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Burton v. 24 Hour Fitness USA, Inc.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE
Jan 18, 2012
B234410 (Cal. Ct. App. Jan. 18, 2012)

Opinion

B234410

01-18-2012

TERRANCE L. BURTON, Plaintiff and Respondent, v. 24 HOUR FITNESS USA, INC. , Defendant and Appellant.

Jackson Lewis, Nicky Jatana, Cynthia J. Emry and Bethany J. Grabiec for Defendant and Appellant. Trush Law Office, James M. Trush; Law Office of Kevin T. Barnes and Kevin T. Barnes for Plaintiff and Respondent.


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Orange County Super. Ct. No. 30-2007-00031558)

APPEAL from an order of the Superior Court of Orange County, Kim G. Dunning. Affirmed.

Jackson Lewis, Nicky Jatana, Cynthia J. Emry and Bethany J. Grabiec for Defendant and Appellant.

Trush Law Office, James M. Trush; Law Office of Kevin T. Barnes and Kevin T. Barnes for Plaintiff and Respondent.

I. INTRODUCTION

Defendant, 24 Hour Fitness USA, Inc., appeals from the trial court's March 8, 2011 order denying its motion to compel arbitration. Defendant sought to compel arbitration almost three years after plaintiff, Terrance L. Burton, filed a class action alleging various violations under the Business and Professions and Labor Codes. The trial court ruled defendant waived the right to move to compel arbitration. Defendant asserts this was error. Additionally, the trial court ruled that Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. _, _ [130 S.Ct. 1758, 1774] did not preempt the unconscionability analysis in Gentry v. Superior Court (2007) 42 Cal.4th 443, 462-463 (Gentry). We conclude the trial court's finding of arbitration waiver is supported by substantial evidence. Accordingly, we affirm the denial of defendant's motion to compel arbitration. We need not discuss the preemption question.

II. BACKGROUND


A. Arbitration Agreement

Plaintiff was employed from September 2006 to May 2007 as a personal trainer at defendant's fitness club in Garden Grove, California. When he was hired, plaintiff signed an employment application form acknowledging he would submit his claims to arbitration: "I understand as an expeditious and economical way to settle employment disputes without need to go through courts, 24 Hour Fitness agrees, and requires it employees to submit such disputes to final and binding arbitration. 24 Hour Fitness and I also understand that if I am offered employment, we both will submit exclusively to final and binding arbitration all disputes arising out of or relating to my employment. This means that a neutral arbitrator, not a court or jury, will decide the dispute." In addition, plaintiff signed an employee handbook receipt acknowledgement form that states in part, "In particular, I agree that if there is a dispute arising out of my employment as described in the 'Arbitration of Disputes' policy, I will submit it exclusively to binding and final arbitration according to its terms."

The arbitration agreement states: "This Policy applies to any employment-related dispute between an employee and 24 Hour Fitness or any of 24 Hour Fitness' agents or employees, whether initiated by an employee or by 24 Hour Fitness. This Policy requires all such disputes be resolved only by an arbitrator through final and binding arbitration. Such disputes include without limitation disputes arising out or relating to interpretation or application of this Policy or the employment relationship and disputes about trade secrets, unfair competition, compensation, termination, or harassment and claims arising under the Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act, and state statutes, if any, addressing the same subject matters, and all other state statutory and common law (excluding worker's compensation claims)." According to the arbitration agreement, "Nothing in this Policy shall be deemed to preclude an employee from filing or maintaining a charge with the Equal Employment Opportunity Commission or National Labor Relations Board." The arbitration agreement is governed by the Federal Arbitration Act. The arbitration agreement contains a class action and class arbitration waiver, "[T]here will be no right or authority for any dispute to be brought, heard, or arbitrated as a class action, private attorney general, or in a representative capacity on behalf of any person."

