Judge Thomas D. Long, Case Number: 24STCP01561, Date: 2024-08-23 Tentative Ruling

On March 15, 2024, Petitioner Edward A. Klein filed a demand for arbitration with JAMS, in accordance with Respondent Gamestop Corp.’s Terms & Conditions. (Rosen Decl. ¶ 2; Logan Decl. ¶ 8.)

On May 1, 2024, JAMS sent to Petitioner and Respondent a Final Request for Filing Fee from Respondent. (Rosen Decl. ¶ 5 & Ex. G.) The letter stated that the outstanding invoice (dated March 26, 2024) was due upon receipt, and JAMS would close the file if the non-refundable filing fee was not received within 30 days. (Rosen Decl., Ex. G.)

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.)

Respondent does not oppose resolution of the claims in arbitration before JAMS and does not dispute that the claims are covered by the arbitration provision in the contract. (Opposition at p. 2.) Instead, Respondent argues that Petitioner should not be entitled to attorney fees and costs.

If, in a consumer arbitration, the drafting party materially breaches the arbitration agreement and is in default by failing to timely pay certain fees and costs, the consumer may compel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration. (Code Civ. Proc., § 1281.97, subds. (a)-(b).)

Respondent argues that the Petition was unnecessary because it did not refuse to arbitrate the dispute. (Opposition at pp. 5-6.) Respondent contacted Petitioner on April 30, 2024 to discuss the arbitration demand, and it requested an accounting of Petitioner’s damages on May 7, 2024. (Logan Decl. ¶¶ 9-10.) Respondent contends that it did not materially breach the arbitration agreement because it did not utterly refuse to participate in arbitration proceeding. (Opposition at p. 6.)

As a matter of law, Respondent’s failure to pay certain fees and costs within 30 days after the due date is a material breach of the arbitration agreement. (Code Civ. Proc., § 1281.97, subd. (a).) Respondent’s payment to JAMS was due upon receipt of the March 26, 2024 invoice. (See Rosen Decl., Ex. G.) Respondent was therefore already in material breach before it contacted Petitioner and “agree[d] to make Petitioner whole without the need to incur the time and expense of an arbitration.” (See Opposition at p. 6.)

The Court finds that Respondent was in material breach of the arbitration agreement.

The Court shall impose monetary sanctions against a drafting party that has materially breached the arbitration agreement. (Code Civ. Proc., § 1281.99, subd. (a).)

Petitioner requests $9,495.00 in sanctions for attorney fees and costs incurred in connection with the Petition. (Motion at pp. 9-10; Rosen Decl. ¶ 7.)

Petitioner’s counsel has an hourly rate of $750. (Rosen Decl. ¶ 6.) He spent more than six hours preparing the Petition, and he anticipates spending at least six more hours reviewing Respondent’s Opposition, preparing a Reply, and attending the hearing. (Rosen Decl. ¶ 7.) Counsel’s hourly rate is excessive for this litigation. Additionally, six hours spent on the Opposition, Reply, and hearing is excessive.

The Court finds that the requested amount of fees is unreasonable, and a reasonable amount of attorney fees and costs under Code of Civil Procedure section 1281.99 is $3,295.00 (7 hours at $400/hour, plus $495 filing fee).

Petitioner requests his reasonable attorney fees and costs related to the arbitration, pursuant to Code of Civil Procedure section 1281.97, subdivision (b)(2). (Motion at pp. 8-9.)

The statute states that Petitioner may compel arbitration “in which” Respondent shall pay reasonable attorney fees and costs related to the arbitration. (Code Civ. Proc., § 1281.97, subd. (b)(2).) The Court will not award an indeterminate amount of attorney fees that are yet to be incurred in the arbitration proceeding, where this Court has no jurisdiction. Any award of fees and costs related to the arbitration should be decided in the arbitration. The request for those additional attorney fees is denied.

The Court only awards sanctions under Code of Civil Procedure section 1281.99, subdivision (a), for Petitioner’s expenses in bringing this Petition as a result of Respondent’s material breach.

Edward A. Klein’s dispute against Gamestop Corp. is ordered to arbitration. Gamestop Corp. is ordered to pay sanctions of $3,295.00 to Edward A. Klein within 30 days.

A Status Conference Re: Arbitration is scheduled for November 25, 2024 at 8:30 a.m. If the arbitration proceedings are again delayed or closed due to Respondent’s violation of this Order, the Court may impose sanctions. If the arbitration is proceeding by that date, the Court will dismiss this action.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court