Judge: Lee W. Tsao, Case: 23NWCV02742, Date: 2024-10-02 Tentative Ruling

Case Number: 23NWCV02742    Hearing Date: October 2, 2024    Dept: C

KALEEL v. WESTERN DENTAL SERVICES, INC.

CASE NO.:  23NWCV02742

HEARING:  10/02/24

#8

TENTATIVE ORDER

Defendant Western Dental Services, Inc.’s motion to compel arbitration is GRANTED. The action is STAYED pending arbitration pursuant to Code of Civil Procedure Section 1281.4.

Defendant Western Dental Services, Inc. to give notice.

Procedural Background

This is an employment action. On August 29, 2023, Plaintiff RANA KALEEL, DDS (“Plaintiff”) sued Defendant WESTERN DENTAL SERVICES, INC. (“Defendant”) and DOES 1-20, inclusive for: (1) Failure to Provide Rest Periods; (2) Failure to Pay All Piece-Rate Wages; (3) Failure to Furnish Accurate Itemized Wage Statements; (4) Failure to Pay All Wages Upon Separation of Employment; (5) Violation of Business & Professions Code § 17200 et seq.; and (60 Declaratory Relief.

On October 20, 2023, Defendant filed an Answer.

Defendant now moves for an order compelling arbitration of the claims alleged in the Complaint and dismissing of staying the proceedings. Plaintiff opposes the motion. 

Request for Judicial Notice

Defendant’s request for judicial notice is GRANTED pursuant to Evidence Code Sections 452, subdivision (d) and 453.

Analysis

General Standards re: Motion to Compel Arbitration

The Federal Arbitration Act (the “FAA”) applies in both federal and state courts to contracts evidencing a transaction involving interstate commerce. (9 U.S.C. §§ 1–2; Southland Corp. v. Keating (1984) 465 U.S. 1, 12.) The FAA preempts conflicting state law. (Preston v. Ferrer (2008) 552 U.S. 346, 353.) The party that contends the FAA applies bears the burden to demonstrate that the arbitration agreement is in a “‘contract evidencing a transaction involving commerce’ . . . .” (Woolls v. Super. Ct. (2005) 127 Cal.App.4th 197, 211.) 

Under Code of Civil Procedure Section 1281.2, “[o]n 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.) 

Applicability of the FAA

Defendant Western Dental Services, Inc. (“Defendant”) argues the FAA governs the Arbitration Agreement in this case. The Court agrees. The Arbitration Agreement explicitly incorporates the FAA. (Eisen Decl., ¶12, Ex. A, ¶2.) Furthermore, Defendant argues it is engaged in interstate commerce within the meaning of the FAA because it (1) provides shared support services to hundreds of affiliated dental practices across the United States; (2) maintains out-of-state vendors; (3) purchases goods and supplies manufactured outside the State of California; and (4) uses interstate communication networks such as U.S. mail, the internet, shipping, and cellular phones to market its business. (Eisen Decl., ¶4.) Thus, Defendant has met its burden of demonstrating that the Arbitration Agreement at issue is a contract that evidences a transaction involving interstate commerce, as required for the FAA to apply.  

Prior Demand for Arbitration

A party seeking to compel arbitration under Code of Civil Procedure Section 1281.2 must “plead and prove a prior demand for arbitration under the parties’ arbitration agreement and a refusal to arbitrate under the agreement.” (Mansouri v. Super. Ct. (2010) 181 Cal.App.4th 633, 640; Civ. Proc. Code, § 1281.2. ) 

Here, Defendant’s counsel, Brendan Joy has established that on November 20, 2023, he requested that Plaintiff requested that Plaintiff stipulate to submit her claims against Defendant to binding arbitration. (Joy Decl., ¶3, Ex. B.)  Defendant’s counsel further declares Plaintiff refused to stipulate to arbitration. (Id. at ¶¶3-4.) Thus, Defendant has demonstrated a prior demand for arbitration was made and Plaintiff refused to arbitrate her claims.  