The arbitration agreement provides for a neutral arbitrator to be "selected by mutual agreement from an association or listing of arbitrators or retired judges in the general geographic vicinity of the place where the dispute arose or where the employee last worked for 24 Hour Fitness." With respect to discovery, the arbitration agreement states, "In arbitration, the parties will have the right to conduct civil discovery and bring motions, as provided by the Federal Rules of Civil Procedure." As for costs, the arbitration agreement provides: "Each party will pay the fees for his, her or its own attorneys, subject to any remedies to which that party may be entitled under applicable law. However, in all cases where required by law, 24 Hour Fitness will pay the arbitrator's and arbitration fees. If under applicable law[,] 24 Hour Fitness is not required to pay the arbitrator's and/or arbitration fees, such fee(s) will be apportioned equally." The arbitration agreement also provides for a written arbitration decision or award, "The arbitrator will issue a decision or award in writing, stating the essential findings of fact and conclusions of law." Finally, the arbitration agreement contains a confidentiality provision, "Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties."

B. Court Proceedings


1. Pleadings

On December 10, 2007, plaintiff filed a class action against defendant. The complaint asserted Labor Code causes of action for: unpaid wages; unpaid split shift wages; wage statement violations; and failure to provide meal and rest periods. The complaint also contained causes of action for unfair business practices in violation of Business and Professions Code section 17200 et seq. and declaratory relief. On March 7, 2008, defendants filed an answer asserting arbitration as an affirmative defense: "The Complaint as a whole, and each purported cause of action alleged therein, is barred in whole or in part because Plaintiff voluntarily entered into an agreement to arbitrate any dispute, claim or controversy arising out of his employment or termination of his employment. These requirements are consistent with the strong public policy articulated in California law and the Federal Arbitration Act (9 U.S.C. § 2). Accordingly, Plaintiff must submit the instant claims to arbitration." On August 31, 2009, plaintiff filed a first amended complaint asserting the same causes of action as those in the original complaint. Neither the original nor the first amended complaint contains a claim pursuant to the Private Attorney General Act. (Lab. Code, § 2698 et seq.) On September 30, 2009, in its answer, defendant again asserted arbitration as an affirmative defense.

2. Discovery

From June 4, 2008 to January 22, 2010, the parties propounded written discovery devices. Defendant served on plaintiff: a total of 151 interrogatories (188 interrogatories if subparts are included); 3 document production demands, comprising of 76 requests; and 30 admissions requests. Plaintiff objected to being served more than 25 interrogatories, contending that the arbitration agreement, which incorporated the Federal Rules of Civil Procedure, permitted defendant to serve only 25 interrogatories. Plaintiff also served interrogatories and 3 document demands on defendant. This included 75 document demands relating to the factors identified in Gentry, supra, 42 Cal.4th at page 463. Defendant objected to the Gentry-related document production demands. On October 1, 2008, plaintiff filed a case management conference statement requesting resolution of the parties' discovery dispute, "The fact Defendant continues to insist that it will file a motion to compel arbitration has significantly hampered discovery, driven up costs of this litigation, and will continue to impair the efficiency in handling this case until the issue is resolved." In addition to written discovery, plaintiff took the deposition of nine corporate witnesses. Plaintiff also retained a consultant to formulate a sample of the putative class members and analyze data produced by defendant.

At the October 3, 2008 case management conference, the trial court set a deadline for defendant to file its motion to compel arbitration: "The record will reflect in the status conference statements filed that there is an impediment to doing discoveries by both sides on the issue of arbitration. The length of discovery and so forth, whether we should be in arbitration and fall under the federal rules of discovery or whether we should be doing something else. [¶] So what I am going to do under the circumstances is exercise my discretion and powers since this case is in complex courts and by the court rules to order that the defendants decide now whether they want me to send this case to arbitration so that we avoid a duplication of proceedings and consumption of court time that will be in [vain] because of the limited discovery that's permitted in an arbitration. . . . [¶] So the best thing to do is for the court to give counsel for the defense and their client a reasonable period of time now going from this day forward to make the decision on whether or not to bring a motion to compel arbitration so that can be heard and the matter can either be pushed into arbitration or that issue is decided and we can move on with the discovery that's needed. [¶] So I'll give the defense until October 31st to advise the plaintiff counsel whether they intend to [file] a motion to compel arbitration and, thereafter, I will order that that motion to compel arbitration will be . . . filed no later than November 21st."

