Paramount Exclusive Insurance Services v. Cabir CA2/7

Filed 6/16/23 Paramount Exclusive Insurance Services v. Cabir CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
PARAMOUNT EXCLUSIVE B315279
INSURANCE SERVICES,
INC., (Los Angeles County
Super. Ct. No. 20STCV20468)
Plaintiff and Respondent,
v.
SHANTELLE CABIR,
Defendant and Appellant.
APPEAL from an order of the Superior Court of
Los Angeles County. Christopher K. Lui, Judge. Reversed and
remanded with directions.
Moore Ruddell, Bonita D. Moore and Howard D. Ruddell for
Defendant and Appellant.
Michelman & Robinson, Jeffrey D. Farrow, Reuben A.
Ginsburg and Samantha Drysdale for Plaintiff and Respondent.
________________________
INTRODUCTION
Paramount Exclusive Insurance Services, Inc. (Paramount)
filed this action against its former sales agent Shantelle Cabir,
alleging Cabir breached a confidential information and non-
solicitation agreement and misappropriated Paramount’s trade
secrets by soliciting Paramount’s customers.
Cabir filed a class action cross-complaint against
Paramount, alleging that Paramount deliberately misclassified
her and other sales agents as independent contractors and that
Paramount wrongfully terminated her in retaliation for
complaints about the misclassification.
Over Cabir’s opposition, the court granted Paramount’s
motion to compel arbitration of Cabir’s individual claims in the
cross-complaint. Cabir then moved to compel arbitration of the
claims asserted in Paramount’s complaint. The trial court denied
Cabir’s motion, concluding Cabir had waived the right to
arbitrate. Cabir timely appealed from the order denying the
motion to arbitrate.
We reverse and remand with directions to the trial court to
vacate its denial and enter a new order granting the motion to
compel arbitration. Cabir’s delay in seeking to compel arbitration
was reasonable, and Paramount has not demonstrated prejudice
from the delay. The only reasonable inference that can be drawn
from the undisputed evidence is that there was no waiver, and
the trial court’s conclusion to the contrary is not supported by
substantial evidence. Further, Paramount’s claims fall within
the scope of the arbitration agreement.
2
FACTUAL AND PROCEDURAL BACKGROUND
A. Cabir’s Agreements with Paramount
Paramount is an insurance broker and agent. Shantelle
Cabir worked for Paramount from October 2, 2012 through
May 20, 2020, most recently as a commercial sales agent. In May
2019, Cabir entered into three agreements with Paramount: an
independent contractor commission agreement, an arbitration
agreement, and a confidential information and non-solicitation
agreement.
Cabir signed the independent contractor commission
agreement and arbitration agreement on May 6, 2019. In the
independent contractor agreement, Paramount agreed to pay
commissions to Cabir at specified rates. The agreement stated
Cabir was an independent contractor and was not entitled to
benefits Paramount provides to employees.
The form arbitration agreement stated: “Any controversy,
claim or dispute between [sic] arising out of or with respect to the
Independent Contractor Commission Agreement or its breach,
termination, enforceability, or validity, including the
determination of the scope or applicability of this Agreement to
arbitrate, or between the Parties or their work relationship shall
be adjudicated by binding arbitration before a single, neutral
arbitrator. . . . This Agreement shall be construed and controlled
by the laws of the State of California.”
Cabir signed the confidential information and non-
solicitation agreement on May 16, 2019. Cabir agreed not to
disclose or use any of Paramount’s confidential information,
including customer lists and customer contact information, except
as authorized by Paramount. The agreement also provided that
3
Cabir may not solicit any of the past, current, or prospective
clients of the company and may not contact any such persons for
any purpose. Further, Cabir agreed that she would not
encourage any other person employed by or contracted with
Paramount to end their relationship with the company. Cabir
also agreed not to make any disparaging remarks about the
company.
On or about May 20, 2020, Cabir was terminated from
Paramount. She went to work for Newfront Insurance Services,
Inc. (Newfront), a competitor of Paramount.
B. The Pleadings
On May 29, 2020, Paramount filed this action against
Newfront and Cabir. A first amended complaint was filed on
July 17, 2020. Cabir filed a demurrer, which was sustained in
part with leave to amend and overruled in part. Paramount filed
a second amended complaint on November 25, 2020, which Cabir
answered on December 28, 2020.
Paramount alleged that, in violation of the confidential
information and non-solicitation agreement and in violation of
duties arising out of her work relationship, Cabir
misappropriated Paramount’s customer list and used
Paramount’s trade secrets and confidential information to contact
and solicit Paramount’s customers. Paramount asserted causes
of action for misappropriation of trade secrets, breach of fiduciary
duty, breach of written contract, and other related claims against
Cabir and Newfront.
4
On August 17, 2020, Cabir filed a class action cross-
complaint against Paramount and its chief executive officer
Shawn Kohen. Cabir alleged that she was employed by
Paramount as a commercial sales agent and sales manager, and
that Paramount and Kohen deliberately misclassified her and
other insurance agents as independent contractors instead of as
employees. Cabir alleged violations of Business & Professions
Code section 17200 et seq. and various provisions of the Labor
Code on behalf of herself and members of the class. Cabir also
alleged she complained to Paramount about the misclassification,
and Paramount retaliated against her in violation of Labor Code
section 1102.5 by terminating her. She asserted claims for
retaliation and wrongful termination on her own behalf.
