Davis v. Shiekh Shoes, LLC

• Decision Date: 31 October 2022
• Docket Number: A161961
• Citation: 84 Cal.App.5th 956,300 Cal.Rptr.3d 787
• Parties: Britani DAVIS, Plaintiff and Respondent, v. SHIEKH SHOES, LLC, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

84 Cal.App.5th 956

300 Cal.Rptr.3d 787

Britani DAVIS, Plaintiff and Respondent,

v.SHIEKH SHOES, LLC, Defendant and Appellant.

A161961

Court of Appeal, First District, Division 2, California.

Filed October 31, 2022

Matern Law Group, PC, Matthew J. Matern ; Joshua D. Boxer, Manhattan Beach; Sara B. Tosdal, San Francisco; Kiran Prasad, Torrance, for Plaintiff and Respondent.

Cohen Law Group, Marc Cohen, Los Angeles, for Defendant and Appellant.

Richman, Acting P. J. Nineteen months after plaintiff Britani Davis filed suit against her former employer Shiekh Shoes, LLC (Shiekh), Shiekh moved to compel arbitration of Davis's claims. The trial court denied the motion, finding Shiekh waived its right to invoke arbitration by unreasonably delaying its arbitration demand and acting inconsistently with an intent to arbitrate. We affirm.

BACKGROUND

In August 2018, Shiekh hired Davis as a sales associate. As part of her "new hire" paperwork, Davis and Shiekh signed an agreement "to resolve any and all disputes or claims each may have against the other which relate in any manner whatsoever as to Employee's employment ... by binding arbitration" and to "waive their right to commence, be a party to, or class member of, any court action."

Davis's employment at Shiekh would prove to be short, however, as she resigned from the position a mere three months after being hired. According to Davis, she was subjected to ongoing, sexually explicit, and demeaning comments, unwanted touching, and indecent exposure from her co-worker, Danilo Ensuncho, as well as other harassing conduct from Shiekh customers.

On March 25, 2019, Davis filed a complaint against Shiekh and Ensuncho. The first cause of action asserted violations of the California Fair Employment and Housing Act (FEHA) ( Gov. Code, § 12900 et seq. ) based on (1) sex discrimination; (2) sexual harassment; (3) retaliation; and (4) failure to take all reasonable steps necessary to prevent discrimination and harassment. The first FEHA violation was alleged against both Ensuncho and Shiekh, while the other three FEHA violations were alleged solely against Shiekh. Davis also asserted three separate causes of action against Shiekh for negligent hiring, supervision, and retention; wrongful constructive discharge in violation of public policy; and intentional infliction of emotional distress.

On May 12, service of summons was completed.¹

On July 8, Shiekh, represented by counsel, answered Davis's complaint, asserting the arbitration agreement as an affirmative defense.

On July 30, Shiekh filed a case management statement, in which it requested a non-jury trial, estimated a trial between five to seven days, and noted that the case would be ready for trial "within 12 months of the date of the filing of the complaint." Shiekh also anticipated conducting written discovery, depositions, and expert discovery, and filing motions. Additionally, Shiekh noted its willingness to participate in a settlement conference, neutral evaluation, or binding private arbitration.

On August 14, the court scheduled a jury trial for July 20, 2020.

One month later, Davis commenced discovery, serving Shiekh with deposition notices, two sets of form interrogatories, special interrogatories, a request for admissions, and a request for production of documents. Two months after that, Shiekh served verified responses to the discovery requests. Although Shiekh objected on a variety of grounds, it did not assert a right to arbitrate Davis's claims.

In December, Davis and Shiekh engaged in meet-and-confer discussions regarding Shiekh's discovery responses, after which Shiekh supplemented its responses to Davis's special interrogatories, request for admissions, and request for production of documents.

On January 13, 2020, Shiekh filed a substitution of attorney, listing itself as its new attorney.

Meanwhile, Davis served written discovery on Ensuncho, who then moved for a stay of the proceedings and discovery, claiming that any forthcoming discovery responses concerning Davis's claims of sexual misconduct would potentially expose him to criminal liability. Based on this, Ensuncho sought a stay until the expiration of the statute of limitations for bringing criminal charges against him or, alternatively, until the resolution of the criminal proceeding in the event such charges were brought. Shiekh did not join in the motion or otherwise file a response. Davis opposed the motion, which the court later denied.

On June 22, Davis applied ex parte for an order to show cause why Shiekh's answer should not be stricken under Code of Civil Procedure sections 435 and 436. Under those provisions, Davis asserted, Shiekh, a business entity, could not represent itself in court in propria persona, but must appear through legal counsel. The court granted the application and set a hearing on the order to show cause.

