Judge: Robert B. Broadbelt, Case: 23STCV24097, Date: 2025-01-31 Tentative Ruling

Case Number: 23STCV24097    Hearing Date: January 31, 2025    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                 Plaintiff Noor Abbas, individually and on behalf of all similarly situated individuals

RESPONDING PARTY:       Defendant Space Exploration Technologies Corp., d/b/a SpaceX

Motion for Relief from Arbitration Agreement and Sanctions

The court considered the moving, opposition, and reply papers filed in connection with this motion.

DISCUSSION

Plaintiff Noor Abbas, individually and on behalf of all similarly situated individuals (“Plaintiff”)[1] moves the court for an order (1) finding that defendant Space Exploration Technologies Corp., d/b/a SpaceX (“Defendant”) is in material breach of the parties’ arbitration agreement and has waived the right to proceed in arbitration, such that Plaintiff may therefore proceed in court, and (2) awarding monetary sanctions in favor of Plaintiff and against Defendant in the amount of $7,360.

“Perceiving that a ‘company’s failure to pay the fees of an arbitration provider’ as required by an arbitration agreement or applicable law ‘hinders the efficient resolution of disputes and contravenes public policy,’ in 2019 the California Legislature passed Senate Bill No. 707 and added sections 1281.97 and 1281.98 to the California Arbitration Act (CAA) (§ 1280 et seq.).”  (De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 750 [internal citations and internal footnote omitted].)  Under section 1281.97, “[i]n an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an 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 arbitration under Section 1281.2.”  (Code Civ. Proc., § 1281.97, subd. (a)(1).)

The court finds that Plaintiff has not met her burden to show that she is entitled to the requested relief pursuant to Code of Civil Procedure sections 1281.97 and 1281.99.

The court acknowledges that Plaintiff has submitted evidence showing that (1) on October 30, 2024, JAMS sent a retainer invoice to Defendant in the amount of $15,000, stating that the payment was due upon receipt, and (2) Defendant had not paid the retainer as of December 9, 2024, i.e., more than 30 days after the due date of October 30, 2024.  (Siddiqui Decl., ¶¶ 6, 7-8; Siddiqui Decl., Ex. B [JAMS October 30, 2024 Invoice to Defendant in amount of $15,000 stating, at the bottom of the page, “Payment is due upon receipt”].)  However, Plaintiff has not shown that section 1281.97 applies to the parties.

“‘[T]he [Federal Arbitration Act’s] procedural provisions (9 U.S.C. §§ 3, 4, 10, 11) do not apply unless the contract contains a choice-of-law clause expressly incorporating them.’  [Citation.]  ‘[T]he question is not whether the parties adopted the [California Arbitration Act’s] procedural provisions: The state’s procedural statutes ([Code Civ. Proc.,] §§ 1281.2, 1290.2) apply by default because Congress intended the comparable [Federal Arbitration Act] sections (9 U.S.C. §§ 3, 4, 10, 11) to apply in federal court.’”¿ (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345 [emphasis in original] [internal citation omitted].)  Thus, parties are permitted to expressly designate that the procedural provisions of the Federal Arbitration Act apply in place of state law.  (Ibid.; Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394.)  

Defendant has submitted a copy of the parties’ “Employee Arbitration and Dispute Resolution Agreement” (the “Arbitration Agreement”) in its opposition to this motion.  The Arbitration Agreement, signed by Plaintiff on April 23, 2015, provides, inter alia, that it “is made under the provisions of the Federal Arbitration Act (9 U.S.C., Sections 1-14) (‘FAA’) and will be construed and governed accordingly.  It is the parties’ intention that both the procedural and substantive provisions of the FAA shall apply.”  (Patel Decl., Ex. 1, Arbitration Agreement, ¶ 10 [emphasis added], and p. 14 [signature page].)  

The court finds that the language in the Arbitration Agreement is “broad and unconditional” and expressly incorporates the Federal Arbitration Agreement in its entirety.  (Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122.)  Further, although Plaintiff has argued that Defendant has not met its burden to show that the Federal Arbitration Act applies since it did not produce evidence establishing that the Arbitration Agreement is a contract evidencing a transaction involving interstate commerce, the court disagrees.  (Reply, pp. 1:408, 2:3-5.)  As set forth above, parties may adopt the Federal Arbitration Agreement in their contracts by including a choice-of-law provision.  (Victrola 89, LLC, supra, 46 Cal.App.5th at p. 345.)  Here, the parties included such a choice-of-law provision in the Arbitration Agreement, such that Defendant was not required to present evidence to show that the contract evidenced a transaction involving interstate commerce.  (Rodriguez, supra, 136 Cal.App.4th at p. 1122.)

Thus, because the Arbitration Agreement is governed by the Federal Arbitration Act in its entirety, the court finds that Plaintiff has not shown that the procedural provisions of the California Arbitration Act—including Code of Civil Procedure sections 1281.98 and 1281.99—apply to the parties and any arbitration proceedings between them.[2]  (Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 633 [“In 2019, the California Legislature added sections 1281.97 and 1281.99 to the [California Arbitration Act]”]; Hernandez v. Sohnen Enterprises, Inc. (2024) 102 Cal.App.5th 222, 238, review granted August 21, 2024, S285696 [concluding that “the parties selected the FAA in its entirety[,]” and that, “[u]nder th[o]se circumstances, section 1281.97 of the [California Arbitration Act] does not apply and the order [finding a material breach of the arbitration agreement for paying the arbitration fees late] under section 1281.97 must be reversed”]; Cal. Rules of Ct., rule 8.1115, subd. (e)(1) [“Pending review and filing of the Supreme Court’s opinion, unless otherwise ordered by the Supreme Court under (3), a published opinion of a Court of Appeal in the matter has no binding or precedential effect, and may be cited for potentially persuasive value only”].)

The court therefore denies Plaintiff’s motion (1) for an order finding that Defendant materially breached the Arbitration Agreement and has waived its right to arbitrate, such that Plaintiff may proceed in court under section 1281.97, and (2) for an award of attorney’s fees and costs in her favor and against Defendant pursuant to section 1281.99.

ORDER

            The court denies plaintiff Noor Abbas, individually and on behalf of all similarly situated individuals’ motion for relief from arbitration agreement and for sanctions.

            The court orders defendant Space Exploration Technologies Corp., d/b/a SpaceX to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 31, 2025

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court