under FEHA, violation of CFRA, wrongful termination in violation of public policy, intentional infliction of emotional distress, and numerous violations of the Labor Code wage and hour provisions as well as statutory unfair competition.

On August 23, 2023, Defendants filed the current Motion to Compel Arbitration (the “Motion”).  

Plaintiff filed an opposition to the Motion on September 12, 2023. Defendants filed a late reply on September 19, 2023.

Legal Standard

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement.”  (Code Civ. Proc., §§ 1281.2(a)-(b).) “Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) 

“California law, ‘like [federal law], reflects a strong policy favoring arbitration agreements and requires close judicial scrutiny of waiver claims.’”  (Wagner Const. Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 31.) If the court orders arbitration, then the court shall stay the action until arbitration is completed.  (See Code Civ. Proc., § 1281.4.) 

Discussion

Existence of an applicable Arbitration Agreement

Defendants move to compel arbitration based on the arbitration agreement that Plaintiff executed as part of her onboarding for her employment with Weiss. (Rodriguez Decl. ¶¶ 11-12, Ex. B.) The specific arbitration provision states that it applies to “all statutory, contractual, and/or common law claims arising from employment with the Company including . . . tort claims; claims for retaliation, discrimination or harassment of any kind, including claims based on sex, . . . Age Discrimination in Employment Act, . . . the California Fair Employment and Housing Act, [and]. . . the California Labor Code.” (Ex. B.) 

Plaintiff’s opposition does not dispute that Plaintiff signed the Agreement or that the claims asserted by Plaintiff are covered by the Agreement. Therefore, Defendants have met their burden of showing that a valid agreement to arbitrate exists between the Parties.  

Waiver of Arbitration

Plaintiff argues that Defendants waived their right to compel arbitration as several of the criterion from St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1194-1195 (St. Agnes) are met. Plaintiff argues Defendants waived their right to arbitrate because (1) Defendants unreasonably delayed in moving to compel arbitration, (2) Plaintiff has been prejudiced by the delay, and (3) Defendants’ conduct has been inconsistent with seeking arbitration.

“No single test defines the conduct that will constitute waiver of an arbitration right.  Rather, courts look to several factors to determine whether waiver has occurred.  [Citation.]  In St. Agnes, the Supreme Court confirmed that a court may consider the following six factors in assessing a waiver claim: ‘‘‘(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.’’  [Citation.]’  [Citations.]”  (Oregel v. PacPizza, LLC (2015) 237 Cal.App.4th 342, 354–355.)

First, the Court does not find that Defendants unreasonably delayed before notifying Plaintiff of their intent to arbitrate and seeking a stay. Plaintiff filed her Complaint on January 25, 2023. (Sumell Decl. ¶ 2.) On March 22, 2023, Defendants included in their answer a fifteenth affirmative defense which stated that “Defendants are informed and believe that a reasonable opportunity for investigation and discovery will reveal [that] . . . Plaintiff is required to arbitrate her claims pursuant to a valid and enforceable arbitration agreement.”  On June 14, 2023, Defendants’ counsel notified Plaintiff’s counsel that Defendants found the parties’ arbitration agreement and sought stipulation to arbitrate. (Id. ¶ 14, Ex. 2.) Defendants had found a copy of the agreement on Laserfiche (8/21/23 Rodrigez Decl., ¶ 10.)  On July 18, 2023, Defendants sought to compel arbitration. 

Plaintiff argues that the five and one half month delay between her filing and the Defendants’ filing of a motion to stay was unreasonable.  She cites cases such as Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331 where defendants delayed five and one half months. In Augusta, the court found defendants’ knowledge about the arbitration provisions and failure to offer any explanation for deferring their arbitration demand was an unreasonable delay. (Augusta, supra, 193 Cal.App.4th at 338.) Here, on the other hand, Defendants raised the issue of arbitration promptly in their answer and made clear they were looking for the arbitration agreement.  Defendants generally explain that the delay was initially due to not being able to locate the arbitration agreement. (Adams Decl. ¶ 3.) The day after they discovered the arbitration agreement, Defendants promptly requested Plaintiff stipulate to arbitration. (Id. ¶¶ 4-5.) Defendants also assert that there have been no substantive procedural developments, motion practice or proceedings in this matter. (Id. ¶ 8.) Thus, the Court does not find there was an unreasonable delay under the particular circumstances of this case.