On December 15, 2020, Newfront filed a cross-complaint
against Paramount, alleging, among other things, interference
with business relations. A first amended cross-complaint was
filed on July 30, 2021.
C. Paramount’s Motion To Compel Arbitration of Cabir’s
Cross-complaint
On October 14, 2020, Paramount and Kohen moved to
compel arbitration of Cabir’s cross-complaint and to dismiss the
class claims. On December 23, 2020, Paramount and Kohen filed
an amended motion to compel arbitration. Cabir opposed the
motion, arguing the arbitration agreement was unconscionable
and that Paramount had waived the right to arbitrate by filing
this action.
5
On March 10, 2021, the court granted the motion to compel
arbitration of Cabir’s individual claims, implicitly denied the
motion to dismiss Cabir’s class claims, and stayed the litigation
as to the class claims only. Among other things, the court ruled
the arbitration agreement was not unconscionable and that
Paramount had not waived the right to arbitrate by filing its
complaint because the claims in Paramount’s complaint did not
fall within the scope of the arbitration agreement.
The court denied the request to stay the action as to
Paramount’s complaint pending completion of arbitration, but on
April 2, 2021, the court granted a temporary stay while Cabir
sought writ review. Cabir filed a writ petition on April 16, 2021,
and we summarily denied it on April 21, 2021. The trial court
lifted the stay on May 25, 2021.
The trial court’s order granting Paramount’s motion to
compel arbitration of Cabir’s cross-complaint is not at issue in
this appeal.
D. Cabir’s Motion To Compel Arbitration of Paramount’s
Complaint
On June 15, 2021, Cabir filed a motion to compel
arbitration of the claims in Paramount’s second amended
complaint. Cabir argued that the claims fell within the scope of
the arbitration agreement and that she had not waived the right
to arbitrate because she had moved promptly to arbitrate
Paramount’s claims after the court granted Paramount’s motion.
In support of her motion, she filed a declaration of Kristina
Rodriguez, Paramount’s chief sales and marketing officer, that
Paramount had submitted in support of its motion to compel
arbitration of Cabir’s cross-complaint. In the declaration,
6
Ms. Rodriguez authenticated the arbitration agreement and
stated that Cabir had agreed “to arbitrate on an individual basis
all of her claims that arise from her work relationship with
Cross-Defendants.”
In opposition, Paramount argued that the trial court had
already decided that Paramount’s claims did not fall within the
scope of the arbitration agreement when it granted Paramount’s
motion to compel arbitration of Cabir’s cross-complaint.
Paramount further argued that we had somehow “decided and
determined” that Paramount’s claims did not fall within the
scope of the arbitration agreement when we summarily denied
Cabir’s writ petition. Paramount argued Cabir’s motion to
compel arbitration was an improper motion for rehearing under
Code of Civil Procedure section 1008, subdivision (b), and
California Rules of Court, rule 8.268. Paramount further argued
that even if the motion was not procedurally improper, it had to
be denied because (1) the arbitration agreement applied only to
claims that arose out of the independent contractor commission
agreement and thus did not apply to Paramount’s claims, and
(2) Cabir had waived the right to arbitrate.
In support of the opposition, Paramount filed a declaration
of its counsel Jeffrey Farrow, in which he declared that Cabir had
propounded 17 special interrogatories, 81 requests for production,
form interrogatories, and 18 requests for admission. Farrow did
not state that Paramount responded to that discovery (and the
record reflects Paramount had not responded). Farrow also
declared that on June 23, 2021 (which was after Cabir filed the
motion to compel arbitration), Paramount had responded to
discovery served by Newfront.
7
In reply, Cabir argued that the motion did not seek
reconsideration of any order by the trial court or the Court of
Appeal; that the claims fell within the scope of the arbitration
agreement and that any other interpretation of the agreement
would render it non-mutual; and that Cabir had not waived the
right to arbitrate.
The court denied the motion, concluding that Cabir waived
the right to arbitrate. The court stated:
“In support of the motion, Cabir contends that there has
been no waiver, since Paramount selected the initial venue,
and Cabir was initially willing to litigate her claims in
Paramount’s chosen forum—this Court—until Paramount
moved to compel arbitration of Cabir’s cross-complaint.
According to Cabir, the instant motion was filed without
delay, because it was brought as soon as possible after the
stay of the action was lifted. Cabir also argues that there is
no prejudice to Paramount from Cabir’s actions in the
judicial forum, since Paramount has not responded to
discovery propounded by Cabir.
“While Cabir contends that the instant motion was brought
promptly after the stay was lifted, the events before the
stay are relevant to the issue of waiver. Cabir did not file a
motion to compel Plaintiff’s claims to arbitration until
June 15, 2021, despite having been named in the original
Complaint filed on May 29, 2020, and thereafter in the
First Amended Complaint and the Second Amended
Complaint. Cabir demurred to Plaintiff’s First Amended
Complaint and filed a Cross-Complaint on August 17, 2020,
8
without seeking a stay of the proceedings. Cabir filed an
Answer to the Second Amended Complaint on
December 28, 2020 without asserting arbitrability as an
affirmative defense. Cabir’s late invocation of arbitrability
after multiple opportunities to raise it is a factor that
points to waiver.
