Judge Salvatore Sirna, Case Number: 24PSCP00353, Date: 2024-11-07 Tentative Ruling

Judge: Salvatore Sirna, Case: 24PSCP00353, Date: 2024-11-07 Tentative Ruling

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Case Number: 24PSCP00353 Hearing Date: November 7, 2024 Dept: G

Petitioner Edward Zheng’s Petition to Vacate Arbitration Discovery Order

Respondent: Respondent United Safety Technology Inc.

TENTATIVE RULING

Petitioner Edward Zheng’s Petition to Vacate Arbitration Discovery Order is DENIED.

BACKGROUND

This petition arises from a discovery dispute in a separate arbitration proceeding. In July 2023, Stone Barkley Company LLC (SBC) commenced arbitration proceedings against Respondent United Safety Technology Inc. (UST) for an alleged breach of a commercial lease agreement. The arbitrator for that proceeding issued a deposition subpoena to Petitioner Edward Zheng on March 26, 2024. On June 14, 2024, the arbitrator granted a motion by UST to compel Zheng’s compliance with the deposition subpoena.

On July 18, 2024, Zheng filed the present petition seeking to vacate the arbitrator’s order to comply with the deposition subpoena.

A hearing on the present petition is set for November 7, 2024, with a case management conference and OSC Re: Failure to File Proof of Service set for December 4, 2024.

ANALYSIS

Zheng seeks to vacate the arbitrator’s order to comply with the deposition subpoena on the grounds that the arbitrator lacks the authority to order Zheng’s compliance as a non-party. For the following reasons, the court DENIES Zheng’s petition.

Legal Standard

Code of Civil Procedure section 1283.05 provides for depositions in arbitration proceedings. Its provisions are automatically incorporated into any “agreement to arbitrate any dispute, controversy, or issue arising out of or resulting from any injury to, or death of, a person caused by the wrongful act or neglect of another.” (Code Civ. Proc., § 1283.1, subd. (a).) In all other cases, its provisions only apply “if the parties by their agreement so provide.” (Code Civ. Proc., § 1283.1, subd. (b).)

“Generally, an arbitrator's decision in a dispute between parties to an arbitration agreement is subject to only limited judicial review.” (Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 534 (Berglund). But when a nonparty is subject to an arbitrator’s discovery orders, those orders are subject to “full judicial review.” (Id., at p. 537-538.)

Discussion

In this case, the key issue is whether the arbitration provision in SBC and UST’s lease agreement incorporates the provisions of Code of Civil Procedure section 1283.05 as required by Code of Civil Procedure section 1283.1, subdivision (b).

In ordering Zheng’s compliance, the arbitrator found it did. (Sperling Decl., Ex. 4, p. 2.) While the arbitrator acknowledged that the arbitration provision lacks any explicit reference to Code of Civil Procedure section 1283.1, the arbitrator noted Zheng had failed to point to any authority that required an explicit reference to this code section. (Sperling Decl., Ex. 4, p. 3-4.) Instead, the arbitrator found it significant that arbitration provision explicitly allowed for the arbitrator to order the deposition of third-party witnesses. (Sperling Decl., Ex. 4, p. 4.) The language that the arbitrator focused on states as follows:

“The Arbitrator shall have the discretion to order a pre-hearing exchange of information by the Parties, including, without limitation, production of requested documents, exchange of summaries of testimony of proposed witnesses, and examination by deposition of parties and third-party witnesses. This discretion shall be exercised in favor of discovery reasonable under the circumstances. The Arbitrator shall issue subpoenas and subpoenas duces tecum as provided for in the applicable statutory or case law (e.g., in California Code of Civil Procedure Section 1282.6).” (Enin Decl., Ex. 1, SB000124.)

Zheng disagrees and argues the “case law is clear” that the arbitration provision must specifically reference the applicable authority. (Petition, p. 6:23-7:10.) But Zheng’s supporting citation to Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360, 396-397, provides no such requirement. While the court in Aixtron held the arbitration agreement did not incorporate Code of Civil Procedure section 1283.05 because it neither referenced this provision nor the California Discovery Act, the court also noted the arbitration provision failed to “even contain the word ‘discovery.’” (Id., at p. 397.) Unlike the arbitration provision in Aixtron, the present arbitration provision in this matter specifically discusses the parties’ discovery remedies and includes specific reference to the arbitrator’s ability to issue subpoenas.

Ultimately, as in the proceedings before the arbitrator, Zheng fails to point to any authority that requires the arbitration agreement to specifically reference the applicable discovery statutes. Furthermore, such an approach is inconsistent with the principles of contractual interpretation which focus on determining the parties’ intent. (See Pacific Gas & Elec. Co. v. G. W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d 33, 38.) While the parties would certainly be well-served to specifically reference the applicable discovery code sections in their arbitration provision, their intent to incorporate Code of Civil Procedure section 1283.05 is evidenced by the agreement’s specific discussions of the arbitrator’s discovery powers and their specific reference to the arbitrator’s ability to order the depositions of third party witnesses. Thus, the court finds the arbitrator was not without authority to order Zheng’s deposition and Zheng is without authority to refuse.

Last, Zheng argues there is no factual need for Zheng to be deposed, insinuating that the purpose of such deposition is to harass Zheng and distract from the issues in arbitration. (Petition, p. 7:11-8:11.) Zheng fails to provide any evidence, however, to support this claim. Zheng also claims the issues Zheng will be examined on were already addressed in a separate arbitration. But as the arbitrator noted in rejecting the same argument, the other arbitration proceeding involved an interim decision that appeared only to address breach of contract claims as opposed to the present case which involves allegations of fraudulent inducement. (Sperling Decl., Ex. 3-A, Ex. 4, p. 4.)

Accordingly, the court DENIES Zheng’s petition.

CONCLUSION

Based on the foregoing, Zheng’s petition to vacate the arbitrator’s discovery order is DENIED.