LOS ANGELES (Legal Newsline) – Time mostly wasted can’t cancel a defendant’s request to send a lawsuit to arbitration.
The California Second Appellate District made that determination on May 10, ruling for a company that waited 13 months to invoke an arbitration clause. A trial judge had found that Commerce Club’s wait, plus extensive discovery meant it had waived any right to arbitrate.
But the Second District disagreed.
“Our Supreme Court has made clear that participation in litigation alone cannot support a finding of waiver, and fees and costs incurred in litigation alone will not establish prejudice on the part of the party resisting arbitration,” the decision says.
“This rule has particular force here, where (Peter) Quach admitted he incurred no costs in litigation that he would not otherwise have expended had the case gone to arbitration earlier.”
In 2015, Quach signed employment papers with Commerce Club, which operates a hotel and casino in Commerce. This new agreement – Quach was originally hired in 1989 – required the resolution of disputes related to his recruitment, employment or termination of employment to be done in arbitration.
He was fired in 2018 after a customer was found to be using counterfeit $100 bills during his shift supervising the casino floor. The two sides participated in discovery throughout 2020, until Commerce Club filed a motion to compel arbitration that December.
The Second District noted California law strongly favors arbitration.
“The record also is bereft of evidence that Commerce Club engaged in bad faith abuse of judicial processes akin to the defendants in (a related case), who used judicial mechanisms such as demurrers to their advantage while resisting the plaintiff’s use of other judicial mechanisms,” the decision says.
“Instead, the parties engaged only in party-directed discovery, and had yet to involve the trial court or invoke its powers through demurrers, motion practice or otherwise.”