“Plaintiff has also demonstrated that Cabir has propounded
discovery to Plaintiff. . . . Cabir contends that the discovery
was only defensive in nature and that Plaintiff was granted
an extension of the time to respond. However, Cabir’ s
propounding of discovery almost simultaneously with
answering the Second Amended Complaint (in a pleading
that does not raise arbitrability as an affirmative defense)
is inconsistent with an intent to assert the right to
arbitrate.
“Taken together, the Court finds that Cabir has waived the
right to compel Plaintiff’s claims to arbitration.”
Cabir timely appealed from the order.
DISCUSSION
A. Standard of Review
“There is no uniform standard of review for evaluating an
order denying a [petition] to compel arbitration.” (Lopez v.
Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311, 317 (Lopez),
quotation marks omitted.) “[I]f the court’s denial rests solely on a
decision of law, then a de novo standard of review is employed.”
9
(Ibid., quotation marks omitted; accord, Garcia v. KND
Development 52, LLC (2020) 58 Cal.App.5th 736, 744 (Garcia)
[“[w]e review de novo the legal conclusions underlying a trial
court’s denial of a petition to compel arbitration”].)
“If the court’s order is based on a decision of fact, then we
adopt a substantial evidence standard.” (Lopez, supra,
39 Cal.App.5th at p. 317, quotation marks omitted.) “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.’” (St. Agnes Medical Center v. PacifiCare of
California (2003) 31 Cal.4th 1187, 1196 (St. Agnes).)
B. The Court’s Order Granting Paramount’s Motion To Compel
Arbitration Is Not at Issue in This Appeal
Cabir argues the trial court erred in granting Paramount’s
motion to compel arbitration of Cabir’s cross-complaint. For
example, Cabir argues the arbitration agreement is
unconscionable and should not have been enforced against her.
We will not consider these arguments. The order granting
Paramount’s motion to compel arbitration is not an appealable
order and is not within the scope of this appeal.1 (Reyes v.
Macy’s, Inc. (2011) 202 Cal.App.4th 1119, 1122.)
1 Cabir does not even purport to appeal from the order
granting Paramount’s motion to compel arbitration of Cabir’s
cross-complaint. The notice of appeal specifically refers to the
court’s September 8, 2021 order denying Cabir’s motion to compel
arbitration.
10
In her opening brief, Cabir does not address whether we
have jurisdiction to review the order granting Paramount’s
motion as part of this appeal. In her reply brief, Cabir argues the
court has ancillary jurisdiction under Code of Civil Procedure
section 1294.2 to review that order. We do not consider an
argument raised for the first time in the reply brief. (See
Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747,
761, fn. 4.)
Even if we were to consider it, we would reject the
argument. Code of Civil Procedure section 1294.2 provides in
part: “Upon an appeal from any order or judgment under this
title [governing arbitration], the court may review the decision
and any intermediate ruling, proceeding, order or decision which
involves the merits or necessarily affects the order or judgment
appealed from, or which substantially affects the rights of a
party.” “‘[T]he ancillary jurisdiction conferred by section 1294.2
simply ensures that the appellate court can effectuate its ruling
on an arbitration order, by permitting review of any other trial
court decision affecting that specific order.’” (J.H. Boyd
Enterprises, Inc. v. Boyd (2019) 39 Cal.App.5th 802, 812.) Thus,
for example, a court reviewing a trial court’s order denying a
motion to compel arbitration has ancillary jurisdiction to consider
the portion of the order denying the request for a stay, even
though an order denying a request for a stay is not generally
appealable, because “‘the appellate court’s determination on the
motion to compel arbitration would have been ineffectual’” if the
denial of the request for a stay is not also reviewed. (Id. at
p. 812.)
11
The order granting Paramount’s motion to compel
arbitration does not fall within this category. We do not need to
review the order granting Paramount’s motion to “effectuate
[any] ruling” in this appeal. The court’s order on Paramount’s
motion is not intermediate to the order denying Cabir’s motion.
(See Laymon v. J. Rockcliff, Inc. (2017) 12 Cal.App.5th 812, 825
[order granting arbitration is not appealable under § 1294.2
merely because it was rendered at the same time as an order
denying arbitration]; J.H. Boyd Enterprises, Inc. v. Boyd, supra,
39 Cal.App.5th at p. 804 [in an appeal from an order denying a
motion to compel arbitration, or in the alternative, motion for
judicial reference, court declined to review the portion of the
order denying the request for a judicial reference; denial of a
request for a judicial reference was not an appealable order and
was not within the scope of Code of Civil Procedure
section 1294.2].)
C. The Trial Court Erred in Denying Cabir’s Motion To
Compel Arbitration
1. The trial court’s finding of waiver is not supported by
substantial evidence
“Code of Civil Procedure section 1281.2 provides that one
ground for denying a petition to compel arbitration is that ‘[t]he
right to compel arbitration has been waived by the petitioner.’”
