Judge: Peter A. Hernandez, Case: 24STCV01459, Date: 2025-03-26 Tentative Ruling
Case Number: 24STCV01459 Hearing Date: March 26, 2025 Dept: 34
Defendants Mindera
Corporation, Beverly Salcedo, George Mahaffey, and Tobin Dickerson’s Motion for
Stay Pending Appeal is DENIED.
Background
On January 19, 2024, Plaintiff Ann
Deren-Lewis (“Plaintiff”) filed a complaint against Defendants Mindera
Corporation, Beverly Salcedo, George
Mahaffey, and Tobin Dickerson (“Defendants”) arising from Plaintiff’s
employment with Defendants alleging causes of action for:
1.
Sex/Gender
Harassment, Violation of Cal. Gov. Code §§ 12940 et seq.;
2.
Sex/Gender
Discrimination, Violation of Cal. Gov. Code §§ 12940 et seq.;
3.
Sex/Gender
Retaliation, Violation of Cal. Gov. Code §§ 12940 et seq.;
4.
Whistleblower
Violation, Cal. Labor Code § 1102.5;
5.
Breach of
Contract;
6.
Breach of The
Implied Covenant of Good Faith and Fair Dealing;
7.
Failure To
Investigate and Prevent Harassment, Discrimination, and Retaliation;
8.
Intentional
Infliction of Emotional Distress; and
9.
Wrongful
Termination and Retaliation in Violation of Public Policy.
On February 23, 2024, Defendants filed individual
answers to Plaintiff’s complaint.
On October 15, 2024, the court denied Defendants’
Motion to Compel Arbitration.
On December 13, 2024, Defendants appealed the
court’s order denying their Motion to Compel Arbitration.
On February 28, 2025, Defendants filed this Motion
for Stay Pending Appeal. On March 13, 2025, Plaintiff filed an opposition. As
of March 19, 2025, no reply has been filed.
Legal Standard
“An aggrieved party may appeal
from: (a) An order dismissing or denying a petition to compel arbitration.
Notwithstanding Section 916, the perfecting of such an appeal shall not
automatically stay any proceedings in the trial court during the pendency of
the appeal.” (Code Civ. Proc. § 1294(a).)
Additionally, “a court ordinarily has inherent power, in its
discretion, to stay proceedings when such a stay will accommodate the ends of
justice.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 141 [citing People
v. Bell (1984) 159 Cal.App.3d 323, 329.]) “[T]he power to stay proceedings
is incidental to the power inherent in every court to control the disposition
of the causes on its docket with economy of time and effort for itself, for
counsel, and for litigants.” (Landis v. North American Co. (1936) 299
U.S. 248, 254; OTO, L.L.C., supra, at p. 141.)
Discussion
Code of Civil Procedure section 916(a)
provides that, “[e]xcept as provided in Sections 917.1 to 917.9, inclusive, and
in Section 116.810, the perfecting of an appeal stays proceedings in the trial
court upon the judgment or order appealed from or upon the matters embraced
therein or affected thereby, including enforcement of the judgment or order,
but the trial court may proceed upon any other matter embraced in the action
and not affected by the judgment or order.” (Code Civ. Proc § 916(a).) However,
Code of Civil Procedure section 1294(a), as amended in 2024, states that,
“[n]otwithstanding Section 916, the perfecting of such an appeal shall not
automatically stay any proceedings in the trial court during the pendency of
the appeal.” (Code Civ. Proc. § 1294(a).)
On October 15, 2024, the court issued its
ruling denying Defendants’ Motion to Compel Arbitration. Defendants appealed
that ruling on December 13, 2024.
Defendants
move for an order staying all further trial court proceedings pending appeal of
this court’s denial of Defendants’ Motion to Compel Arbitration. (Motion, at p.
3.) Defendants move on the grounds that the court’s power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the causes on its docket
with economy of time and effort. (Ibid.) Defendants also argue that pursuant to the Federal Arbitration Act (“FAA”), as
interpreted by Coinbase, Inc. v. Bielski (2023) 599 U.S. 736, a stay is
mandatory and automatic pending appeal of an order denying a motion to compel
arbitration. (Id., at p. 4.) Defendants argue that the FAA governs the
arbitration agreement at issue here requiring a mandatory stay. (Id., at
pp. 4-5.) In the alternative, Defendants argue that they are entitled to a
discretionary stay. (Id., at p. 5.)
In opposition, Plaintiff argues that Defendants’ motion
for stay is governed by Code of Civil Procedure section 1294 which codifies the
legislative intent to eliminate mandatory stays while a denial of a motion to
compel arbitration is appealed. (Opp., at p. 4.) Additionally, Plaintiff also
argues that a discretionary stay is not warranted here. (Id., at p. 5.)
