Judge Randolph M. Hammock, Case Number: 23STCP02880, Date: 2023-09-20 Tentative Ruling

Petitioner Jennifer Haywood (“Petitioner” or “Haywood”) brought an individual statutory consumer arbitration demand (“Demand”) against Respondent Snap, Inc. (“Respondent” or “Snap”) (collectively, the “Parties”) in front of ADR Services, Inc. (“ADR Services”) on November 28, 2022. In her demand, Haywood alleges violations of the Illinois Biometric Information Privacy Act (“BIPA”), 740 ILCS 14, et seq.

Petitioner now contends that ADR Services is requiring her to pay “prohibitively expensive fees” which she cannot be obligated to pay under California Law and the Parties’ Arbitration Agreement.

Accordingly, Petitioner Jennifer Haywood petitions the Court for an order compelling arbitration under certain terms, namely that Respondent pay Haywood’s share of arbitration fees in a proceeding currently pending before ADR Services., Inc.

Petitioner Jennifer Haywood moves for an order requiring that Respondent Snap, Inc., pay Haywood’s share of arbitration fees in a proceeding currently pending before ADR Services., Inc.

Through Snap’s Terms of Service, the parties agreed to arbitrate this dispute. That much is undisputed. Consistent with that Agreement, Petitioner filed this action directly in arbitration before ADR Services, Inc. That arbitration is ongoing.

Petitioner now contends that Respondent has violated the parties’ agreement and California law by failing to cover fees required in the Arbitration. Petitioner further contends that she lacks the financial ability to split the fees for arbitration equally, and that Respondent must be ordered to cover her share.

A threshold question is whether the court has jurisdiction to hear this petition. Indeed, it appears the Arbitrator did, in fact, already consider and rule on this same issue, and found in Respondent’s favor.

Under the Agreement’s delegation clause, the parties agreed that “all disputes concerning the arbitrability of a claim (including disputes about the scope, applicability, enforceability, revocability, or validity of the Arbitration Agreement) shall be decided by the arbitrator.” (Kind Decl., Exh. A, ¶ 18(a).)

The parties offer little authority directly on point. The parties agreed to arbitrate all claims and disputes “arising out of relating to” the “[t]erms” of the Arbitration Agreement. (Kind Decl., Exh. A, ¶ 18(a).) It would appear that the interpretation of the costs provision within the agreement is one such “term” to be left to the arbitrator to decide.

Moreover, Petitioner’s cited authority stating that courts may decide issues not “clear[ly] and unmistakeabl[y]” delegated to the arbitrator addressed the “gateway” question of initial arbitrability—not issues that arise in the course of arbitration. (See Beco v. Fast Auto Loans, Inc. (2022) 86 Cal. App. 5th 292, 302; Mendoza v. Trans Valley Transport (2022) 75 Cal. App. 5th 748, 772.)

Considering these facts, this court’s jurisdiction to hear the motion is questionable. Be that as it may, because the motion is denied, as will be discussed below, the court continues to address the motion on its merits.

The authority for Petitioner’s motion is Code of Civil Procedure section 1281.98. Subdivision (b)(3) of section 1281.98 allows the employee or consumer to “unilaterally elect” any of several options if “the drafting party materially breaches the arbitration agreement and is in default” under subdivision (a). One option is to “[p]etition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration provider.” (§ 1281.98, subd. (b)(3)).

Importantly, section 1281.98(b)(3), by operation of subdivision (b), is only triggered where the company defending an arbitration “materially breaches the arbitration agreement.” (§ 1281.98(b).)

If Snap is the party initiating an arbitration against you, Snap will pay all costs associated with the arbitration, including the entire filing fee. If you are the party initiating an arbitration against Snap, you will be responsible for the first $100 toward the nonrefundable Initial Filing Fee, and Snap will pay the remainder of your Initial Filing fee and both parties’ Administrative Fee.

Petitioner was the party who initiated arbitration. Petitioner contends the provision is ambiguous, and in light of the ambiguity, reads this provision to mean that she is responsible for a maximum of $100 in fees and that Respondent most cover any fees exceeding $100. She further argues that Respondent breached the Agreement by failing to do so.

The court does not agree that the provision is ambiguous, nor with Petitioner’s reading of the provision. When interpreting an arbitration provision, courts apply the rules of construction generally applicable to contracts, “that is, we interpret the words in their ordinary sense, according to the plain meaning a layperson would attach to them.” (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal. App. 4th 761, 774–75.)

Under the plain terms of the Agreement, Petitioner was responsible “for the first $100 toward the nonrefundable Initial Filing Fee,” while Respondent was responsible for “the remainder of [Petitioner’s] Initial Filing fee and both parties’ Administrative Fee.” (Id.) This provision cannot be read to suggest that a consumer was limited to paying no more than $100 in the arbitration. Rather, it covers only what it says: the “initial filing fee” and the Administrative Fee.”

The agreement is silent on the distribution of any arbitrator’s fees beyond the “initial filing fee” and “Administrative Fee.” Thus, turning to ADR’s fee schedule, the parties are to share the remaining arbitration fees equally. (Kind Decl., Ex B.) This is precisely what Respondent and ADR Services are requiring here.

This conclusion precludes the relief Petitioner seeks. Section 1281.98(b)(3)—which allows a court to order that the drafting party pay fees required under the agreement—applies only where the “drafting party materially breaches the arbitration agreement.” (§ 1281.98(b).) As discussed, Respondent has not materially breached the agreement. Rather, it has paid all fees it is required to pay under the Agreement and California law.

Petitioner’s alternative argument that ADR Services is “not available” to arbitrate the dispute also lacks merit. (Kind Decl., Ex. A, § 18(b) [“[i]f ADR Services is not available to arbitrate, the parties will select an alternative arbitral forum, and if they cannot agree, will ask the court to appoint an arbitrator.”].) To the contrary, ADR Services is involved in the arbitration and the arbitrator has addressed the same issue presented here. Thus, there is no authority allowing this court to appoint a different arbitrator.

To conclude, because Petitioner has not established she is procedurally entitled to the relief she seeks, the court need not address whether she has established a financial inability to pay the costs of arbitration.