(Iskanian v. CLS Transportation Los Angeles, LLC (2014)
59 Cal.4th 348, 374 (Iskanian), overruled in part on other
grounds by Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct.
1906.) The party opposing arbitration bears the burden of
proving waiver. (Pinnacle Museum Tower Assn. v. Pinnacle
Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)
12
The standards for determining waiver of the right to
arbitrate are not identical under California and federal law.
(Compare St. Agnes, supra, 31 Cal.4th at p. 1203 [question of
prejudice “is critical in waiver determinations”] with Morgan v.
Sundance (2022) 142 S.Ct. 1708, 1713 [under federal law, courts
may not “condition a waiver of the right to arbitrate on a showing
of prejudice”].)2 We thus must determine whether California or
federal law applies here.
The arbitration agreement provides: “This Agreement
shall be construed and controlled by the laws of the State of
California.” Even when an arbitration agreement involves
interstate commerce and thus falls within the scope of the
Federal Arbitration Act, courts give effect to choice-of-law
provisions in the arbitration agreement. (Volt Information
Sciences, Inc. v. Board of Trustees of Leland Stanford Junior
University (1989) 489 U.S. 468, 475-476.) Where parties agree
the arbitration agreement will be governed by California law,
California law applies even when the agreement involves
interstate commerce. (Cronus Investments, Inc. v. Concierge
Services (2005) 35 Cal.4th 376, 380.) California law thus applies
here.
Under California law, “[i]n the arbitration context, ‘[t]he
term ‘waiver’ has . . . been used as a shorthand statement for the
conclusion that a contractual right to arbitration has been lost.’”
(St. Agnes, supra, 31 Cal.4th at p. 1195, fn. 4.) “[A] party who
2 The issue of whether prejudice remains a critical factor in
determining waiver under California law is currently pending
before the California Supreme Court in Quach v. California
Commerce Club, Inc. (2022) 78 Cal.App.5th 737, review granted
August 24, 2022, S275121.
13
resists arbitration on the ground of waiver bears a heavy burden
[citations], and any doubts regarding a waiver allegation should
be resolved in favor of arbitration.” (Ibid.; accord, Cox v. Bonni
(2018) 30 Cal.App.5th 287, 303; Gloster v. Sonic Automotive, Inc.
(2014) 226 Cal.App.4th 438, 447.)
The California Supreme Court has held the following non-
exclusive factors are relevant to the waiver determination:
“(1) whether the party’s actions are inconsistent with the right to
arbitrate; (2) whether the litigation machinery has been
substantially invoked and the parties were well into preparation
of a lawsuit before the party notified the opposing party of an
intent to arbitrate; (3) whether a party either requested
arbitration enforcement close to the trial date or delayed for a
long period before seeking a stay; (4) whether a defendant
seeking arbitration filed a counterclaim without asking for a stay
of the proceedings; (5) whether important intervening steps [e.g.,
taking advantage of judicial discovery procedures not available in
arbitration] had taken place; and (6) whether the delay affected,
misled, or prejudiced the opposing party.” (St. Agnes, supra, 31
Cal.4th at p. 1196, quotation marks omitted, brackets in original;
accord, Iskanian, supra, 59 Cal.4th at p. 375.) We refer to these
factors as the St. Agnes factors.
We analyze each St. Agnes factor in turn, starting with
whether Cabir’s actions were inconsistent with the right to
arbitrate. Here, Cabir’s initial actions in this litigation, such as
filing a demurrer and a cross-complaint, were not consistent with
the right to arbitrate. But Cabir provides a reasonable
explanation for her delay in seeking arbitration. (See Iskanian,
supra, 59 Cal.4th at p. 376 [in analyzing whether the litigant’s
actions were consistent with the right to arbitrate, the court
14
considered “whether a delay was ‘unreasonable’”]; see also
Quach v. California Commerce Club, Inc. (2022) 78 Cal.App.5th
470, 479 (Quach), review granted August 24, 2022, S275121
[reasonableness of the delay considered in determining waiver];
Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th
1076, 1100 [“[c]ourts will consider the existence or absence of a
reasonable explanation for the party’s delay in asserting its
arbitration right in making a determination of waiver”].)
Cabir’s primary objective was to litigate the claims in her
cross-complaint in court, and she was willing to submit to the
court’s jurisdiction on Paramount’s complaint to achieve her
primary objective. Further, Cabir claimed the arbitration
agreement was unconscionable. Moving to compel arbitration of
Paramount’s complaint in the first instance would have
undermined this position. Thus, when the action was originally
filed, it was not in Cabir’s interest to move to compel arbitration,
and she acted consistent with that interest.
But Cabir’s interests substantially changed when
Paramount’s motion to compel arbitration of her cross-complaint
was granted and her writ was denied. At that point, Cabir had a
strong interest in the mutual, reciprocal application of the
arbitration agreement to Paramount’s claims against her. Cabir
reasonably sought to litigate the entire action in a single forum
that both parties apparently perceive as being more
advantageous to the defendant or cross-defendant.
