Judge Kerry Bensinger, Case Number: 20STCV44666, Date: 2023-09-07 Tentative Ruling

On November 20, 2020, Plaintiff, Sarkis Avagyan, initiated this action against Defendants, The State of California (the “State”), California Highway Patrol (“CHP”), Officer Leal (“Leal”), Lyft, Inc. (“Lyft”), Jose Gabriel Martinez (“Martinez”), and Eugene Min Lee (“Lee”) alleging causes of action for (1) general negligence (2) negligence per se; (3) and statutory negligence. The first and second causes of action were asserted against Defendants Lyft, Martinez, and Lee, and the third cause of action was asserted against Defendants the State, CHP, and Leal.

On October 5, 2022, Plaintiff filed a motion for leave to assert six new causes of action against Lyft.

On November 4, 2022, Lyft filed an opposition to Plaintiff's motion for leave, indicating that it would file a motion to compel arbitration should the Court grant Plaintiff’s motion to file his First Amended Complaint (“FAC”).

On November 18, 2022, the Court granted Plaintiff’s motion for leave to file the FAC. In addition to the first three causes of action, the FAC added six causes of action against Lyft for (4) negligence/gross negligence, (5) negligent supervision, (6) fraud, (7) intentional misrepresentation, (8) negligent misrepresentation, and (9) violation of Business & Professions Code § 17200 et seq.

On November 23, 2022, Lyft filed a Motion to Compel Arbitration of the FAC as to all causes of action pending against Lyft.

On February 8, 2023, the Court heard argument on the Motion to Compel. Notably, the Court’s tentative was to deny the motion. At oral argument, Lyft’s counsel urged the Court to reconsider its ruling because of the expansive nature of the newly added causes of action in the FAC (herein after the “revival causes of action”). At the hearing, when asked why Lyft had not previously move to compel arbitration in the two years prior to the filing of the FAC, Lyft responded that the original complaint was a “run of the mill” car accident case that did not warrant arbitration. Lyft conceded it waived by litigation the right to compel arbitration on the first two causes of action but pressed its revival argument. The Court continued the hearing to reconsider the FAC and Lyft’s revival argument.

On March 23, 2023, Plaintiff dismissed with prejudice his sixth cause of action for fraud and the ninth cause of action for violations of Business and Profession Code 17200.

On March 27, 2023, the Court granted Lyft's Motion to Compel Arbitration finding that Lyft waived by litigation its right to compel arbitration as to the first two causes of action but because of the dramatic expansion of the revival claims, the FAC revived Lyft’s right to compel arbitration.

On April 27, 2023, after further briefing and argument, the Court stayed the state court proceeding between Plaintiff and Defendant Martinez pending completion of the arbitration between Plaintiff and Lyft and sent all of Plaintiffs causes of action against Lyft to arbitration. The stay of the state case was predicated on the fact the allegations against Lyft in arbitration were far more expansive and time consuming than the “run of the mill” auto accident case presented in the first two causes of action.

On May 16, 2023, Lyft submitted a Demand for arbitration with the American Arbitration Association ("AAA") per Lyft's Terms of Service.[1]

On May 24, 2023, AAA assigned a case manager to the arbitration between Plaintiff and Lyft.

On June 28, 2023, AAA sent a letter to the attorneys for Plaintiff and Lyft, requesting that the parties submit their intent to proceed with arbitration on or before July 12, 2023.

On June 30, 2023, Plaintiff corresponded with AAA, indicating that he was ready to proceed in arbitration.

On July 3, 2023, Lyft corresponded with AAA, indicating that it was ready to proceed in arbitration.

On August 4, 2023, AAA sent a letter to the attorneys for Plaintiff and Lyft, indicating that AAA appointed Frank M. Kaplan, Esq. to be the arbitrator.