Generally, only the substantive
requirements—and not the procedural requirements—of the FAA apply to
proceedings in California courts. (Cronus Invs., Inc. v. Concierge Servs. (2005)
35 Cal.4th 376, 389.) However, parties to an arbitration agreement may
expressly adopt the Federal Arbitration Act’s procedural provisions. (Id.,
at p. 394.) In Cronus, the invocation of the Federal Arbitration Act in
the agreement at issue stated, “The designation of a situs or specifically a
governing law for this agreement or the arbitration shall not be deemed an
election to preclude application of the [FAA], if it would be applicable.” (Cronus,
supra, 35 Cal.4th at 381.) Interpreting this language, our Supreme Court
concluded that the parties to the arbitration agreement had not adopted
the FAA’s procedural requirements, because that agreement’s invocation of the
Act was limited to “applicable” portions of the FAA which conflicted with
California law and was otherwise expressly subordinate to a choice-of-law
provision adopting California law. (Id., at p. 393-394.) The high Court
found that there was no conflict between the Federal Arbitration Act and the
statute at issue—Code of Civil Procedure section 1281.2(c)—which would trigger
the invocation of the FAA. (Ibid.) In contrast, the Court of Appeal in Rodriguez
v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110 determined that
an agreement which only stated that arbitration would be conducted “pursuant to
the FAA,” and contained no contrary choice of law provision, constituted an
express adoption of the FAA’s procedural requirements. (Rodriguez v.
American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1121-22.)
Here, the applicable arbitration provision
states the following: “In consideration of my employment with the
company, its promise to arbitrate all employment-related disputes, and my
receipt of the compensation, pay raises, and other benefits paid to me by the
company, at present and in the future, i agree that any and all controversies,
claims, or disputes with anyone (including the company and any employee,
officer, director, shareholder, or benefit plan of the company, in their
capacity as such or otherwise), arising out of, relating to, or resulting from
my employment with the company or the termination of my employment with the
company, including any breach of this agreement, shall be subject to binding
arbitration under the arbitration provisions set forth in California Code of Civil
Procedure sections 1280 through 1294.2 (the “CCP Act”), and pursuant to California
law. The Federal Arbitration Act shall continue to apply with full force
and effect notwithstanding the application of procedural rules set forth in the
CCP Act.” (Dorn Decl. ISO Mot. Compel Arb., Exh. C.
[emphasis added].)
This language explicitly invokes section
1294 and California law to govern the procedure of the arbitration agreement.
This language bears greater similarity to the statement in Cronus, than
the statement that arbitration would be conducted “pursuant to the FAA” at
issue in Rodriguez. (Rodriguez, supra, 136 Cal.App.4th at
1121-22.)
Based on this record, the court concludes that the arbitration
agreement at issue contains an express adoption of California law in addition
to the FAA, such that procedural and substantial provisions of the California
law apply to this agreement. Although, Defendants rely heavily on Coinbase, which specifically
addresses the procedures in federal district courts under the FAA, Coinbase
does not specifically extend its requirements or language to state trial
courts.
Moreover,
the recent amendment to California law under section 1294(a) empowers state
courts to continue litigation even during such appeals. The amended statute now
explicitly states that there is no automatic stay on appeal when dealing with
the denial or dismissal of a petition to compel arbitration. This legislative
change eliminates the presumption of an automatic stay in cases like the one
here. Additionally, section 1294(a) clearly modifies the FAA, or at least
supplements it, by giving clear state law regarding whether a stay is automatic
during an appeal of an order denying a motion to compel arbitration. In
accordance with the terms of the arbitration agreement between the parties,
section 1294(a) would supersede the FAA.
The
Legislature’s amendment to section 1294(a) was aimed to curtail the abuse of
the appeals process by defendants seeking to delay litigation without
substantial justification. (2023 S.B. No. 365, California 2023-2024 Regular
Session, pg. 1 of 12 [“Proponents of this bill argue that corporate defendants
are abusing the automatic stay when a motion to compel arbitration is denied by
the trial court and then appealed by the defendant, using it as a delay tactic
causing real harm to consumers and workers. This bill provides that there shall
be no stay of the proceedings when an order dismissing or denying a motion to
compel arbitration is appealed.”].) As such, the court is disinclined to stay
the instant matter under section 1294(a).
Conclusion
Defendants
Mindera Corporation, Beverly Salcedo, George Mahaffey, and Tobin Dickerson’s
Motion for Stay Pending Appeal is DENIED.