Judge: Kevin C. Brazile, Case: 22STCV12564, Date: 2022-09-21 Tentative Ruling

Hearing Date: September 21, 2022

Case Name: Grandchamp v. Space Exploration Technologies Corp., et al.

Case No.: 22STCV10885

Matter: Motion to Compel Arbitration 

Moving Party: Defendant Space Exploration Technologies Corp.

Responding Party: Plaintiff Robert Grandchamp

Ruling: The Motion to Compel Arbitration is granted.

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

This is an employment action.  Defendant Space Exploration Technologies Corp. dba Space X seeks to compel arbitration of this matter on the basis of an arbitration agreement purportedly executed by Plaintiff upon the start of his employment.   

Plaintiff contends that (1) he never electronically signed any arbitration agreement; (2) the agreement fails to provide for sufficient discovery; (3) the agreement violates Lab. Code § 450; and (4) the agreement is unconscionable.  

With regard to the existence of the arbitration agreement, after having reviewed the declaration of John Sandhu, the Court is satisfied that it was in fact the Plaintiff that electronically signed the subject arbitration agreement.  Defendant has carried its burden.

Plaintiff contends that the subject arbitration agreement does not provide for sufficient discovery under Armendariz and is, for the same reason, substantively unconscionable.  Specifically, Plaintiff argues that there is not sufficient discovery to the extent it was ruled in Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360 that arbitrators cannot issue subpoenas to third-parties for discovery under the FAA. 

Armendariz held that arbitration agreements as to FEHA claims must “(1) provide[] for neutral arbitrators, (2) provide[] for more than minimal discovery, (3) require[] a written award [which permits judicial review], (4) provide[] for all of the types of relief that would otherwise be available in court, and (5) . . . not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum.”  (Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal. 4th 83, 102.) 

It is true that the FAA does not allow for discovery subpoenas; rather, it allows arbitrators to subpoena documents or witnesses for a hearing before the panel.  (Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360, 394.)  However, there is still a work-around: “discovery from third parties may be obtained prehearing if the arbitrators issue a subpoena to the third party to appear and produce documents before at least one of the arbitrators at a ‘hearing’ with the intention that this ‘hearing’ will be adjourned once the documents are secured to the merits hearing. This is often referred to as a ‘work-around’ the limitations of 9 USC § 7. No court has disapproved this practice, so cases that state prehearing deposition discovery is not permitted by the FAA should not be read to prevent the ‘work-around.’ ”  (Cal. Prac. Guide Alt. Disp. Res. Ch. 5-H.)  That is, discovery as to third-parties can still be obtained.  Therefore, the Court believes that the requirements of Armendariz have been met.

Finally, Plaintiff argues that the subject arbitration agreement violates Lab. Code § 450 by, in effect, requiring Plaintiff to pay an initial $400 case management fee to JAMS.

Lab. Code § 450 states, “No employer, or agent or officer thereof, or other person, may compel or coerce any employee, or applicant for employment, to patronize his or her employer, or any other person, in the purchase of any thing of value.” 

It is not apparent to the Court that Lab. Code § 450 is applicable. A $400 case management fee is not quite for “the purchase of anything of value.”  It is a basic cost tendered to participate in contractually-agreed-upon arbitration.  The Court notes that Plaintiff would have to pay $400 even if filing a lawsuit.  

In sum, the Motion to Compel Arbitration is granted.  

The Court expects to set an OSC re: dismissal without prejudice pursuant to a reservation of jurisdiction by the Court to proceed if and as necessary with any appropriate enforcement or other proceedings herein; with respect to the parties subject to the Arbitration Order in this case, all applicable statutes of limitation are tolled from the date of entry of this Order. 

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.