Maya Palominos v. Harbor City Enterprises, Inc. et al.

PLAINTIFF’S MOTION FOR ORDER TO VACATE STAY AND REMOVE THE ACTION FROM ARBITRATION FOR DEFENDANTS’ FAILURE TO PARTICIPATE AT ARBITRATION

 

MOVING PARTY: Plaintiff Maya Palominos

RESPONDING PARTY(S): Defendants Ronald Senters and Drew Bruns

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an employment case.  Plaintiff Maya Palominos filed the instant complaint alleging seventeen causes of action against Defendant California Harley-Davidson and its employees Ronald Senters, Drew Bruns, and Mark Ruffalo, including claims for sexual harassment.

On January 27, 2022, this court granted Defendants’ motion to compel binding arbitration. 

Defendants Harbor City Enterprises, Inc. and Mark Ruffalo have been unrepresented by counsel since March 17, 2023, when this court granted counsel Linda Krieger’s motion to withdraw. On April 18, 2023, Defendant Harbor City Enterprises, Inc.’s Answer to the Complaint was ordered stricken for its failure to retain new counsel. Attorney Krieger still represents Defendants Ronald Senters and Drew Bruns. 

Plaintiff Maya Palominos now moves to vacate the order staying the proceedings and withdraw from arbitration. Defendants Senters and Bruns opposed.

TENTATIVE RULING:

Plaintiff’s Motion to Vacate Stay and Withdraw is continued to a date TBD at the hearing under the conditions discussed herein.

Moving party to give notice, unless waived.  

DISCUSSION:

Motion to Vacate Stay and Withdraw from Arbitration

Analysis

Plaintiff moves under Code of Civil Procedure section 1281.98 to withdraw from arbitration, lift the stay, and proceed with this matter in court. This court retains the power to consider this motion under its “vestigial jurisdiction,” and Plaintiffs need not seek consent of the arbitrator. (Williams v. W. Coast Hosps., Inc. (2022) 86 Cal. App. 5th 1054, 1068-1069.)

On January 27, 2022, this court granted Defendants’ motion to compel binding arbitration. Nearly a year later, on January 18, 2023, Plaintiff submitted a Demand for Arbitration before ADR Services, Inc. 

Shortly after, counsel for Defendants, Linda Krieger, lost contact with Defendants Harbor City Enterprises, Inc. and Mark Ruffalo. On February 6, 2023, ADR Services granted Krieger an extension on behalf of Defendant Harbor City Enterprises to submit an answer and agree on an arbitrator. ADR Services extended the date for respondents to submit an Answering Statement to February 23, 2023. (Id., Exh. 4.) Soon after, Krieger moved to before this court to withdraw as counsel for Defendants Ruffalo and Harbor City only, and this court granted that motion on March 17, 2023. 

This is Plaintiff’s second motion attempting to vacate arbitration. Addressing the first motion on July 31, 2023, this court ruled that Plaintiff had not presented sufficient evidence that Defendants failed to pay arbitration fees. (See 07/31/23 Ruling, pp. 3, 4.) Therefore, it denied the motion without prejudice. 

The issue presented in the second motion is slightly different: Plaintiff now represents that Defendants Senters and Bruns have agreed to arbitrate without the other Defendants, but are refusing to pay the costs of arbitration. Instead, Defendants propose to split the costs of arbitration equally among the arbitrating parties. Plaintiff opposes that arrangement.

In opposition, Defendants first argues that Plaintiff failed to timely serve Defendants with the motion. Under CCP section 1005(b), all moving and supporting papers shall be served and filed at least 16 court days before the hearing, plus an additional two court days for electronic service.

Be that as it may, courts have discretion to consider untimely service. “The principal purpose of the requirement to file and serve a notice of motion a specified number of days before the hearing ([Code Civ. Proc.,] § 1005, subd. (b) ) is to provide the opposing party adequate time to prepare an opposition. That purpose is served if the party appears at the hearing, opposes the motion on the merits, and was not prejudiced in preparing an opposition by the untimely notice.” (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 828–829.) Here, Defendants have not established prejudice, and therefore, the court will consider the motion on its merits.

Turning to the merits, Defendants next argue that they should not have to bear the costs of arbitration, and instead, that such costs should be split equally. They argue that requiring them “to pay the entire arbitration cost would cause undue prejudice.” (Opp. 6: 4-6.) They likewise contend that they should not be penalized for the other Defendants’ failure to participate in arbitration. 

Defendants provide no authority for their argument that the arbitration costs should be split equally. This would force Plaintiff to cover some costs of the arbitration. But it is well-settled that an agreement to arbitrate must 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. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th at p. 102, emphasis added.) 

This court understands that this result leaves Defendants holding the proverbial bag for the costs of arbitration. That however, is the effect of invoking the arbitration agreement as third-party beneficiaries, and continuing to demand arbitration despite the unavailability of the employer defendant. Under the circumstances, Defendants can either continue with the arbitration by solely covering the costs to do so (subject to possible reallocation) or alternatively, proceed with litigation in this court. 

Accordingly, Plaintiff’s motion is continued to a date TBD at the hearing. Defendants are ordered to pay the costs of arbitration, subject to possible reallocation.   If they do not agree to this, Plaintiff’s motion to vacate arbitration will be granted. 

Moving party to give notice.

IT IS SO ORDERED.

Dated:   November 16, 2023 ___________________________________