On October 28, 2008, defendant informed plaintiff it would not file a motion to compel arbitration pursuant to the October 3, 2008 trial court's case management conference order. However, defendant did not withdraw its affirmative defense of arbitration in its answer. Defendant indicated it would move for summary adjudication on that affirmative defense. In its November 6, 2008 case management conference statement, defendant informed the trial court, "In compliance with this Court's order, on October 28, 2008, [defendant] advised Plaintiff that [it] will not file a motion to compel arbitration in this matter." At the November 6, 2008 case management conference, defendant reiterated it would not compel arbitration when it sought additional interrogatory responses from plaintiff, "I think that, Your Honor, right now, . . . we've addressed the arbitration issue with the fact that we don't intend to file a motion to compel arbitration . . . ." Towards the end of the November 6, 2008 case management conference, the trial court discussed plaintiff's Gentry-related discovery: "There is one final issue. And that is, although defendants have indicated they do not intend to bring a motion to compel arbitration, they nevertheless are availing themselves of their rights to continue to maintain that as an affirmative defense to the complaint. . . . [¶] In regard to a motion to compel [] - the bottom line is that that there is no need for [Gentry] discovery now— underline 'now' - since there is going to be no motion to compel." To move forward with precertification issues, plaintiff agreed to withdraw discovery regarding the Gentry factors without prejudice to renewing the discovery at a later time.

3. Defendant's motion to compel arbitration

On November 10, 2010, defendant moved to compel arbitration and stay the judicial proceedings. Defendant argued plaintiff's claims were covered by the arbitration agreement. Defendant explained it had informed plaintiff that it was not going to file a motion to compel arbitration because the existing law at the time held class action waivers in arbitration agreements were unenforceable; however, it expressly did not withdraw its affirmative defense of arbitration. Defendant now sought to compel arbitration because Stolt-Nielsen S.A. v. AnimalFeeds International Corp., supra, 559 U.S. at page _ , preempted Gentry, supra, 42 Cal.4th at page 450. Defendant argued it did not waive arbitration because: defendant had not taken any depositions to date; no discovery on the merits of the class claims had been conducted; plaintiff was not prejudiced by the discovery because these forms of discovery also were available in arbitration; neither a class certification briefing schedule nor a trial date had been set; and no mediation had been scheduled. In addition, defendant sought a stay of all proceedings pending arbitration, or in the alternative, pending the United States Supreme Court's ruling in AT&T Mobility v. Concepcion (2011) 563 U.S. _, _ [131 S.Ct. 1740, 1751-1753].

In opposition, plaintiff argued there was waiver because: defendant expressly waived its right to compel arbitration in writing and in open court; defendant pursued discovery not available in arbitration; and plaintiff detrimentally relied upon defendant's waiver by withdrawing his Gentry factors discovery requests without prejudice and by expending substantial resources pursuing the class claims. In addition, plaintiff argued Gentry was not preempted by Stolt-Nielsen. Plaintiff also contended: the class action waiver was unenforceable because it violated public policy; the arbitration agreement was procedurally and substantively unconscionable; and the unfair competition law injunctive relief claims were non-arbitrable.

Plaintiff submitted a declaration as part of his opposition to the motion to compel arbitration. Plaintiff had no legal training when he signed the employment application and employee handbook acknowledgement forms. Plaintiff was not told he could consult with an attorney. He was a moderate income wage earner while employed with defendant. Plaintiff is represented by James M. Trush. Mr. Trush was willing to file the case as a class action and represent plaintiff on a contingency basis. This was the only way plaintiff could secure legal representation.

Mr. Trush detailed the procedural history of the case, including the various case management conferences and summarized the discovery conducted by the parties. Mr. Trush stated, "To date, Plaintiff has expended over 1,103 attorney hours and over $92,929.00 in out of pocket costs to pursue the class claims to date; none of which would have been expended if Defendant had filed a successful motion to compel arbitration of Plaintiff's individual claims as the Court ordered in October 2008."

