Judge: Salvatore Sirna, Case: 21PSCV00981, Date: 2023-10-02 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 21PSCV00981    Hearing Date: October 2, 2023    Dept: G

Plaintiff Rosindo Sandoval’s Motion to Vacate Order Sending the Parties to Arbitration

Respondent: Defendants Q and B Foods Inc., David Caudillo, Carolyn Shimono, and Francisco Arroyo

Defendants Q and B Foods Inc., David Caudillo, Carolyn Shimono, and Francisco Arroyo’s Motion to Compel Arbitration and Request for Sanctions

Respondent: Plaintiff Rosindo Sandoval

TENTATIVE RULING

Plaintiff Rosindo Sandoval’s Motion to Vacate Order Sending the Parties to Arbitration is DENIED.

Defendants Q and B Foods Inc., David Caudillo, Carolyn Shimono, and Francisco Arroyo’s Motion to Compel Arbitration is GRANTED and their Request for Sanctions is DENIED.

BACKGROUND

This is an employment discrimination action. Plaintiff Rosindo Sandoval is a veteran with disabilities that include hearing difficulties which require hearing aids and post-traumatic stress disorder (PTSD). In April 2016, Defendant Q and B Foods Inc. (Q&B Foods) hired Sandoval as a production mechanic. Sandoval alleges Defendants David Caudillo and Francisco Arroyo, who served as supervisors for Q&B Foods, began to harass and discriminate against Sandoval. Sandoval alleges they publicly disparaged Sandoval’s hearing issues, repeatedly bumped into Sandoval, falsely accused Sandoval of harassment, failed to investigate Sandoval’s claims involving safety concerns or other employee conduct, discouraged other employees from talking to Sandoval, and failed to give Sandoval a raise when all other employees received one. Sandoval also alleges Defendant Carolyn Shimono, a human resources supervisor for Q&B Foods, failed to address Caudillo and Arroyo’s alleged misconduct and instead told Sandoval to speak with Caudillo. Sandoval alleges Q&B Foods began to retaliate against Sandoval for making complaints by placing Sandoval on leave, issuing reprimands, and training another employee to replace Sandoval.

On November 24, 2021, Sandoval filed a complaint against Q&B Foods, Caudillo, Shimono, and Arroyo (collectively, Q&B Defendants), as well as Does 1-25, alleging the following causes of action: (1) harassment based on disability and veteran status, (2) discrimination based on disability and veteran status, (3) retaliation, (4) assault, (5) battery, (6) failure to prevent discrimination, (7) aiding and abetting discrimination, (8) negligent hiring and retention, and (9) intentional infliction of emotional distress (IIED).

On January 28, 2022, Sandoval filed a First Amended Complaint (FAC) against the same Q&B Defendants alleging the same causes of action.

On September 19, 2022, the court approved a stipulation by the parties to submit the present action to private arbitration.

On August 4, 2023, Sandoval filed the present motion to vacate the order sending parties to arbitration. Four days later on August 8, the Q&B Defendants filed a motion to compel arbitration. On August 28, the court granted an ex parte application by the Q&B Defendants to consolidate the hearings on parties’ arbitration motions. Accordingly, a hearing on the present motions is set for October 2 with a post-arbitration status conference and OSC Re: Sanctions for Failure to Appear on January 29, 2024.

ANALYSIS

Motion to Vacate Arbitration

Sandoval moves to vacate the parties’ stipulation to arbitrate the present dispute pursuant to Code of Civil Procedure section 1281.98. For the following reasons, the court DENIES Sandoval’s motion.

Legal Standard

In employment or consumer arbitrations where the drafting party is required to pay certain fees and costs, Code of Civil Procedure section 1281.98, subdivision (a)(1) requires that “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.” If the drafting party has materially breached the arbitration agreement pursuant to this subsection, the employee or consumer may unilaterally withdraw the claim from arbitration, continue the arbitration, petition for a court order compelling the payment of fees, or pay the fees due. (Code Civ. Proc., § 1281.98, subd. (b).)

Discussion

In this case, Sandoval argues the Q&B Defendants materially breached their agreement to arbitrate because they did not timely pay an $8,000 deposit to the American Arbitration Association (AAA). On May 22, 2023, the AAA emailed a letter to the parties’ counsel that included arbitration instructions. (Hechavarria Decl., ¶ 8, Ex. D.) The letter also advised that an $8,000 deposit was due upon receipt of the invoice included in the letter. (Hechavarria Decl., ¶ 8, Ex. D.) The letter also included the language from Code of Civil Procedure sections 1281.97 and 1281.98 with a warning that payments must be received within thirty days of the invoice date and that the AAA could not grant any extensions to the deadline absent an agreement by all the parties. (Hechavarria Decl., ¶ 8, Ex. D.)