Existence of Valid Arbitration Agreement and Claims Covered by Arbitration Clause

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 (Giuliano).) “In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation].  The court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.” (Weeks v. Crow (1980) 113 Cal.App.3d 350, 353.) “To determine whether a contractual arbitration clause requires arbitration of a particular controversy, the controversy is first identified, and the issue is whether that controversy is within the scope of the contractual arbitration clause.” (Titolo v. Cano (2007) 157 Cal.App.4th 310, 316.) “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.  The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.” (California Correctional Peace Officers Ass’n v. State (2006) 142 Cal.App.4th 198, 205.) 

[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  [Citation.]  In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. 

(Giuliano, supra, 149 Cal.App.4th at p. 1284.)

Here, Defendant has provided a copy of the Arbitration Agreement electronically signed by Plaintiff. (Eisen Decl., ¶12, Ex. A, ¶1.)

The Arbitration Agreement states in pertinent part:

“Except as it otherwise provides, this Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Agreement, but not as to the enforceability, revocability or validity of the Agreement or any portion of the Agreement.

Except as it otherwise provides, this Agreement also applies, without limitation, to disputes regarding the employment relationship, trade secrets, unfair competition, compensation, breaks and rest periods, termination, or harassment and claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act (except for claims for employee benefits under any benefit plan sponsored by the Company and covered by the Employee Retirement Income Security Act of 1974 or funded by insurance), Genetic Information Non-Discrimination Act, and state statutes, if any, addressing the same or similar subject matters, and all other state statutory and common law claims.”

The Court notes that Plaintiff does not dispute a valid arbitration agreement exists between the parties. (Opp’n at 4:25-27.) Instead, Plaintiff contends she is entitled to withdraw her claims from arbitration and proceed in this Court because Defendant failed to pay its filing fee in a timely manner in violation of Code of Civil Procedure Section 1281.97. More specifically, Plaintiff argues the California Arbitration Act (“CAA”) applies in California courts by default; Defendant acknowledges California law applies; the Arbitration Agreement recognizes the applicability of California law; and Section 1281.97 further the objectives of the FAA. In reply, Defendant cites to Hernandez v. Sohnen Enterprises, Inc. (2024) 102 Cal.App.5th 222 (Hernandez), review granted August 21, 2024, S285696 in support of its assertion that California law does not apply to the Arbitration Agreement and is preempted by the FAA.

Under Code of Civil Procedure Section 1281.97, “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, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an 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 arbitration under Section 1281.2.” (Code Civ. Proc., § 1281.97, subd. (a)(1).) “If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following: [¶](1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.” (Code Civ. Proc., § 1281.97, subd. (b).)

The FAA Preempts Code of Civil Procedure Section 1281.97

Pursuant to California Rules of Court, rule 8.1115, the Court relies upon Hernandez for its persuasive value only. In Hernandez, an employer failed to pay the arbitration costs within 30 days of the due date and the employee filed a motion to withdraw from arbitration and litigate in trial court under Section 1281.97. The appellate court reversed the trial court’s decision granting the employee’s motion to withdraw holding that “When an agreement falls within the scope of the FAA and the parties have not expressly elected California law,…the FAA preempts the portion of section 1281.97 that requires findings of material breach and a waiver of the right to arbitrate as a matter of contract law.” (Hernandez v. Sohnen Enterprises, Inc. (2024) 102 Cal.App.5th 222, 242.)

This instant case is indistinguishable from Hernandez. Here, Plaintiff asserts she was entitled to withdraw from arbitration and litigate her claims in this Court because Defendant failed to pay its arbitration filing fees withing 30 days after the due date, or no later than May 31, 2023. (Sohn Decl., ¶12, Ex. G.) Likewise, Defendant does not dispute it failed to pay its filling fees in a timely manner. Nonetheless, the Arbitration Agreement at issue in this case is explicitly governed by the FAA. The Arbitration Agreement states in pertinent part: “This Agreement is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. and evidences a transaction involving commerce.” (Eisen Decl., ¶12, Ex. A, ¶1.) Similar to Hernandez, the Arbitration Agreement in this action does not contain any express provisions for California law contrary to Plaintiff’s assertion. As such, Defendant did not waive its right to arbitrate by failing to pay filing fees in a timely manner because the CAA including Section 1281.97 inapplicable to the Arbitration Agreement sought to be enforced.

Conclusion

Based on the foregoing, Defendant Western Dental Services, Inc.’s motion to compel arbitration is GRANTED. The action is STAYED pending arbitration.