Judge Lee W. Tsao, Case Number: 23NWCV02679, Date: 2024-09-11 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV02679, Date: 2024-09-11 Tentative Ruling

Case Number: 23NWCV02679 Hearing Date: September 11, 2024 Dept: C

NOLAN v. WESTERN DENTAL SERVICES, INC.

CASE NO.: 23NWCV02679

HEARING: 9/11/24 @ 10:30 A.M.

#11

TENTATIVE RULING

Defendant Western Dental Services, Inc.’s motion to compel arbitration is GRANTED. The action is stayed pending arbitration.

Moving Party to give NOTICE.

This is a wage-and-hour action. Defendant Western Dental Services, Inc. moves to compel arbitration based on a contract Plaintiff signed. Defendant also requests a stay of the action pending arbitration.

Procedural Background

On April 18, 2023, Plaintiff submitted a demand for arbitration with JAMS. (Decl. Sohn, ¶ 2.) JAMS confirmed submission. (Decl. Sohn, ¶ 3, 4; Ex. A and B.)

On May 17, 2023, Plaintiff paid her filing fee. (Decl. Sohn, ¶ 7.)

On June 20, 2023, JAMS informed all parties that Defendant had not paid its filing fee. (Decl. Sohn, ¶ 10.)

In July 2023, JAMS informed Plaintiff that Defendant paid its filing fee on June 28, 2023. (Decl. Sohn, ¶ 12.)

Plaintiff withdrew the demand for arbitration and subsequently filed the instant lawsuit on August 15, 2023. (Decl. Sohn, ¶ 14.)

On January 4, 2024, Defendant filed the instant motion.

Discussion

The parties dispute the applicability of Code of Civil Procedure section 1281.97, which states that in an employment arbitration, if the drafting party does not pay the fees or costs to start an arbitration within 30 days of the due date, the drafting party materially breaches the agreement, defaults on the arbitration, and waives its right to compel arbitration under Code of Civil Procedure section 1281.2.

Defendant argues that because the parties have chosen the Federal Arbitration Act to govern their arbitration, California state law which provides for waiver of arbitration does not apply.

In opposition, Plaintiff argues that the Califiornia Arbitration Act applies in California courts by default; in its moving papers, Defendant acknowledges that California law applies; the arbitration agreement recognizes the applicability of California law; Code of Civil Procedure section 1281.97 furthers the objectives of the Federal Arbitration Act; and Plaintiff’s case law citations are inapplicable to this situation.

In reply, Defendant relies upon Hernandez v. Sohnen Enterprises, Inc. (2024) 102 Cal.App.5th 222, review granted August 21, 2024, S285696. There, the appellate court held that the procedures of the Califiornia Arbitration Act do not apply, including the provision that allows an employee to proceed to court based on an employer’s material breach and waiver. The Court relies upon Hernandez for its persuasive authority. (Cal. Rules of Court, rule 8.1115.)

In Hernandez v. Sohnen Enterprises, Inc., supra, 102 Cal.App.5th 222, an employer did not pay arbitration costs within 30 days of the due date and the employee filed a motion to withdraw from arbitration and litigate in state court as permitted under Code of Civil Procedure section 1281.97. The Court held that the arbitration agreement is governed by the FAA, both substantively and procedurally, rather than California’s arbitration laws. Further, the Court held that when an agreement falls within the scope of the FAA and does not expressly adopt California arbitration laws, the FAA preempts the provisions of section 1281.97 that mandate findings of breach and waiver. As the Court reasoned, because the arbitration agreement states, “this agreement is governed by the FAA,” the statement is broad and encompasses both the procedural and substantive provisions of the FAA. (Id. at pg. 241.) Further, there is no provision explicitly referring to California law in the agreement. (Id. at pg. 242.) The parties selected the procedural provisions of the FAA, and therefore, the procedures of the CAA, including section 1281.97, do not apply. (Ibid.)

Similarly, here, the arbitration agreement states, “This agreement is governed by the Federal Arbitration Act…” (Decl. Sohn, ¶ 16, Ex. H.) It also does not expressly adopt California’s arbitration laws. (Decl. Sohn, ¶ 16, Ex. H.)

Thus, the procedures of the CAA, including section 1281.97, do not apply.

If a court has ordered arbitration of a controversy which is pending before a court, upon motion of a party to such action or proceeding, the court shall stay the action or proceeding until an arbitration occurs in accordance with the order to arbitrate or until such earlier time as the court specifies. (Code Civ. Proc., § 1281.4.)

The motion is GRANTED. The action is stayed pending arbitration.