Judge: Stephen I. Goorvitch, Case: 21STCV26283, Date: 2022-08-31 Tentative Ruling

Case Number: 21STCV26283    Hearing Date: August 31, 2022    Dept: 39

Massiel Linneth Hernandez v. Sohnen Enterprises, Inc.

Case No. 21STCV26283

Motion to Vacate Stay and Withdraw from Arbitration

            Plaintiff Massiel Linneth (“Plaintiff”) filed this employment discrimination case against Sohnen Enterprises, Inc. (“Defendant”).  Pursuant to Plaintiff’s arbitration agreement, the parties stipulated to submit this matter to binding arbitration, and the Court granted the stipulation on November 9, 2021.  On March 23, 2022, Plaintiff submitted a demand for arbitration to JAMS and Defendant.  (Declaration of Jessica M. Abreu, Exh. B.)  On April 7, 2022, JAMS sent the parties a “Notice of Intent to Initiate Arbitration” that required Defendant to pay a filing fee of $1,750.  (Id., Exh. D.)  The letter states: “Fees are due upon receipt.”  (Ibid.)  An invoice request from JAMS, dated April 7, 2022, was sent to Defendant’s counsel.  (Ibid.)  Defendant’s counsel did not make the payment until May 13, 2022.  (Id., Exh. E.)

            Now, Plaintiff seeks to vacate the stay and withdraw from arbitration.  Code of Civil Procedure section 1281.97 states: “[I]f 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 or the arbitration, and waives its right to compel arbitration under section 1281.2.”  (Code Civ. Proc., § 1281.97(a)(1).)  Defendant paid the required fee late and therefore has breached the arbitration agreement. 

            Defendant argues that this section is preempted by the Federal Arbitration Act (the “FAA”).  This matter was recently resolved by Gallo v. Wood Ranch USA, Inc. (2022) --- Cal. Rptr.3d ---, 81 Cal.App.5th 621, which held that the FAA does not preempt Code of Civil Procedure section 1281.97.  The Court also grants Plaintiff’s motion because Defendant violated the Court’s order to pay the entire cost of the arbitration filing fee and the arbitrator’s initial deposit on or before the arbitrator’s deadline.  The fee was due upon receipt.  Defendant argues that the Federal Rules of Civil Procedure benefit its position.  While the rules may apply to the arbitration itself, they do not apply to this Court’s decisions in advance of the arbitration provision.  The Court also notes that the parties delegated the gateway determinations to this Court. 

            Plaintiff seeks sanctions in the amount of $1,230, and the request is granted, per Code of Civil Procedure section 1281.99, which states that the Court “shall” impose sanctions for a material breach of an arbitration agreement.  The Court finds that the requested amount is fair and reasonable under the circumstances.

            Based upon the foregoing, the Court orders as follows:

            1.         Plaintiff’s motion to vacate the stay and withdraw from the arbitration agreement is granted.  The stay is lifted, and the parties are not required to arbitrate this matter. 

            2.         Defendant shall pay Plaintiff, by and through counsel, sanctions in the amount of $1,230 within thirty (30) days.

            3.         The Court sets the following dates:

                        Final Status Conference:        September 29, 2023, at 9:30 a.m.

                        Trial:                                        October 10, 2023, at 9:30 a.m.

The discovery and motions deadlines shall be based on this trial date.

            4.         Plaintiff’s counsel shall provide notice and file proof of such with the Court.