Judge Randolph M. Hammock, Case Number: 23STCV07681, Date: 2024-12-19 Tentative Ruling

This is an employment case. Plaintiff Naomi Zhang brings this action against her former employer, Miniso Depot Ca, Inc., for allegedly violating various wage-and-hour laws, FEHA work environment harassment and discrimination, whistleblower retaliation, and constructive discharge in violation of public policy.

Subdivision (a)(1) of section 1281.98 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.”

Subdivision (b) 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). The employee or consumer may “[w]ithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction” (§ 1281.98, subd. (b)(1)), “[c]ontinue the arbitration proceeding, if the arbitration provider agrees to continue administering the proceeding, notwithstanding the drafting party's failure to pay fees or costs” (§ 1281.98, subd. (b)(2)), “[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)), or “[p]ay the drafting party's fees and proceed with the arbitration proceeding” (§ 1281.98, subd. (b)(4)).

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.)

Plaintiff contends that Defendant breached its arbitration agreement as a matter of law when it failed to timely pay JAMS’ arbitration fees by no later than June 16, 2024 based on the invoice dated May 17, 2024 that was due upon receipt. Particularly, On May 17, 2024, JAMS provided all parties (via Email and the JAMS portal) of the Notice of Hearing with Invoice enclosed. (Shalchi Decl., ¶ 3, Ex. C.) The Invoice was dated 5/17/24 with “Payment Due Upon Receipt.” In communications with JAMS, Defendant sought to extend the payment deadline two weeks. JAMS declined. Defendant did not make payment by the deadline of June 17, 2024 and JAMS issued a correspondence to that effect on June 20, 2024. (Shalchi Decl., ¶ 5, Ex. F.) Defendant then made the payment 22 days later on July 8, 2024. (Id. ¶ Ex. G.) Plaintiff did not file this motion until October 28, 2024.

Defendant opposes the motion. Defendant does not dispute that it failed to pay the arbitration fees in time. (See Opp. 4: 9-10 [stating “[i]t is not disputed that Miniso did not pay the arbitration fees by June 17, 2024, but instead paid the fees on July 8, 2024”].) Instead, first Defendant contends that the delegation clause in the agreement requires that this motion be heard by the arbitrator and not this court. Defendant also contends that Plaintiff forfeited or waived its rights under section 1281.99 by electing to continue with the arbitration for over three months before bringing this motion, which included propounding initial discovery. Defendant asserts Plaintiff should be equitably estopped from returning to court.

First, the delegation clause has no bearing on this issue. Rather, “[t]he statute's intent for the trial court to decide this statutory issue controls.” (Cvejic v. Skyview Cap., LLC (2023) 92 Cal. App. 5th 1073, 1079.) Therefore, the court turns to whether Plaintiff waived, forfeited, or otherwise elected to “[c]ontinue the arbitration proceeding.” (§ 1281.98(b)(2).)

“ ‘ “An election of remedies is defined as the choosing between two or more different and coexisting modes of procedure and relief allowed by law on the same state of facts.” [Citation.] “Election of remedies has been defined to be the right to choose or the act of choosing between different actions or remedies where [the] plaintiff has suffered one species of wrong from the act complained of. Broadly speaking, an election of remedies is the choice by a plaintiff to an action of one of two or more coexisting remedial rights, where several such rights arise out of the same facts, but the term has been generally limited to a choice by a party between inconsistent remedial rights, the assertion of one being necessarily repugnant to or a repudiation of the other.” (Reynosa v. Superior Ct. of Tulare Cnty. (2024) 101 Cal. App. 5th 967, 989.) “ ‘The doctrine of election is applicable only when the party is cognizant of all the facts.’ ” (Id.) Without such knowledge, “ ‘it is impossible for the party to make a discriminating and deliberate choice, such as ought to bind him to reason and justice.’” (Id.)

Here, although Plaintiff did immediately threaten to bring a motion under section 1281.98, she held off on doing so in hopes of settling the matter. She then proceeded to engage in discovery and leave the arbitration pending with full knowledge that Defendant had failed to timely pay fees. In the sense, Plaintiff appears to want her cake and eat it too.

But Plaintiff cannot rely on the hopes of settlement as evincing that she was not “aware of the facts.” What matters is that Plaintiff was actually aware that Defendant did not pay fees yet elected to remain in arbitration thereafter for several months. This demonstrates that Plaintiff deliberately chose to “[c]ontinue the arbitration proceeding” “notwithstanding [Defendant’s] failure to [timely] pay fees or costs.” (§ 1281.98, subd. (b)(2).) Thus, on these facts, Plaintiff elected her remedy provided in the statue to remain in arbitration. Alternatively, she cannot now seek to return this matter to court under the doctrine of equitable estoppel.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.