As the Supreme Court recognized in Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
117-118, employees and other workers subject to mandatory
arbitration agreements have a strong interest in having
arbitration agreements applied mutually. “Given the
15
disadvantages that may exist for plaintiffs arbitrating disputes, it
is unfairly one-sided for an employer with superior bargaining
power to impose arbitration on the employee as plaintiff but not
to accept such limitations when it seeks to prosecute a claim
against the employee.” (Id. at p. 117.) It was reasonable for
Cabir to seek to pursue her cross-complaint in court in the first
instance, but after she lost that battle, for Cabir to seek to have
the agreement applied mutually and reciprocally.
After Paramount’s motion was granted, Cabir moved
quickly to seek a reciprocal order. Cabir’s actions were consistent
with her right to seek the mutual application of the arbitration
agreement after the court granted Paramount’s motion. The first
factor provides no support in favor of a finding of waiver.
The second factor considers whether “the litigation
machinery has been substantially invoked” and whether the
parties “were well into preparation of a lawsuit” before the party
notified the opposing party of an intent to arbitrate. (St. Agnes,
supra, 31 Cal.4th at p. 1196, quotation marks omitted.) Here, the
parties were not well into the preparation of the case when Cabir
filed her motion. While Cabir had propounded written discovery,
Paramount had not answered it. Rather, the parties had agreed
(and the court had ordered) that Paramount would not answer
the discovery until 30 days after the trial court ruled on Cabir’s
motion to compel arbitration.3 Further, the record does not
3 In opposition to Cabir’s motion to compel arbitration,
Paramount’s counsel declared that Paramount responded to
defendant Newfront’s discovery on June 23, 2021 (after Cabir’s
motion to compel arbitration had been filed), but counsel did not
state that Paramount had responded to Cabir’s discovery. In her
reply memorandum in support of her motion to compel
16
reflect that any depositions had been taken. While Cabir had
filed a demurrer and had answered Paramount’s second amended
complaint, those actions had occurred before Paramount filed its
motion to compel arbitration. We cannot conclude the “litigation
machinery ha[d] been substantially invoked” simply because of
those filings.
The third factor considers “whether a party either
requested arbitration enforcement close to the trial date or
delayed for a long period before seeking a stay.” (St. Agnes,
supra, 31 Cal.4th at p. 1196, quotation marks omitted.) Here,
Cabir’s motion was not made close to the trial date; no trial date
had been set when Cabir filed her motion. As to delay, as
Paramount acknowledges, the relevant question is whether any
delay was reasonable. (Iskanian, supra, 59 Cal.4th at p. 377.)
Here, as discussed, Cabir acted reasonably in moving to compel
arbitration of Paramount’s claims after the court compelled
arbitration of Cabir’s cross-complaint, and not before.
The fourth factor considers “whether a defendant seeking
arbitration filed a counterclaim without asking for a stay of the
proceedings.” (St. Agnes, supra, 31 Cal.4th at p. 1196, quotation
marks omitted.) Although Cabir did file a cross-complaint, under
the circumstances here, this factor provides little support for a
arbitration, Cabir asserted that she agreed to extend the deadline
for Paramount to respond to her written discovery to 30 days
after the motion was decided. She further stated that
Paramount’s counsel consented. The May 25, 2021 order reflects
that agreement. The notice of appeal from the order denying the
motion to compel arbitration was filed less than 30 days after the
court denied the motion, which stayed the action.
17
finding of waiver. As discussed, Cabir sought to have the cross-
complaint litigated in court and was willing to submit to the
court’s jurisdiction on Paramount’s complaint to ensure her
action remained in court. It was only when she was compelled to
arbitrate her cross-complaint that her interest in obtaining a
reciprocal order arose. Cabir’s filing of the cross-complaint does
not evidence a waiver of the right to seek a mutual, reciprocal
order.
The fifth factor considers “whether important intervening
steps [e.g., taking advantage of judicial discovery procedures not
available in arbitration] had taken place.” (St. Agnes, supra,
31 Cal.4th at p. 1196, quotation marks omitted, brackets in
original.) The analysis of this factor is identical to the second,
third and fourth factors. No important intervening steps
occurred.
Finally (and most significantly), the sixth factor considers
prejudice to the opposing party, specifically “whether the delay
affected, misled, or prejudiced the opposing party.” (St. Agnes,
supra, 31 Cal.4th at p. 1196, quotation marks omitted.) Prejudice
is a “critical” or “determinati[ve]” issue. (Iskanian, supra,59 Cal.4th at pp. 376-377 [prejudice is “critical”]; St. Agnes,
supra, 31 Cal.4th at p. 1203 [same]; Quach, supra,
78 Cal.App.5th at p. 479, review granted August 24, 2022,
S275121 [prejudice is required to prove waiver]; Hoover v.
American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1205
(Hoover) [“[t]he presence or absence of prejudice from the
litigation is a determinative issue”]; see also Gamma Eta Chapter
of Pi Kappa Alpha v. Helvey (2020) 44 Cal.App.5th 1090, 1101
[“[a] party claiming the other party has waived its right to
arbitrate must show prejudice”].)
