Judge: Theresa M. Traber, Case: 24STCV04058, Date: 2025-02-10 Tentative Ruling

Case Number: 24STCV04058    Hearing Date: February 10, 2025    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     February 10, 2025                 TRIAL DATE: NOT SET

CASE:                         Shiela Dietz v. FirstService Residential Cailfornia, LLC, et al.

CASE NO.:                 24STCV04058           

MOTION TO COMPEL ARBITRATION

MOVING PARTY:               Defendant FirstService Residential California, LLC

RESPONDING PARTY(S): Plaintiff Shiela Dietz

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is a wrongful termination and employment discrimination action that was filed on February 16, 2024. Plaintiff alleges that she was harassed and forced out of her employment for disclosing breaches of confidentiality and based on her age.

Defendant FirstService Residential California, LLC moves to compel arbitration of this dispute.

TENTATIVE RULING:

Defendant’s Motion to Compel Arbitration is DENIED.

DISCUSSION:

Defendant FirstService Residential California, LLC moves to compel arbitration of this dispute.

Existence of Arbitration Agreement

Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (Blake v. Ecker (2001) 93 Cal.App.4th 728, 741 (overruled on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094).) A party petitioning to compel arbitration has the burden of persuasion to establish the existence of a valid agreement to arbitrate, and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356-57.)

As to the burden of production, rather than persuasion, courts have articulated a three-step burden shifting process:

First, the moving party bears the burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” [citation] The moving party “can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature.” [citation] Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. [citations] For this step, “it is not necessary to follow the normal procedures of document authentication.” [citation] If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.

If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. [citation] The opposing party can do this in several ways. For example, the opposing party may testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement. [citations]

If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party. [citation].

(Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165-66.)

Here, Defendants seek to compel arbitration based on a Mutual Agreement to Mediate and Arbitrate Claims executed by Plaintiff first on August 9, 2019, then again in 2021 and again via electronic signature on May 27, 2022. (Declaration of Michelle Swartz ISO Mot. ¶ 12; Exh. C.) Plaintiff, in opposition, does not dispute that she signed an arbitration agreement.

The Court therefore finds that there is an agreement to arbitrate between the parties.  

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Applicability of the FAA

            The Agreement states that “[e]xcept as provided in this agreement, arbitration shall be governed by and proceed in accordance with and be subject to the provisions of the Federal Arbitration Act; however, to the extent that the Federal Arbitration Act is inapplicable or held not to require arbitration of a particular Claim or Claims, the California Arbitration Act - Title 9 of Part III of the California Code of Civil Procedure (commencing at Section 1280, et seq.), or any successor or replacement statute(s), shall apply” (Lamber-Gaffney Decl. Exh. A p.1.) This language is an express adoption of the Federal Arbitration Act. However, under controlling precedent, this authority does not preclude the application of California law as relevant. (Cronus Investments Inc. v. Concierge Svc. (2005) 35 Cal.4th 376, 394.)  

Scope of the Arbitration Agreement

             “The scope of arbitration is a matter of agreement between the parties.” (See, e.g., Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.) “A party can be compelled to arbitrate only those issues it has agreed to arbitrate.” (Perez v. U-Haul Co. of California (2016) 3 Cal.App.5th 408, 419.)

            The parties agree that Plaintiff’s claims as alleged in the Complaint are within the scope of the arbitration agreement. As this matter is not in dispute, the Court need not address this matter further.

Statutory Waiver of Right to Compel Arbitration

            Plaintiff’s principal challenge to the Arbitration Agreement is that Defendants waived their right to compel arbitration by failing to timely pay arbitration fees.

(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if 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 of the arbitration, and waives its right to compel arbitration under Section 1281.2.

(2) After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed 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.

(Code Civ. Proc. § 1281.97(a).) If the drafting party is in default under subdivision (a), the employee may withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. (Code Civ. Proc. § 1281.97(b).) The thirty-day period to respond begins to run upon receipt of the invoice by the drafting party unless the parties expressly agree to the contrary. (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 774.) A drafting party must strictly comply with the statute to avoid waiver of the right to arbitration. (Id. at 775.) 

Defendant concedes arbitration was opened on December 5, 2023, that its administrative fee was due by January 4, 2024, and that the fee was not timely paid. (Declaration of Jeffrey Katz ISO Mot. ¶¶ 6-7.) Nevertheless, Defendant argues that Code of Civil Procedure section 1281.97 is not applicable because California law is not adopted by the Agreement, and section 1281.97 is specifically preempted by the Federal Arbitration Act. Defendant’s first argument is contradicted by express California precedent. (Cronus Investments Inc. v. Concierge Svc. (2005) 35 Cal.4th 376, 394.) As to the latter contention, Defendant’s position is based on the recent opinion Hernandez v. Sohnen Enterprises (2024) 102 Cal.App.5th 222, reaching precisely that conclusion. (Hernandez v. Sohnen Enterprises (2024) 102 Cal.App.5th 222, 243-44 (review granted Aug 21, 2024).) Hernandez itself, however, expressly acknowledges that it is an outlier from a long line of authority finding that section 1281.97 is not preempted. (Id.; see, e.g., Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 641-46.) Moreover, our Supreme Court has granted review of Hernandez on this specific issue, so the opinion hs no binding or precedential effect. (Cal. Rules of Court Rule. 8.1115(e)(1).) As controlling precedent requires the Court to give effect to California statutes in the context of arbitration agreements of the type presented here, the Court elects to adopt the majority view on this motion. Under the plain language of section 1281.97, Defendant’s admissions establish that it has waived the right to binding arbitration.

CONCLUSION:

            Accordingly, Defendant’s Motion to Compel Arbitration is DENIED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  February 10, 2025                              ___________________________________

                                                                                    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.