Judge: Theresa M. Traber, Case: 22STCP03453, Date: 2022-12-22 Tentative Ruling

Case Number: 22STCP03453    Hearing Date: December 22, 2022    Dept: 47

Tentative Ruling

 

Judge Theresa M. Traber, Department 47

 

 

HEARING DATE:     December 22, 2022                TRIAL DATE: NOT SET

                                                          

CASE:                         Ontrak Inc. v. Dariohealth Corp.

 

CASE NO.:                 22STCP03453           

 

PETITION TO ENFORCE ARBITRATION SUBPOENA

 

MOVING PARTY:               Petitioner Ontrak Inc.

 

RESPONDING PARTY(S): Respondent Dariohealth Corp.

 

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

           

            This is a petition to compel a third party to comply with a deposition subpoena served as part of an ongoing arbitration proceeding between Petitioner Ontrak, Inc. and two of its former employees who allegedly misappropriated trade secrets and confidential information and disclosed them to the non-party Respondent, Dariohealth Corp.

           

TENTATIVE RULING:

 

Petitioner Ontrak Inc.’s petition to enforce a third-party deposition subpoena is GRANTED.

 

Respondent is to designate a person most qualified and produce the documents or things described in the subpoena at a date and time of Petitioner’s choosing.

 

DISCUSSION:

 

            Petitioner Ontrak Inc. petitions to enforce a third-party deposition subpoena brought in connection with an arbitration proceeding.

 

Petitioner’s Evidentiary Objections

 

            Petitioner raises evidentiary objections to the Declaration of Gerry Silver in support of the opposition. Petitioner cites no law requiring the court to rule on these objections in the context of a petition to enforce an arbitration subpoena. To the extent that the Court relies on the evidence presented, the Court will take Petitioner’s objections into account when weighing the evidence.

 

Respondent’s Sur-Reply

 

            Respondent filed a sur-reply to the petition on December 19, 2022. Respondent cites no law entitling it to file this document. The Court therefore refuses to consider this filing.

 

Applicability of Federal Arbitration Act

 

Neither party addresses directly whether the arbitration agreement at the center of this dispute is governed by the Federal Arbitration Act or the California Arbitration Act. However, section 8.6 of the Employment Agreement states: “[t]he validity, construction, and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of California, except where Federal Law is indicated.” (Petitioner Exh. 4.) Section 8.12, which is the arbitration clause of the agreement, does not specifically state whether the FAA or CAA governs, except as to class, collective, or representative actions. (See Exh. 4. § 8.12.) A statement that California law governs a contract is sufficient to establish that the California Arbitration Act applies. (Mastick v. TD Ameritrade Inc., (2012) 209 Cal.App.4th 1258, 1264.) As the agreement contains an express statement that California law governs and does not expressly state that the FAA applies to all circumstances, despite otherwise referencing it, the Court concludes that the California Arbitration Act governs the agreement.

 

Right to Compel Third-Party Deposition

 

            Under Code of Civil Procedure section 1283.05, the parties to an arbitration, after appointment of the arbitrator, “have the right to take depositions and obtain discovery regarding the subject matter of the arbitration, and, to that end, to use and exercise all of the same rights, remedies, and procedures, and be subject to all of the same duties, liabilities, and obligations in the arbitration” as they would under the Civil Discovery Act in a proceeding on the same matter before a superior court in a civil action, subject to the limitations of section 1283.1. (Code Civ. Proc. § 1283.05(a)[Emphasis added].) Section 1283.1 provides:

 

(a) All of the provisions of Section 1283.05 shall be conclusively deemed to be incorporated into, made a part of, and shall be applicable to, every 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.

 

(b) Only if the parties by their agreement so provide, may the provisions of Section 1283.05 be incorporated into, made a part of, or made applicable to, any other arbitration agreement.

 

(Code Civ. Proc. § 1283.1.)

 

            The right to discovery in arbitration proceedings under the California Arbitration Act is generally quite limited. (See, e.g., Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 534; see also Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106, fn.11 [“a limitation on discovery is one important component of the ‘simplicity, informality, and expedition of arbitration’”] abrogated in part on other grounds in ATT Mobility LLC v. Concepcion (2011) 563 U.S. 333.)

 

            Petitioner contends that the arbitration clause in the Employment Agreement is sufficient to incorporate section 1283.05, pursuant to subdivision (b) of section 1283.1. An express provision that discovery would be conducted pursuant to section 1283.05 is sufficient under section 1283.1(b). (Cox v. Bonni (2018) 30 Cal.App.5th 287, 304-305.) Similarly, a statement that arbitration would be conducted pursuant to the CAA “with full discovery permitted” is also sufficient to incorporate section 1283.05. (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 119.) However, an arbitration clause that contains no reference to discovery at all necessarily does not incorporate section 1283.05. (Aixtron Inc. v. Veeco Instruments, Inc. (2020) 52 Cal.App.5th 360, 396-97.)

 

            Here, the agreement provides that the arbitration shall provide “for written discovery and depositions adequate to give the parties access to documents and witnesses that are essential to the dispute. . .” (Petitioner Exh. 4. § 8.12.) Petitioner argues that this is sufficient to incorporate section 1283.05. Respondent disputes this position, arguing that the discovery provision in the arbitration agreement is insufficient to incorporate section 1283.05.

 

            This dispute, in the Court’s view, is a red herring. The issue actually before the Court is not whether the arbitration agreement incorporates section 1283.05, but whether Petitioner has the authority to compel a non-party to comply with a subpoena pursuant to an arbitration agreement. As Petitioner states, both the previous arbitrator, the late Justice Jeffrey King (ret.), and the current arbitrator, Judge Lynn O’Malley Taylor (ret.) concluded that the subpoena to Respondent was proper, and that compliance with the subpoena is necessary to provide Petitioner with written discovery and depositions adequate to give the parties access to documents and witnesses that are essential to the dispute. (Petitioner’s Exhs. 2, 13.) Pursuant to the terms of the arbitration agreement, the arbitrator has the authority to resolve disputes concerning the construction or interpretation of the terms of the arbitration. (Petitioner’s Exh. 4 § 8.12.) Two different arbitrators did so on separate occasions and reached the same conclusion each time. The Court declines to disturb the findings of the arbitrator in this respect. The arbitrators have concluded that the subpoena is proper. The Court is inclined to give effect to their decisions.

 

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Improper Objections

 

            Turning to the merits of the subpoena and Respondent’s objections in response, a cursory review of the evidence establishes that Respondent served only general objections to the deposition subpoena, without reference to the specific requests listed in the subpoena. (Petitioner’s Exh. 8.) These objections are improper and invalid on their face.

 

No Separate Statement

 

            Respondent contends that the petition should be denied because Petitioner did not include a separate statement, as required by California Rule of Court 3.1345. Although Respondent is correct that a separate statement is required, the Court is inclined to overlook this defect given that Respondent’s only response to the subpoena was a set of general objections made without reference to the specific requests in the subpoena. (Petitioner’s Exh. 8) The Court is unwilling to entertain an objection on a procedural defect from an entity that has chosen to stand on such facially inadequate responses.

 

CONCLUSION:

 

Accordingly, Petitioner Ontrak Inc.’s petition to enforce a third-party deposition subpoena is GRANTED.

 

Respondent is to designate a person most qualified and produce the documents or things described in the subpoena at a date and time of Petitioner’s choosing.

 

Moving Party to give notice.

 

IT IS SO ORDERED.

 

Dated: December 22, 2022                             ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

 


            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@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.