Judge: Maurice A. Leiter, Case: 19STCV32486, Date: 2023-10-27 Tentative Ruling

Case Number: 19STCV32486    Hearing Date: October 27, 2023    Dept: 54

Hearing Date: October 27, 2023

Department 54, Judge Maurice A. Leiter

Motion to Vacate Arbitration;

Motion to Appoint Neutral Arbitrator

T/R:     THE COURT SETS AN EVIDENTIARY HEARING ON PLAINTIFF’S MOTION TO VACATE ARBITRATION FOR NOVEMBER 17, 2023 AT 9:00AM.

DEFENDANTS’ MOTION TO APPOINT AN ARBITRATOR IS ALSO CONTINUED TO NOVEMBER 17, 2023.

PLAINTIFF TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, oppositions, and replies.

BACKGROUND

On March 2, 2020, Plaintiff Edward Lyman III filed the operative first amended complaint against Defendants Walzer Melcher LLP, Peter Walzer, and Christopher Melcher, asserting thirteen causes of action including wrongful termination, retaliation, breach of contract, and PAGA claims. Plaintiff was employed as an attorney by Defendant law firm Walzer Melcher LLP. On March 12, 2020, the Court granted Defendants’ motion to compel arbitration. The Court exempted the PAGA claims from arbitration under applicable law and stayed the action pending arbitration.

ANALYSIS

A. Plaintiff’s Motion to Vacate Arbitration

CCP § 1281.98(a) provides, “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, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach.” Subsection (b)(1) allows the non-drafting party the option of withdrawing the dispute from arbitration and proceeding in Court in the event the drafting party violates subsection (a).

Plaintiff moves to vacate the Court’s order compelling arbitration on the ground that Defendants failed to pay certain arbitrator’s invoices within 30 days of their due dates. Defendants assert that Plaintiff has failed to provide competent evidence showing Defendants failed to timely pay the invoices and argue Plaintiff has waived the right to vacate arbitration.

The statute at issue in this motion has been in force for only a couple of years. The Court of Appeal has addressed the statute in: Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621; Williams v. West Coast Hospital (2022) 86 Cal.App.5th 1054; Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 775, 778; De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740; and Doe v. Superior Court of City and County of San Francisco (2023) 95 Cal.App.5th 346. In each case, the Court strictly construed the statute. The Court in Espinoza held that there are no exceptions for substantial compliance, inadvertent nonpayment, or absence of prejudice. (Espinoza, supra at 775-78.) Espinoza and Gallo also held that the FAA does not preempt these statutes. (Espinoza at 778-85; Gallo at 641-646.)

Following the strict construction of statute, if Defendants failed to make timely payments, Defendants are in material breach. However, Defendants challenge the competency of Plaintiff’s evidence and Plaintiff has failed to attach the invoices to the declaration filed with the Court. The Court will set an evidentiary hearing to determine whether Defendants failed to make timely arbitration payments in violation of CCP § 1281.98.

The Court will continue Defendants’ motion to appoint a neutral arbitrator pending the outcome of the evidentiary hearing.