Why Not Wait?

Khalatian v. Prime Time Shuttle Inc., No. B255945 (D2d8 Jun. 9, 2015)

In an appeal of the denial of a motion to compel arbitration in a wage-and-hour misclassification case, the court of appeal uncontroversially finds that plaintiff’s job as an airport shuttle driver involved interstate commerce and thus that the FAA preempted the anti-arbitration provisions in Labor Code § 299.

But it reverses the trial court’s finding that defendant waived its right to arbitrate by failing to bring a motion to compel until fourteen months into the litigation. That decision is largely factual and thus reviewed for only substantial evidence. The court of appeal finds that there wasn’t substantial evidence supporting many of the trial court’s fact findings. 

For instance, the trial court’s order noted that a demurrer had been overruled, even though the record showed that it had been filed but withdrawn when Plaintiff amended his complaint. And it said that there had been substantial participation in discovery, when there was only one set of document demands by a Defendant, resulting in the production of only 177 documents. And it said that trial was at hand, even though the trial date was a year away. The trial court’s findings thus did not support a finding that there was prejudice to the plaintiff due to the fourteen-month delay.

I don’t get this one. Particularly, I don’t understand the court’s heavy reliance on the Iskanian opinion in finding non-waiver. The salient aspect of the non-waiver finding in Iskanian was that the defendant timely moved for arbitration early in the case and only litigated because an intervening decision of the California Supreme Court—a decision later overturned by the U.S. Supreme Court—clearly held that its claims weren’t arbitrable. But as soon as that landscape changed to suggest that the Iskanian defendant did, in fact, have the right to compel arbitration, Defendants renewed their efforts to get their case out of court. So nothing they did was inconsistent with enforcing their right to arbitrate.

That is hardly similar to the facts here, which entail an entirely unexplained fourteen months of participation in active litigation when the law was clear, followed by a very late motion to compel. As Iskanian explains, unjustified or unreasonable delay can waive arbitration. Even if the trial court here overstated the facts a little in favor of a waiver, I find it hard to understand how it should be reversed under the pertinent standard of review. And indeed, the results of this case to some extent invite a degree of tactical choice that isn’t appropriate for a defendant that truly believes it has a right to kick a plaintiff out of court.

Reversed.