4. Trial Court's Ruling

On January 21, 2011, the trial court held a hearing on defendant's motion to compel arbitration and took the matter under submission. On March 8, 2011, the trial court denied defendant's motion to compel arbitration and for a stay of judicial proceedings. The trial court ruled: "By way of background, plaintiff initiated this action on December 10, 2007. On October 28, 2008, defendant advised that it declined to petition the court to compel arbitration. This decision meant the trial court never had the opportunity to evaluate the enforceability of the parties' class action waiver under Gentry v. Superior Court [, supra,] 42 Cal.4th 443. Both parties have engaged, and continue to engage, in discovery. The first amended complaint followed on August 31, 2009. Defendant's answer includes as an affirmative defense the existence of an arbitration agreement. [¶] The United States Supreme Court rendered its decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. [, supra,]599 U.S. _, 130 S.Ct. 1758 on April 27, 2010. Moving party waited almost seven months, until November 10, 2010, to file the instant motion. No explanation was provided to justify this delay, even though defendant has taken the position in this motion that plaintiff's arbitration agreement is 'valid and enforceable' . . . . [¶] This court is not persuaded by moving party's arguments that Stolt-Nielsen preempts Gentry. The preemption issues were well briefed and argued by the parties, and the court will not reiterate them here. The context within which the [United States] Supreme Court rendered its decision in Stolt-Nielsen is distinguishable from the facts of this matter."

On April 5, 2011, defendant timely filed its notice of appeal. On July 13, 2011, our Supreme Court transferred the instant appeal from the Court of Appeal, Fourth Appellate District to us.

III. DISCUSSION


A. Standard Of Review

We review the trial court's finding of arbitration waiver under the substantial evidence test. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196 ["Generally, the determination of waiver is a question of fact, and the trial court's finding, if supported by substantial evidence, is binding on the appellate court"]; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 983; Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 319.) However, when the facts are undisputed and only one inference may be reasonably drawn, the issue is one of law and we review de novo. (St. Agnes, supra, 31 Cal.4th at p. 1196; Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th at p. 319.)

B. Waiver of Arbitration

Code of Civil Procedure section 1281.2, subdivision (a) provides in pertinent part: "On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] (a) The right to compel arbitration has been waived by the petitioner; or [¶] (b) Grounds exist for the revocation of the agreement. . . ." Under both federal and state law, waiver of the right to arbitrate is not lightly inferred and the party opposing arbitration has a heavy burden of proof. (St. Agnes, supra, 31 Cal.4th at p. 1195; Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 782.) Thus, any doubts concerning waiver should be resolved in favor of arbitration. (St. Agnes, supra, 31 Cal.4th at p. 1195; see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24-25.)

In Saint Agnes, our Supreme Court adopted a multi-factor test for determining whether a party has waived the right to arbitrate: "'In determining waiver, a court can consider "(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, quoting Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 992; Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30-31; accord Fisher v. A.G. Becker Paribas Inc. (1986) 791 F.2d 691, 694 ["A party seeking to prove waiver of a right to arbitrate must demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts"].)

Under both federal and state law, whether litigation results in prejudice to the party opposing arbitration is critical in waiver determinations. (St. Agnes, supra, 31 Cal.4th at p. 1203; Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331, 340; Zamora v. Lehman (2010) 186 Cal.App.4th 1, 16.) Our Supreme Court explained: "Because merely participating in litigation, by itself, does not result in waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses. [Citations.] [¶] Rather, courts 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. [¶] For 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]." (St. Agnes, supra, 31 Cal.4th at pp. 1203-1204, see Augustus v. Keehn & Associates, supra, 193 Cal.App.4th at p. 340.)

We conclude the trial court's arbitration waiver finding is supported by substantial evidence. First, defendant acted inconsistent with its right to arbitrate. At the October 3, 2008 case management conference, the trial court ordered defendant to decide whether it would compel arbitration by October 31, 2008. In its November 6, 2008 case management conference statement, defendant informed the trial court in writing, "In compliance with this Court's order, on October 28, 2008, [defendant] advised Plaintiff that [it] will not file a motion to compel arbitration in this matter." At the November 6, 2008 case management conference, defense counsel reiterated defendant's intent not to compel arbitration.