Second, the Court finds Plaintiff has failed to show she has been prejudiced by the delay. “Prejudice is typically found only where the petitioning party’s conduct has substantially undermined this important public policy or substantially impaired the other side’s ability to take advantage of the benefits and efficiencies of arbitration. For example, courts have found prejudice where the petitioning party used the judicial discovery processes to gain information about the other side’s case that could not have been gained in arbitration; where a party unduly delayed and waited until the eve of trial to seek arbitration; or where the lengthy nature of the delays associated with the petitioning party’s attempts to litigate resulted in lost evidence.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 378 quoting St. Agnes, supra, 31 Cal.4th at 1204.) Plaintiff argues she has been prejudiced because she has had to wait months for Defendants to engage and Plaintiff had to post non-refundable jury fees. However, Plaintiff has not shown that Defendants unduly delayed until the eve of trial, that Defendants have obtained evidence they otherwise would not have acquired in arbitration, or any significant risk of lost evidence. Thus, the Court does not find the effects of the delay rise to a level of prejudice.

Finally, Defendants’ actions were not inconsistent with their right to arbitrate. “‘[T]here is no fixed stage in a lawsuit beyond which further litigation waives the right to arbitrate.  Rather, the court views the litigation as a whole in determining whether the parties’ conduct is inconsistent with a desire to arbitrate.’ [Citation.]”  (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1042.)   Plaintiff states Defendants requested a jury trial in their CMC statement and posted jury fees. However, Plaintiff does not point to any other action taken by Defendants that are inconsistent with their desire to arbitrate. For example, in Augusta, supra, 193 Cal.App.4th at 339, the defendant had propounded discovery and supplemental responses which the court found signified his intent to litigate considering the arbitration clause prohibited formal discovery. Here, there have not been substantive procedural developments, motion practice or proceedings in this matter and no other conduct on behalf of Defendants that have been inconsistent with arbitration. Thus, the Court finds Plaintiff has failed to show Defendants’ conduct as a whole has been inconsistent with a desire to arbitrate.

Applicability of Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 

Next, Plaintiff briefly references the federal “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” Plaintiff does not actually argue that this statute applies to the current case.  Rather, she asserts that the federal act “reflects a definite policy departure from what used to be a preference for arbitration in cases involving sexual harassment. Thus, the landscape in which motions to compel arbitration in sexual harassment cases are decided has changed considerably.”  (Opp. At p. 7.)

Because Plaintiff has not advanced an argument that the statute requires that her claim be kept in court rather than in arbitration, Plaintiff has waived the issue.  To the extent she did not waive the issue, she has not made a showing that the statute applies to the current case, which appears to have accrued before the statute was in effect.

On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (the “Act”). The Act amends the Federal Arbitration Act, 9 U.S.C. § 1, et seq., and renders unenforceable (at the option of person alleging assault or harassment) pre-dispute arbitration agreements relating to claims of sexual assault or sexual harassment: 

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute. 

 (9 U.S.C. § 402, subd. (a).) 

The Act has certain limitations on the timing of claims. As the notes to this statute make clear: “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”(PL 117-90, March 3, 2022, 136 Stat 26, emphasis added.) The Act became effective March 3, 2022.  Federal courts have recognized that claims that accrued prior to March 3, 2022 are not covered by the statute.  (Walters v. Starbucks Corp. (2022) 623 F.Supp.3d 333, 337-338; Hodgin v. Intensive Care Consortium, Inc. (S.D. Fla. 2023) 2023 WL 2751443 at *2.)  A claim normally “accrues” when the plaintiff has a “complete and present cause of action.”  (Walters v. Starbucks Corp., supra,  623 F.Supp.3d at pp. 337-338.) 

Here, Plaintiff does not allege facts indicating her sexual harassment claim or dispute arose or accrued after the Act’s enactment date. In the Complaint, Plaintiff alleges she was subjected to sexual harassment and discrimination in the form of sexually demeaning comments and sexually offensive language during her employment with Weiss. (Compl. ¶ 27.) However, Plaintiff does not allege specifically when the harassing comments were made. Plaintiff worked for Weiss from February 2019 until October 2022. (Compl. ¶¶ 2, 50.) There is nothing in Plaintiff’s complaint or in her opposition to the Motion that indicates that her claims arose in her final six months of employment (from March 3, 2022 until October 2022) as opposed to during the first three years of employment (from February 2019 until March 3, 2022).  Plaintiff has therefore not shown that the Act applies to her claim for sexual harassment.

For these foregoing reasons, the Court GRANTS Defendants’ motion to compel arbitration. The action is stayed pending resolution of the arbitration proceedings. 

 Defendants are ordered to give notice of this ruling.