18
“[C]ourts assess prejudice with the recognition that
California’s arbitration statutes reflect ‘“a strong public policy in
favor of arbitration as a speedy and relatively inexpensive means
of dispute resolution’” and are intended ‘“to encourage persons
who wish to avoid delays incident to a civil action to obtain an
adjustment of their differences by a tribunal of their own
choosing.’” [Citation.] Prejudice typically is found only where the
petitioning party’s conduct has substantially undermined this
important public policy or substantially impaired the other side’s
ability to take advantage of the benefits and efficiencies of
arbitration.” (St. Agnes, supra, 31 Cal.4th at p. 1204, italics
added.) “Because merely participating in litigation, by itself, does
not result in a waiver, courts will not find prejudice where the
party opposing arbitration shows only that it incurred court costs
and legal expenses.” (Id. at p. 1203; accord, Iskanian, supra,59 Cal.4th at p. 377.)
Instead, “‘[f]or example, courts have found prejudice where
the petitioning party used the judicial discovery processes to gain
information about the other side’s case that could not have been
gained in arbitration [citations]; where a party unduly delayed
and waited until the eve of trial to seek arbitration [citation]; or
where the lengthy nature of the delays associated with the
petitioning party’s attempts to litigate resulted in lost evidence
[citation].’” (Iskanian, supra, 59 Cal.4th at p. 377; accord,
St. Agnes, supra, 31 Cal.4th at p. 1204.)
Paramount has not identified any cognizable prejudice from
the delay. Paramount argues it was prejudiced because Cabir
filed a demurrer, filed her cross-complaint, propounded discovery,
attended a case management conference, demanded a jury, and
posted jury fees. Paramount asserts this conduct required
19
Paramount “to oppose the demurrer, file a motion to compel
arbitration of Cabir’s cross-complaint, attend the case
management conference, and participate in litigation that early
arbitration would have rendered unnecessary.” But this does not
constitute substantial evidence of prejudice.
As to the discovery, as noted, Paramount did not respond to
the written discovery propounded by Cabir, and the record does
not reflect that any depositions were taken. Accordingly,
Paramount cannot show that Cabir obtained discovery of
information that she would not have been able to obtain in
arbitration or that Paramount was otherwise prejudiced from any
discovery propounded by Cabir. (Groom v. Health Net (2000)
82 Cal.App.4th 1189, 1196 (Groom) [party opposing motion to
compel arbitration did not suffer prejudice from discovery
requests to which the party did not respond]; see also Iskanian,
supra, 59 Cal.4th at p. 378 [discovery causes prejudice when “the
petitioning party used the judicial discovery processes to gain
information about the other side’s case that could not have been
gained in arbitration”].)
As to responding to the demurrer and attending the case
management conference, the Supreme Court has held that
incurring costs for such pretrial proceedings does not amount to
prejudice. (See St. Agnes, supra, 31 Cal.4th at p. 1203 [citing and
relying on Groom, supra, 82 Cal.App.4th at p. 1197 for the
proposition that “mere expense of responding to motions or other
preliminary pleadings filed in court is not the type of prejudice
that bars a later petition to compel arbitration”].) Paramount
does not contend it suffered any prejudice from the demurrer
other than the expense Paramount incurred in responding to it.
20
Paramount can hardly claim prejudice from having to file a
motion to compel arbitration in response to Cabir’s cross-
complaint. Paramount initiated this litigation by filing its
complaint in court. Cabir’s preference was for the entire action,
including her cross-complaint, to remain in court. Paramount
benefited from its motion to compel arbitration; it was not
prejudiced by it.
Paramount cites a series of cases for the proposition that
delay by itself can create prejudice by substantially impairing the
other side’s ability to take advantage of the benefits and
efficiencies of arbitration. The cases include, among others,
Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443;
Burton v. Cruise (2010) 190 Cal.App.4th 939; Guess?, Inc. v.
Superior Court (2000) 79 Cal.App.4th 553; and Sobremonte v.
Superior Court (1998) 61 Cal.App.4th 980. But those cases do not
support Paramount’s position. In each of those cases,
“substantial expense and delay were caused by the unreasonable
or unjustified conduct of the party seeking arbitration.”
(Iskanian, supra, 59 Cal.4th at p. 377.) Here, as explained,
Cabir’s conduct was reasonable and justified.4
4 Other cases cited by Paramount also support the conclusion
that the right to arbitrate is not waived when the delay is
reasonable. (See, e.g., Wagner Construction Co. v. Pacific
Mechanical Corp. (2007) 41 Cal.4th 19, 30 [“a party must . . .
demand arbitration within a reasonable time”]; Spear v.
California State Auto. Assn. (1992) 2 Cal.4th 1035, 1043 [“When
an arbitration agreement does not specify the time within which
arbitration must be demanded, a reasonable time is allowed; a
party who does not demand arbitration within a reasonable time
is deemed to have waived the right to arbitration.”]; Spracher v.
21
The trial court did not address prejudice in its order. Any
implied finding of prejudice is not supported by substantial
evidence.
The facts here are undisputed. The only reasonable
inference we can draw from the undisputed facts is that Cabir did
not waive her right to demand mutual arbitration. We thus
conclude the trial court erred in finding waiver. (St. Agnes,
supra, 31 Cal.4th at p. 1206 [where facts are undisputed and
subject to only one reasonable inference, “the issue of waiver is
one of law” and the reviewing court is not “bound by the trial
court’s ruling”].)