On June 13, 2023, the AAA sent an email to the Q&B Defendants’ counsel with a remainder that the $8,000 payment was outstanding and must be received within thirty days of May 22, 2023. (Hechavarria Decl., ¶ 9, Ex. E.) On June 16, the AAA sent another email to the Q&B Defendants’ counsel that inquired about the status of their payment. (Hechavarria Decl., ¶ 11, Ex. F.) After the thirty-day period expired on June 22, the AAA sent an email to the parties’ counsel noting the Q&B Defendants had failed to make the payment and requesting a response from Sandoval’s counsel on how Sandoval wished to proceed. (Hechavarria Decl., ¶ 13, Ex. G.) On June 23, AAA received the payment from Q&B Defendants. (Lee Decl., ¶ 9.

In opposition to Sandoval’s motion, the Q&B Defendants argue they were not properly served with the invoice for the $8,000 payment because Code of Civil Procedure section 1281.98 requires the invoice to be served on the parties themselves rather than their counsel. Code of Civil Procedure section 1281.98, subdivision (a)(2), which the Q&B Defendants miscite as subdivision (b)(2), states the following:

“The arbitration provider shall provide an invoice for any fees and costs required for the arbitration proceeding to continue to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt. Any extension of time for the due date shall be agreed upon by all parties.” (Code Civ. Proc., § 1281.98, subd. (a)(2).)

In arguing the term “parties” does not include counsel, the Q&B Defendants point to other provisions in the Code of Civil Procedure that distinguish between the two including Code of Civil Procedure sections 2023.020; 2023.030; 1011; 128.5; 2030.300, subdivision (d); 2031.310, subdivision (h); 2033.290, subdivision (d); and 664.6.

“In construing a statute, a court’s objective is to ascertain and effectuate legislative intent. [Citation.] To determine legislative intent, a court begins with the words of the statute, because they generally provide the most reliable indicator of legislative intent.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 871.) The court “give[s] the words their usual and ordinary meaning [Citation], while construing them in light of the statute as a whole and the statute’s purpose [Citation].” (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 529-530.) “If there is no ambiguity in the language, [the court] presume[s] the Legislature meant what it said and the plain meaning of the statute governs.” (People v. Snook (1997) 16 Cal.4th 1210, 1215.) “Only when the statute's language is ambiguous or susceptible of more than one reasonable interpretation, may the court turn to extrinsic aids to assist in interpretation.” (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.) Pursuant to the doctrine of in pari materia, “[i]dentical language appearing in separate provisions dealing with the same subject matter should be accorded the same interpretation.” (Walker v. Superior Court (1988) 47 Cal.3d 112, 132.) This doctrine applies to separate statutes “when they relate to the same person or thing, or class of persons or things, or have the same purpose or object.” (Kaanaana v. Barrett Business Services, Inc. (2021) 11 Cal.5th 158, 175.)

In applying these principles here, the court finds the Q&B Defendants’ argument unpersuasive. None of the code sections cited involve arbitration and instead involve discovery disputes (Code Civ. Proc., §§ 2023.020; 2023.030; 2030.300; 2031.310; 2033.290); personal service requirements (Code Civ. Proc., § 1011), sanctions for frivolous actions or delaying tactics (Code Civ. Proc., § 128.5), and settlement stipulations (Code Civ. Proc., § 664.6.). Instead of looking to unrelated provisions of the Code of Civil Procedure, the court looks to the specific provisions governing arbitration in Title 9 where Code of Civil Procedure section 1281.98 can be found.

There, the term “parties to the arbitration” is specifically defined as “a party to the arbitration agreement, including any of the following: (1) A party who seeks to arbitrate a controversy pursuant to the agreement[,] (2) A party against whom such arbitration is sought pursuant to the agreement[, or] (3) A party who is made a party to the arbitration by order of the neutral arbitrator upon that party’s application, upon the application of any other party to the arbitration, or upon the neutral arbitrator’s own determination.” (Code Civ. Proc., § 1280, subd. (h).) Attorneys or counsel are not included in this definition.

In the title governing arbitrations, there are at least two times where this term is used separately from counsel. In Code of Civil Procedure section 1282.4, which governs the use of counsel in arbitration proceedings, an attorney who makes an appearance in an arbitration proceeding must serve certification “on the arbitrator, arbitrators, or arbitral forum, the State Bar of California, and all other parties and counsel in the arbitration whose addresses are known to the attorney.” (Code Civ. Proc., § 1282.4, subd. (c) (emphasis added).) In Code of Civil Procedure section 1281.9, which governs the neutrality of an arbitrator, an arbitrator must make disclosures involving prior involvement or conflicts of interest with parties in the arbitration proceeding or any lawyer for a party in the arbitration proceeding. (Code Civ. Proc., § 1281.9, subd. (a).)

