Motion to Partially Lift Stay Pending Arbitration (Judge Goode)

CASE NAME: BIO-RAD VS 10X TECHNOLOGIES

HEARING ON MOTION TO/FOR TO PARTIALLY LIFT STAY PENDING

ARBITRATION FILED BY BIO-RAD LABOATORIES, INC, BIO-RAD QL, INC.

* TENTATIVE RULING: *

The Court first notes that the opposition was not filed until August 31, 2015. The opposition was due nine court days before the September 10, 2015 hearing date, or August 27, 2015. This time, the Court exercises its discretion and considers the late-filed papers. But the parties are cautioned to take statutory deadlines seriously in the future.

In December 2014, the Court stayed this action on the grounds that it contained at least one overlapping factual issue with a dispute between plaintiffs Bio-Rad Laboratories, Inc. and Bio-Rad QL, Inc. (collectively, ?Bio-Rad?) and the founders of defendant 10X Technologies, Inc. (?10X?), and that the dispute between Bio-Rad and 10X?s founders was subject to arbitration.

Bio-Rad now seeks an order partially lifting that stay, so that it may take discovery and so that 10X may either demur to or answer the complaint.

The problem with Bio-Rad?s position is that the arbitration between it and 10X?s founders has not concluded. While Code of Civil Procedure (?CCP?) ? 1281.4 provides the Court at least some discretion to lift a stay, Bio-Rad does not cite, and the Court could not locate, any authority that interprets the discretion afforded by ? 1281.4 to be broad enough to permit what Bio-Rad seeks here.

On the contrary, ?[a]ppellate courts ? routinely reject[] parties? efforts to have courts overstep their limited jurisdiction in cases that are stayed pending binding contractual arbitration.? Optimal Markets, Inc. v. Salant (2013) 221 Cal.App.4th 912, 924. And prevailing law emphasizes just how limited that jurisdiction is. See, e.g., Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1796 (?[o]nce a court grants the petition to compel arbitration and stays the action at law, the action at law sits in the twilight zone of abatement with the trial court retaining merely a vestigial jurisdiction over matters submitted to arbitration?).

Under the court?s ?vestigial jurisdiction,? the court may ?appoint arbitrators if the method selected by the parties fails; grant a provisional remedy but only upon the ground that the award to which an applicant may be entitled may be rendered ineffectual without provisional relief; and confirm, correct, or vacate the arbitration award. Absent an agreement to withdraw the controversy from arbitration, however, no other judicial act is authorized.? MKJA, Inc. v. 123 Fit Franchising, LLC (2011) 191 Cal.App.4th 643, 658-659 (internal quotations and citations omitted); SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1199-1200. See also Finley v. Saturn of Roseville (2004) 117 Cal.App.4th 1253, 1259 (?once a matter has been referred to arbitration, the court?s involvement is strictly limited until the arbitration is completed ? the arbitration must be considered to include both the initial hearing and decision on the merits and any postdecision remedies provided for in the arbitration agreement?).

This limited jurisdiction is animated by a concern that trial court action following the submission of a dispute to arbitration would interfere with the arbitrator?s jurisdiction and thus the enforceability of the arbitration agreement. Federal Ins. Co. v. Super. Ct. (1998) 60 Cal.App.4th 1370, 1374-1375.

Illustrating these principles, in Titan/Value Equities Group, Inc. v. Super. Ct. (1994) 29 Cal.App.4th 482, one party was frustrated that the arbitration ?never got off the ground.? Id. at p. 485, and so asked the court to ?take control of the case.? Id. The trial court ordered defendants to respond to various discovery and set the case for trial in the court. Id. at pp. 486; 489. The appellate court reversed, stating that the trial court had ?exceeded its jurisdiction.? Id. at p. 488. Although the arbitration had barely started, it still was the province of the arbitrator, and not the trial court, to determine how best to proceed. ?The arbitrator, and not the court, decides questions of procedure and discovery.? Id.

Here, it is undisputed that the arbitration started, is proceeding, and will reach a conclusion on the merits in the near future. While Bio-Rad argues in its reply papers that all that remains for the arbitrator to do is consider post-hearing briefs and render its decision, Finley counsels that such consideration should be considered part of the arbitration. Finley, supra, 117 Cal.App.4th at p. 1259.

Bio-Rad cites footnote 11 from Cinel v. Christopher (2012) 203 Cal.App.4th 759 for the proposition that California courts have used the discretion afforded them by CCP ? 1281.4 to lift stays before the conclusion of the arbitration. The Court declines to read Cinel in this manner. Cinel reaffirmed the general rule (i.e., that the trial court?s jurisdiction is limited once a matter is referred to arbitration), but concluded that, in the case before it, because the arbitration never commenced and then was terminated by the arbitrator, it was proper for the trial court to lift the stay. Id. at p. 769. Cinel does not aid Bio-Rad?s position. It does not support the argument that the Court should permit discovery and/or demurrers in this case before the arbitration concludes. In Cinel, there was no risk of disrupting the arbitrator?s jurisdiction by lifting the stay, because there was no arbitration. That is not the case here.

Bio-Rad fails to provide the Court any authority to depart from the general rule that once an arbitration commences, a stay imposed under CCP ? 1281.4 should continue until the arbitration concludes. The arbitration in this case has not concluded.

The Motion is denied.