2. Paramount’s claims are within the scope of the
arbitration agreement
The trial court did not reach the issue of whether
Paramount’s claims are within the scope of the arbitration
agreement in ruling on Cabir’s motion to compel arbitration.
Instead, by reaching the defense of waiver, the trial court
implicitly assumed without deciding that the claims fell within
the scope of the agreement.
The “[i]nterpretation of a contract is solely a question of
law unless the interpretation turns upon the credibility of
extrinsic evidence. [Citations.] Even where extrinsic evidence is
admitted to interpret a contract, unless it is conflicting and
requires a determination of credibility, the reviewing court is not
Paul M. Zagaris, Inc. (2019) 39 Cal.App.5th 1135, 1138
[unreasonable delay in seeking arbitration may constitute
waiver]; Lewis v. Fletcher Jones Motor Cars, Inc. (2012)
205 Cal.App.4th 436, 445-446 [considering whether the delay in
seeking arbitration was unreasonable].)
22
bound by the trial court’s interpretation.” (Badie v. Bank of
America (1998) 67 Cal.App.4th 779, 799; see also Garcia v. Truck
Ins. Exchange (1984) 36 Cal.3d 426, 439 [“[i]t is solely a judicial
function to interpret a written contract unless the interpretation
turns upon the credibility of extrinsic evidence, even when
conflicting inferences may be drawn from uncontroverted
evidence”]; Parsons v. Bristol Development Co. (1965) 62 Cal.2d
861, 866 [“[s]ince there is no conflict in the extrinsic evidence in
the present case we must make an independent determination of
the meaning of the contract”].)
Here, in the briefing before the trial court, neither side
presented any extrinsic evidence concerning the interpretation of
the arbitration agreement, other than the two other agreements
that Cabir signed. Because there is no disputed extrinsic
evidence, the interpretation of the agreement presents a pure
question of law. We thus may consider the issue in the first
instance. 5
5 In the order granting Paramount’s motion to compel
arbitration of Cabir’s cross-complaint, the court concluded
Paramount had not waived the right to arbitrate in filing the
lawsuit. In reaching that conclusion, the trial court stated,
“Paramount’s Complaint, First Amended Complaint . . . and
Second Amended Complaint . . . did not seek to litigate arbitrable
causes of action. Paramount’s Complaint, [first amended
complaint] and [second amended complaint] sought to recover for
Cabir’s alleged misappropriation of trade secrets [and]
solicitation of Paramount employees, and to enforce the
Confidential Information and Non-Solicitation Agreement
executed by Shanelle Cabir on May 16, 2019, which does not
contain an arbitration clause. [¶] On the other hand, Paramount
now seeks to enforce the Binding Arbitration Agreement,
23
In her opening brief, Cabir argues Paramount’s claims fall
within the scope of the arbitration agreement. Paramount does
not respond to this argument, other than to say that we need not
reach the issue because the trial court correctly found waiver.
“[R]espondent’s failure to address an issue raised in the opening
brief is not a concession,” so we address the merits of Cabir’s
position. (Golden Door Properties, LLC v. County of San Diego
(2020) 50 Cal.App.5th 467, 557, fn. 48.)
To reiterate, the arbitration agreement states in part: “Any
controversy, claim or dispute between [sic] arising out of or with
respect to the Independent Contractor Commission Agreement or
its breach, termination, enforceability, or validity, including the
determination of the scope or applicability of this Agreement to
arbitrate, or between the Parties or their work relationship shall
be adjudicated by binding arbitration.”
Although the language is not entirely clear, the best
reading is that the arbitration agreement applies to three
categories of claims: (1) controversies, claims, or disputes arising
out of or with respect to the independent contractor commission
agreement or its breach, termination, enforceability, or validity;
(2) controversies, claims, or disputes between the parties (that is
between Cabir and Paramount); and (3) controversies, claims, or
disputes arising out of or with respect to the work relationship
between Cabir and Paramount.
pertaining to the Independent Contractor Commission
Agreement, executed by Shantelle Cabir on May 6, 2019.” As
discussed, the motion granting the motion to compel arbitration
is not an appealable order, and we thus do not review the trial
court’s conclusions made in the context of that order.
24
The use of the word “or” before “between the Parties” and
before “their work relationship” indicates that those are separate,
disjunctive categories of controversies, claims, or disputes to
which the arbitration agreement applies. (Cf. In re E.A. (2018)
24 Cal.App.5th 648, 661 [explaining the function of the word “or”
in interpreting a statute].) “The word ‘or’ suggests alternatives.”
(Ibid.) “[T]he function of the word ‘or’ is to mark an alternative
such as ‘either this or that.’” (Ibid., quotation marks omitted.)
Further, there is no reasonable way to interpret the
phrases “or between the Parties” and “or their work relationship”
as somehow modifying the phrase “arising out of or with respect
to the Independent Contractor Commission Agreement.” For
example, the grammatical structure of the provision does not
support the conclusion that those categories constitute a subset of
claims arising out of the independent contractor commission
agreement. Instead, the language strongly suggests that those
are intended to be separate categories and that the agreement to
arbitrate is not limited to claims, controversies or disputes
arising from or with respect to the independent contractor
commission agreement.