In contrast to these provisions, other provisions governing service or mailing refer to this term without adding counsel. In Code of Civil Procedure section 1284, an applicant seeking to correct an arbitration award “shall deliver or mail a copy of the application to all of the other parties to the arbitration” and anyone opposing the application “shall deliver or mail a copy of the objection to the applicant and all the other parties to the arbitration.” In Code of Civil Procedure section 1283.6, a signed copy of an arbitration award must be served by the arbitrator “on each party to the arbitration personally or by registered or certified mail or as provided in the agreement.” Last, in Code of Civil Procedure section 1288.2, “[a] response requesting that an award be vacated or that an award be corrected shall be served and filed not later than 100 days after the date of service of a signed copy of the award upon: (a) [t]he respondent if he was a party to the arbitration; or (b) [t]he respondent's representative if the respondent was not a party to the arbitration.”

Like the latter provisions, Code of Civil procedure section 1281.98 requires the arbitration provider to “provide an invoice for any fees and costs required for the arbitration proceeding to continue to all of the parties to the arbitration. . . .  by the same means on the same day.” (Code Civ. Proc., § 1281.98, subd. (a)(2).) Because the Legislature used a defined term and does not add the term counsel or representative as done elsewhere, the court finds this provision is not satisfied when the invoice is only sent to the parties’ counsel. In fact, the issues in this case support this interpretation as sending the invoice directly to Sandoval and the Q&B Defendants would have avoided all the issues surrounding whether the service list was properly updated, whether the counsel listed were currently representing the parties, and whether the inclusion of legal support staff was appropriate.

Thus, because the AAA did not comply with the statutory requirements of Code of Civil Procedure section 1281.98, subdivision (a)(2) in failing to send the invoice to the parties directly, Code of Civil Procedure section 1281.98’s provisions are inapplicable. The court acknowledges Sandoval’s concern that such an interpretation could allow drafting parties to game the system by failing to provide their contact information. But the provisions of this section were intended by the Legislature to be followed strictly and do not allow for a drafting party’s fault, good faith, or substantial compliance to be considered. (See, e.g., Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1074-1075.) Given the strict compliance required and consequences for failing to comply, interpreting this provision to require service on the parties themselves appears appropriate, just, and in furtherance of the Legislature’s intent.

Accordingly, Sandoval’s motion is DENIED.

Motion to Compel Arbitration

The Q&B Defendants move to compel Sandoval to complete arbitration. For the following reasons, the court GRANTS their motion.

Legal Standard

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)¿ The court must grant a petition to compel arbitration unless it finds no written agreement to arbitrate exists, the right to compel arbitration has been waived, grounds exist for revocation of the agreement, or litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.¿ (Code Civ. Proc., § 1281.2.) A petition to compel arbitration functions as a motion. (Code Civ. Proc., § 1290.2.)

In a motion or petition to compel arbitration, “the moving party bears the burden of producing ‘prima facie evidence of a written agreement to arbitrate the controversy.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (Gamboa).) Once the court finds an arbitration agreement exists, the party opposing arbitration bears the burden of establishing a defense to enforcement by preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) In interpreting an arbitration agreement, courts apply the same principles used to interpret contractual provisions with the fundamental goal of giving effect to the parties’ mutual intentions and applying contractual language if clear and explicit. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) Because public policy strongly favors arbitration, “any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.)

The¿Federal Arbitration Act (FAA)¿applies to contracts that involve interstate commerce (9 U.S.C. §§ 1,¿2), but since arbitration is a matter of contract, the¿FAA¿also applies if stated in the agreement.¿ (See¿Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 355.) Pursuant to the FAA, the court’s role “is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 840, quoting U.S. ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 796.)

Discussion

In this case, there is no dispute that the parties are subject to binding arbitration as evidenced by the stipulation entered in September 2022. Instead, Sandoval opposes the Q&B Defendants’ motion to compel arbitration on the same grounds as Sandoval’s motion to vacate arbitration. But as noted above, these grounds fail. Accordingly, the Q&B Defendants’ motion is GRANTED.

The Q&B Defendants also seek to impose sanctions on Sandoval pursuant to Code of Civil Procedure section 128.5. But this section requires sanctions to be requested in a separate motion. (Code Civ. Proc., § 128.5, subd. (f)(1)(A).) Thus, the Q&B Defendants’ request is DENIED.

CONCLUSION

Based on the foregoing, Sandoval’s motion to vacate arbitration is DENIED and the Q&B Defendants’ motion to compel arbitration is GRANTED. Furthermore, the Q&B Defendants’ request for sanctions is DENIED.