Judge Theresa M. Traber, Case Number: 23STCV21363, Date: 2024-12-18 Tentative Ruling

Judge: Theresa M. Traber, Case: 23STCV21363, Date: 2024-12-18 Tentative Ruling

Case Number: 23STCV21363 Hearing Date: December 18, 2024 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: December 18, 2024 TRIAL DATE: NOT SET

CASE: Gabriela Cortez v. Burberry Limited, et al.

CASE NO.: 23STCV21363

MOTION FOR STAY PENDING APPEAL

MOVING PARTY: Defendants Burberry Limited and Ana Fragoso

RESPONDING PARTY(S): Plaintiff Gabriela Cortez

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an employment discrimination action that was filed on September 6, 2023. Plaintiff alleges that she was harassed for taking maternity leave and terminated for complaining about her mistreatment.

Defendants move for a stay pending appeal of the Court’s denial of their motion to compel arbitration.

TENTATIVE RULING:

Defendants’ Motion for Stay Pending Appeal is GRANTED.

DISCUSSION:

Defendants move for a stay pending appeal of the Court’s denial of their motion to compel arbitration.

Code of Civil Procedure section 916(a) provides that, “[e]xcept as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc § 916(a).) However, Code of Civil Procedure section 1294, subdivision (a), as amended this year, states that, “[n]otwithstanding Section 916, the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.” (Code Civ. Proc. § 1294(a).)

On May 24, 2024, the Court issued its ruling on Defendants’ Motion to Compel Arbitration. The Court found that the Parties had entered into an agreement to arbitrate, governed by the Federal Arbitration Act, which applied to the claims asserted in this action. (May 24, 2024 Ruling on Matter Taken Under Submission pp. 4.) However, the Court declined to enforce the agreement on the grounds that the agreement “is permeated with substantive unconscionability and is unconscionable on the whole.” (May 24, 2024 Ruling on Matter Taken Under Submission p. 12.) Defendants appealed that ruling on July 11, 2024. (Notice of Appeal.)

Defendants argue that the matter should be stayed, notwithstanding Code of Civil Procedure section 1294, because, under recent federal authority, the Federal Arbitration Act mandates a stay of proceedings upon appeal from an order denying arbitration. (Coinbase Inc. v. Bielski (2023) 599 U.S. 736, 740-44 [holding that, although no express provision of the FAA mandates a stay pending appeal from an order denying arbitration, such a requirement is implicit, and its absence would defeat the purpose of the Act].) Although Defendants argue that the Court’s prior ruling that the Federal Arbitration Act applies resolves the matter, closer examination of the applicable precedent reveals greater complexity.

Generally, only the substantive requirements—and not the procedural requirements—of the Federal Arbitration Act apply to proceedings in California courts. (Cronus Invs., Inc. v. Concierge Servs. (2005) 35 Cal.4th 376, 389.) However, parties to an arbitration agreement may expressly adopt the Federal Arbitration Act’s procedural provisions. (Id. at 394.) In Cronus, the invocation of the Federal Arbitration Act in the agreement at issue stated “The designation of a situs or specifically a governing law for this agreement or the arbitration shall not be deemed an election to preclude application of the [FAA], if it would be applicable.” (Cronus, supra, 35 Cal.4th at 381.) Interpreting this language, our Supreme Court concluded that the parties to the arbitration agreement had not adopted the FAA’s procedural requirements, because that agreement’s invocation of the Act was limited to “applicable” portions of the FAA which conflicted with California law and was otherwise expressly subordinate to a choice-of-law provision adopting California law. (Id. at 393-394.) The high Court found that there was no conflict between the Federal Arbitration Act and the statute at issue—Code of Civil Procedure section 1281.2(c)—which would trigger the invocation of the FAA. (Id.) Defendants instead analogize this case to Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, in which the Court of Appeal determined that an agreement which only stated that arbitration would be conducted “pursuant to the FAA,” and contained no contrary choice of law provision, constituted an express adoption of the FAA’s procedural requirements. (Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1121-22.)

Here, the applicable provision stated that “[t]he interpretation and enforcement of this Agreement shall be governed by the Federal Arbitration Act, or, to the extent the Federal Arbitration Act is not applicable, then under applicable state law.” (Declaration of Nicola Internullo ISO Mot. Compel Arb. Exh. A.) Although this language, like the language in Cronus, contemplates the potential inapplicability of the Federal Arbitration Act, there is no separate choice of law provision adopting California law to which this language would be subordinated. Instead, this language bears greater similarity to the statement that arbitration would be conducted “pursuant to the FAA” at issue in Rodriguez. (Rodriguez, supra, 136 Cal.App.4th at 1121-22.) Indeed, this language, arguably, is more explicit, as it expressly invokes the Federal Arbitration Act as to both the interpretation and enforcement of the Agreement. (Internullo Decl. Exh. A.) Plaintiff attempts to distinguish Rodriguez by arguing that it, like Cronus, concerned section 1281.2(c), and not this statute. (Rodriguez, supra, 136 Cal. App. 4th at 1121-22.) While true, that argument is not material, as Rodriguez is not offered for the California statute at issue but for guidance on how to interpret of the invocation of the FAA in this Agreement. With respect to the Agreement itself, Plaintiff asserts that the Court’s decision not to enforce the agreement somehow invalidates the Court’s separate finding that the Federal Arbitration Act applies to the Agreement. Plaintiff cites no authority for that position.

Based on this record, the Court concludes that the Agreement at issue contains an express adoption of the Federal Arbitration Act, such that both the substantive and the procedural provisions of the Act apply to this Agreement. Therefore, notwithstanding Code of Civil Procedure section 1294(a) and pursuant to the Supreme Court’s holding in Coinbase Inc. v. Bielski, Defendants are entitled to a stay of this action pending resolution of their appeal from the Court’s order denying arbitration.

CONCLUSION:

Accordingly, Defendants’ Motion for Stay Pending Appeal is GRANTED.

Moving Parties to give notice.

IT IS SO ORDERED.

Dated: December 18, 2024 ___________________________________

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.