We recognize that the category of controversies, claims or
disputes “between the Parties” is broad enough to encompass
controversies, claims or disputes “arising out of or with respect to
the Independent Contractor Commission Agreement” and
controversies, claims, or disputes “arising out of with respect to
[the parties’] work relationship.” Thus, interpreting the
agreement to cover all disputes “between the Parties” potentially
renders the language describing the other two categories
superfluous. However, the only way to avoid that issue would be
to read the phrase “or between the Parties” out of the agreement
25
altogether. On balance, we conclude the most reasonable
interpretation is that the arbitration agreement covers disputes
between the parties. This is also consistent with the principles
that ambiguities are to be interpreted against the drafter and
that the arbitration agreements are to be interpreted to ensure
they are bilateral. (Roman v. Superior Court (2009)
172 Cal.App.4th 1462, 1472; 24 Hour Fitness, Inc. v. Superior
Court (1998) 66 Cal.App.4th 1199, 1214-1215 [“[p]articularly
where the contract is one of adhesion, ambiguity in the contract
language not dispelled by application of other canons of
construction is interpreted against the drafter”].)
At the very least, the agreement covers disputes “arising
out of or with respect to the work relationship between Cabir and
Paramount.” In moving to compel arbitration of Cabir’s cross-
complaint, Paramount repeatedly took the position that the
arbitration agreement applied to all claims that arose out of
Cabir’s “work relationship.” For example, Paramount argued
that “[b]y executing the standalone ‘Binding Arbitration
Agreement,’ [Cabir] affirmed that she understood and agreed to
be bound to arbitration to resolve any and all claims arising out
of her work relationship with Paramount.”
The claims asserted in Paramount’s second amended
complaint are “claims, controversies or disputes” “between the
[p]arties,” and they thus fall within the scope of the arbitration
agreement. The claims also arise out of the parties’ “work
relationship.” Paramount’s second amended complaint expressly
alleges that Cabir breached duties that arose out of Cabir’s work
or business relationship with Paramount. For example, in the
first cause of action for misappropriation of trade secrets,
Paramount alleges: “Cabir, as a condition of working for
26
Plaintiff, acknowledged, understood and agreed that she would
be entrusted with the confidential, proprietary and valuable
information . . . , and further agreed that she would act in good
faith toward Plaintiff and not disclose any such information
during the term of her work with Plaintiff or thereafter.” (Italics
added.) In the second cause of action for breach of fiduciary
duties, Paramount alleges: “While in a business relationship
with Plaintiff, and as a long-term independent contractor with
Plaintiff, Cabir had, at all times, a duty of good faith to Plaintiff,
as well as a fiduciary duty to Plaintiff. [¶] While in a business
relationship with Plaintiff, Cabir occupied positions of trust and
authority sufficient to create a duty of good faith to Plaintiff, as
well as fiduciary duties to Plaintiff.” (Italics added.) The cause of
action alleges breach of these duties.
Similarly, the fourth cause of action for breach of the
confidential information and non-solicitation agreement alleges
that Cabir breached the agreement by making improper use of
information Cabir obtained through her work relationship. The
first sentence of the confidential information and non-solicitation
agreement states: “[Cabir] understands that, by virtue of . . . her
work relationship with [Paramount], [Cabir] will acquire and/or
be exposed to proprietary and confidential information of the
Company.” (Italics added.) This claim thus also arises out of
Cabir’s work relationship with Paramount.
In sum, the claims against Cabir in Paramount’s second
amended complaint fall within the scope of the arbitration
agreement.
We note the confidential information and non-solicitation
agreement states: “Notwithstanding any arbitration agreement
between [Cabir] and [Paramount], in the event of a breach, or a
27
threatened breach, by [Cabir] of this Agreement, [Paramount]
shall have the right to have the provisions of this Agreement
specifically enforced by any Court having equity jurisdiction, and
shall not be required to mediate or arbitrate, because breach or
threatened breach will cause irreparable injury to [Paramount]
and money damages will not provide an adequate remedy. . . .
[Paramount] has the right to recover damages for all losses.” (We
refer to this provision as the “exclusion provision.”) The
agreement further contains a severability provision stating: “If
any provision of this Agreement shall be held to be illegal, invalid
or unenforceable, the remaining provisions shall remain in full
force and effect.”
Paramount did not argue in the briefing in the trial court
or in this appeal that its claims should not be ordered to
arbitration because the exclusion provision applies.6 Any such
argument has been forfeited.
6 As a result, the parties did not address, and the trial court
did not have occasion to consider, whether the provision applied
only to claims for injunctive relief or whether it would have to be
severed to avoid rendering the arbitration agreement
unconscionable. (See, e.g., Carbajal v. CWPSC, Inc. (2016)
245 Cal.App.4th 227, 248-249.)
28
DISPOSITION
The order denying Cabir’s motion to compel arbitration is
reversed, and the case is remanded to the trial court with
directions to vacate its order and enter a new order granting the
motion. Cabir is to recover her costs on appeal.
ESCALANTE, J.*
We concur:
SEGAL, Acting P. J.
FEUER, J.
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
29