On August 4, 2023, in anticipation of a status conference to be held on August 10, 2023, Plaintiff filed a document entitled “Plaintiff’s Arbitration Status Report.” Plaintiff counsel stated in her declaration in support of the status report that she learned from AAA that there was no limit to the number of times a party may object to the assigned arbitrator. Plaintiff’s counsel then stated that “Mr. Avagyan has decided to dismiss the newly added causes of action and proceed to trial in his case against defendant Martinez.”[2] Plaintiff’s counsel went on to ask the Court to lift the stay on the case against Defendant Martinez.

On August 7, 2023, Lyft's insurance carrier promptly issued payment to AAA for the arbitrator’s fee.

On August 10, 2023, the Court held a status conference to address the status of the arbitration proceedings. At the hearing, Plaintiff took the position because he intended to dismiss the “revival” based causes of action, leaving only the first and second causes of action in place, the arbitration should end and the state case should proceed. Lyft opposed the request to end the arbitration. Given Plaintiff’s sudden request, the Court continued the hearing to allow the parties to brief the issues.

On August 15, 2023, Lyft filed its brief requesting Plaintiff’s causes of action remain in arbitration.

On August 22, 2023, Plaintiff dismissed the third, fourth, fifth, seventh and eighth causes of action without prejudice.

Culled from this procedural history are two operative facts that impact the Court’s consideration of the issues. First, Lyft waived its right to arbitrate the first and second causes of action. Second, the Court ordered all of the causes of action between Plaintiff and Lyft, including the first and second causes of action, to arbitration.

Plaintiff’s August 4, 2023, “Arbitration Status Report” is a procedural enigma. It is neither a motion nor an application, or a petition. It fails to state the relief being sought. In the body of counsel’s declaration, Plaintiff asks the Court to lift the stay of the state court case. In Plaintiff’s Response to Lyft’s Brief, Plaintiff argues that the stay of the state court matter should be lifted, and the case should proceed to trial against Mr. Martinez and Lyft on the first and second causes of action. Plaintiff frames his August 4, 2023, pleading a request to lift the stay.

Plaintiff’s argument to life the stay vis-a-vis Lyft is factually misplaced. The Court ordered all of the causes of action between Plaintiff and Lyft into arbitration. This factual flaw undermines Plaintiff’s “request” to simply lift the stay and proceed to trial against Martinez and Lyft on the first and second causes of action. Plaintiff and Lyft remain in the arbitral forum on the first and second causes of action.

If Plaintiff’s Arbitration Status Report is not a motion to lift the stay vis-a vis Lyft, then what is it? Lyft argues it is a motion for reconsideration of the motion to compel arbitration or, alternatively, of the motion to send the first and second causes of action along with the revival causes of action to arbitration. Either way, if Plaintiff’s Status Report is construed as a motion for reconsideration, it is untimely. (See Code Civ. Proc., § 1008.)^{^[3]}

Notably, Lyft does not argue Plaintiff cannot dismiss the remaining revival claims. Lyft argues instead that the Court lacks jurisdiction to vacate the orders to compel arbitration and, therefore, the first two causes of action remain in arbitration until such time as the arbitrator rules on the motion to vacate the arbitration.

The Court Lacks the Authority to Grant Plaintiff’s “Motion” to Vacate or Withdraw From the Arbitration.

Assuming the Plaintiff’s Arbitration Status Report is a veiled motion to vacate or withdraw from arbitration and return the matter to state court, the threshold question is who can rule on this motion -- the Court or the arbitrator? The general rule is succinctly stated: “Once a court grants the petition to compel arbitration and stays the action at law, the action at law sits in the twilight zone of abatement with the trial court retaining merely a vestigial jurisdiction over matters submitted to arbitration. This vestigial jurisdiction over the action at law consists solely of making the determination, upon conclusion of the arbitration proceedings, of whether there was an award on the merits (in which case the action at law should be dismissed because of the res judicata effects of the arbitration award [Division of Labor Standards Enforcement v. Williams (1981) 121 Cal.App.3d 302, 309 [175 Cal.Rptr. 347]; Rest.2d Judgments, § 84]) or not (at which point the action at law may resume to determine the rights of the parties). (Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1796.) (cleaned up.)