On June 23, Davis filed an ex parte application to continue trial in light of Shiekh's failure to obtain counsel. The court denied the application because there was no stipulation among the parties for a continuance.

On June 30, Davis again sought to continue the trial date, this time by way of noticed motion. Shiekh filed no opposition. The court granted the motion and continued the trial date to September 28, 2020.

On July 14, Davis filed a dismissal with prejudice as to Ensuncho.

On August 24, seven months after being unrepresented by counsel, Shiekh filed a substitution of attorney designating Marc Cohen as its new attorney. The court then vacated the order to show cause on whether Shiekh's answer should be stricken.

On September 8, Davis filed another ex parte application to continue the trial date to May 10, 2021, attaching Davis's and Shiekh's stipulation. The stipulation stated "[Shiekh's] counsel requires additional time to complete necessary discovery and prepare for trial" and "the Parties have agreed to an extension of the trial date and related deadlines in order to complete discovery in this matter, as well as allow time to address and resolve any potential disputes." The court granted the application and continued the trial date to May 10, 2021.

On October 5, 2020—about 17 months after Shiekh was served with the complaint and seven months before the new trial date—Shiekh moved to compel arbitration and to stay the action pursuant to both the Federal Arbitration Act (FAA) ( 9 U.S.C. § 1 et seq. ) and California Arbitration Act (CAA) ( Code Civ. Proc., § 1280 et seq. ) Anticipating an argument from Davis that Shiekh had waived its right to invoke arbitration, Shiekh asserted its participation in the lawsuit thus far was de minimis and therefore it did not act inconsistently with an intent to arbitrate. Shiekh acknowledged it had delayed in filing a motion to compel arbitration, but argued the delay was excusable, citing its lack of counsel for several months, pandemic-related disruptions to the court, and "the fact that [Ensuncho] seemed to be the primary target of [the] complaint, until his dismissal from the action on July 14, 2020." Shiekh further asserted the absence of prejudice to Davis from its conduct in the litigation was a factor weighing against finding waiver.

Davis opposed the petition, disputing Shiekh's assertions it had not waived its right to seek arbitration. Davis pointed to Shiekh's approximately one-and-a-half-year delay before filing its motion and its active participation in the lawsuit as evidence supporting waiver. In reply, Shiekh reiterated its claim that it "did the bare minimum that was necessary to avoid having a default entered against it."

On November 13, the court held the hearing on the motion, beginning with this: "[L]et me just say, to start, that this issue of waiver comes up at least once a month in this calendar. And I gotta tell you, ... [¶] ... [¶] I've never seen one that's as long as seventeen months ...." Following the parties’ arguments, the court, by written order, denied the motion. The court highlighted Shiekh's delay in moving to compel arbitration and pre-trial activity in the lawsuit before concluding that Shiekh "fails the waiver test California's [S]upreme [C]ourt adopted in St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727 : defendant's actions were ‘inconsistent with the right to arbitrate’; defendant ‘delayed for a long period of time’; litigation machinery has been substantially invoked’; ‘judicial discovery procedures’ took place; and the delay ‘affected, misled, or prejudiced’ plaintiff."

Shiekh appealed.

After the parties completed briefing, the United States Supreme Court issued its decision in Morgan v. Sundance, Inc. (2022) ––– U.S. ––––, 142 S.Ct. 1708, 212 L.Ed.2d 753 ( Morgan ), holding that under the FAA, courts may not condition a determination of waiver on prejudice. In light of this, we directed the parties to submit supplemental briefs on the applicability of the FAA and Morgan , if any, to the issues raised in the appeal. Both parties submitted briefs accordingly.

DISCUSSION

Standard of Review

We begin with a discussion of the applicable standard of review, a standard on which the parties disagree. Shiekh seeks to obtain de novo review of the order denying its motion, claiming the facts are not disputed and thus we are free to substitute our view for that of the trial court. Davis contends the facts are disputed, thereby requiring application of the substantial evidence standard of review. We agree with Davis.

As set forth in St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 8 Cal.Rptr.3d 517, 82 P.3d 727 ( St. Agnes ), "Generally, the determination of waiver is a question of fact, and the trial court's finding, if supported by sufficient evidence, is binding on the appellate court. [Citations.] ‘When, however, the facts are undisputed and only one inference may reasonably be drawn, the issue is one of law and the reviewing court is not bound by the trial court's ruling.’ [...