Courts have discussed the meaning of vestigial jurisdiction. “[U]nder under its “vestigial” jurisdiction, a court may: appoint arbitrators if the method selected by the parties fails (§ 1281.6); grant a provisional remedy “but only upon the ground that the award to which an applicant may be entitled may be rendered ineffectual without provisional relief ” (§ 1281.8, subd. (b)); and confirm, correct or vacate the arbitration award (§ 1285). Absent an agreement to withdraw the controversy from arbitration, however, no other judicial act is authorized. (Citation omitted.)” (Titan/Value Equities Group, Inc. v. Superior Court (1994) 29 Cal.App.4th 482, 487–488 (Titan/Value).)

The Titan/Value Court went on to explain that after the case is stayed, “the arbitrator takes over. It is the job of the arbitrator, not the court, to resolve all questions needed to determine the controversy. The arbitrator, and not the court, decides questions of procedure⁷ and discovery. It is also up to the arbitrator, and not the court, to grant relief for delay in bringing an arbitration to a resolution. As the court reasoned in McRae v. Superior Court, supra, 221 Cal.App.2d at page 171: “When it has been determined that arbitration should be pursued and all judicial proceedings have been suspended until completion of the arbitration, it would be wholly incompatible with established policies of the law to permit the court thereafter to intervene in, and necessarily to interfere with, the arbitration ordered. In large measure, it would not only preclude the parties from obtaining 'an adjustment of their differences by a tribunal of their choosing,' but it would also recreate the very 'delays incident to a civil action' that the arbitration agreement was designed to avoid.” (Titan/Value, supra, 29 Cal.App.4th 482, 487-488.)

Cases have followed this general rule finding that it is the arbitrator, not the court, who must decide whether to dismiss/terminate the arbitration because of perceived delays in the arbitration. (See Brock, supra, 10 Cal.App.4^th 1790, 1808 [trial court erred “in purporting to dismiss the contractual arbitration proceedings between the parties”]; Byerly v. Sale (1988) 204 Cal.App.3d 1312, 1316 [“only the arbitrator should determine whether there has been an unreasonable delay in prosecution which would justify dismissal”].)

Courts have developed several narrow exceptions to the general rule. In Bosworth v. Whitmore (2006) 135 Cal.App.4^th 536, 539, the appellate court held the trial court had the authority, on petition by the party to the arbitration, to set a date by which the arbitration proceedings must be concluded. Similarly, there is a line of cases that stand for the proposition that even after a case is sent to arbitration, if one party fails to pay the required fees, the trial court may grant the moving parties’ motion to withdraw from arbitration. (See Williams v. West Coast Hospitals (2022) 86 Cal.App.5th 1054, 1066 (Williams); Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073; DeLeon v. Juanita’s Foods (2022) 85 Cal.App.5th 740; Espinoza v. Superior Court (2022) 83 Cal.App.5th 761; Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621.)

In Williams, the plaintiff sued the hospital (West Coast) for elder abuse, among other causes of action. West Coast moved to compel arbitration. The trial court, for our purposes, granted the motion and sent the matter into arbitration. West Coast did not timely pay their portion of the arbitration fee. Plaintiffs moved to withdraw from arbitration. The trial court granted the motion and West Coast appealed. The appellate court affirmed and rejected West Coast’s jurisdictional argument. “West Coast alternatively asserts that the limits on trial court jurisdiction over the contractual arbitration deprived the trial court here of authority to vacate its own prior order.” (Williams, supra, 86 Cal.App.5th at p. 1068.) “Under West Coast's theory of the statute, the commencement of arbitration divests the trial court of jurisdiction to do anything other than confirm, vacate, or correct an arbitration award, unless and until the arbitrator grants plaintiffs leave to withdraw from arbitration. By vacating its prior order, West Coast maintains, the trial court effectively dismissed the arbitration. West Coast's argument misconstrues the nature of trial court's order and conflates two distinct aspects of the trial court's continuing jurisdiction.” The Appellate Court went on to explain, “[t]he contractual right to compel arbitration is not self-executing: the party asserting its right may do so by petition or affirmative defense in the trial court and by seeking a stay of judicial proceedings. (Citation omitted) Once a court grants a petition to compel arbitration and stays the litigation, the court nonetheless retains (1) “vestigial jurisdiction over the action at law,” which then “sits in the twilight zone of abatement,” and (2) a “separate, limited jurisdiction over the contractual arbitration.” (Id. at pp. 1068-69.) (Citations omitted.) The Williams Court went on to declare “the trial court’s review of the withdrawal is within its vestigial jurisdiction.” (Ibid.)

The Williams Court may provide a pathway for the trial court’s consideration of a motion to withdraw under the Court’s vestigial jurisdiction. The equities may similarly weigh in favor of such a disposition.^{^[4]} However, Plaintiff fails to cite any authority that on the facts presented herein, this Court has that authority. This case does not fit into one of the narrow exceptions to the general rule. It does not fall within the “late fee” line of cases. And Plaintiff fails to cite any case holding that on the facts of this case (or a similarly situated case) the court can exercise vestigial jurisdiction to terminate or withdraw the matter from arbitration. Without authority otherwise, this case falls within the general rule that once the motion to compel arbitration is granted, “the arbitrator takes over.” (Titan/Value, supra, 29 Cal.App.4th at pp. 487-488.) And “[i]t is the job of the arbitrator, not the court, to resolve all questions needed to determine the controversy” (Ibid.) Plaintiff must bring the motion, if at all, before the arbitrator.

Plaintiff’s “Arbitration Status Report” even if construed as a motion to terminate or withdraw from arbitration is DENIED. Such a motion must be heard by the arbitrator.

Plaintiff’s request to lift the stay of the case with Mr. Martinez is GRANTED.^{^[5]} The Court will discuss with counsel the status of the Mr. Martinez case vis-à-vis the arbitration matter.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

[1] The Court adopts the facts related to the proceedings with AAA as presented by Lyft. Plaintiff does not contest Lyft’s factual recitations regarding the interactions with AAA.

[2] Plaintiff’s counsel’s statement is confusing. Plaintiff states he seeks to proceed in state court with his claims against Martinez. Plaintiff makes no mention of pursuing his claims against Lyft. Plaintiff has not dismissed Lyft from the first two causes of action.

[3] The Court could reconsider its rulings on its own motion. And there is good cause to do so given Lyft’s waiver of its right to arbitrate the first and second causes of action. But the Court is constrained by the general rule that once the matter has been sent to arbitration, the decision whether to end/vacate/terminate the arbitration is for the arbitrator to make, not the court.

[4] Lyft cannot be heard to complain about a trial in state court when that is exactly what it intended for two years before the FAC was filed. Indeed, the only reason, according to Lyft that it sought to compel arbitration was the filing of the FAC. In Lyft’s Reply to Plaintiff’s Opposition to Motion to Compel Arbitration, Lyft referred to the question whether it waived its right to arbitrate the “original complaint” as a “a non-issue.” It did. Lyft did not contest that point. As Lyft stated, “Lyft’s right to arbitrate stems from Plaintiff’s dramatic expansion of the scope of this litigation based upon this First Amended Complaint (the “FAC”).” (Lyft’s Reply at p. 2.)(emphasis in original.) As such, Lyft may well be judicially estopped from seeking arbitration when it specifically represented to the Court that it waived its right to arbitrate. Now, even though all the revival causes of action have been dismissed, Lyft takes the contrary position and argues it has the right to arbitrate the very causes of action it represented previously that it had no right to arbitrate. And without arbitrable claims, there is no basis for the arbitration. Moreover, Lyft cannot complain of prejudice when the very causes of action that created the “sea change” and compelled Lyft to pursue arbitration have been dismissed and all that remains is, as Lyft put it, a “run of the mill” auto accident case that Lyft was perfectly happy to try in state court.

[5] Alternatively, should Plaintiff wish to bring his motion before the arbitrator prior to the resumption of the state case, the Court will hear from counsel whether the court should continue the stay until the arbitrator rules on the motion.