Defendant argues its October 28, 2008 letter is not evidence of waiver because it expressly maintained its affirmative defense regarding arbitration. Defendant contends its decision not to move to compel arbitration in October 2008 was based on existing law at the time, which held class action waivers in arbitration agreements were unenforceable. Defendant's arguments are unpersuasive.

Defendant's assertion that it could not move to compel arbitration in October 2008 because of the unfavorable existing law is premised on its inaccurate reading of Gentry. Gentry did not invalidate all class action waivers in arbitration agreements. In Gentry, our Supreme Court expressly held that not all class arbitration waivers in overtime cases are unenforceable: "Nonetheless, when it is alleged that an employer has systematically denied proper overtime pay for a class of employees and a class action is requested notwithstanding an arbitration agreement that contains a class arbitration waiver, the trial court must consider the factors discussed above: the modest size of the potential individual recovery, the potential for retaliation against members of the class, the fact that absent members of the class may be ill informed about their rights, and other real world obstacles to the vindication of class members' rights to overtime pay through individual arbitration. If it concludes, based on these factors that a class arbitration is likely to be a significantly more effective means of vindicating the rights of affected employees than individual litigation or arbitration, and finds that the disallowance of the class action will likely lead to a less comprehensive enforcement of overtime laws for employees alleged to be affected by the employer's violations, it must invalidate the class arbitration waiver to ensure that these employees can 'vindicate [their] unwaivable rights in an arbitration forum. [Citation]." (Gentry, supra, at p. 463.) Gentry never held all class action waivers are unenforceable. Rather, depending on the circumstances, a class action waiver may be enforceable, notwithstanding California's unconscionability jurisprudence.

There is no merit to defendant's contention that it did not act inconsistent with an intent to arbitrate. Defendant reasons that it informed the trial court and plaintiff of its intent to move to compel arbitration at the first court appearance after Stolt-Nielsen was decided. Defendant informed the trial court and plaintiff of its intent to compel arbitration at the September 9, 2010 case management conference. But as the trial court noted, defendant did not file its motion to compel arbitration until November 10, 2010, nearly seven months after the United States Supreme Court's Stolt-Nielsen opinion on April 27, 2010. Defendant presents no explanation why it delayed for four months before informing the trial court and plaintiff of the intent to move to arbitrate. Then defendant waited an additional two months to file the motion to compel arbitration. The trial court may consider whether the petitioning party unduly delayed in bringing the motion to compel arbitration when evaluating waiver issues. (See St. Agnes, supra, 31 Cal.4th at p. 1196 [in determining waiver, a court can consider "whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay"]; Wagner Construction Co. v. Pacific Mechanical Corp., supra, 41 Cal.4th at 31.) Defendant did not move to compel arbitration until nearly three years after plaintiff filed his class action. Such was filed on December 10, 2007. Defendant filed its motion to compel arbitration on November 10, 2010. By then, the parties have served numerous discovery devices, filed motions to compel documents, and participated in numerous case management conferences. Mr. Trush expended over 1,103 attorney hours and over $92,929.00 in out of pocket costs to pursue the class claims to date. Mr. Trush stated under oath that none of these funds would have been expended had plaintiff's claims been subject to arbitration.

More importantly, plaintiff has been prejudiced by defendant's delay in bringing the motion to compel arbitration. As instructed by the Supreme Court in Saint Agnes, "[We] 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.'" (St. Agnes, supra, 31 Cal.4th at p. 1204; see Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1102-1103.) Our Supreme Court has stated, "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 advantages of the benefits and efficiencies of arbitration." (St. Agnes, supra, 31 Cal.4th at p. 1204; see Law Offices of Dixon R. Howell v. Valley, supra, 129 Cal.App.4th at p. 1103.)

Here, plaintiff withdrew his Gentry-related discovery devices in reliance on defendant's representation that it did not intend to compel arbitration. Defendant does not deny plaintiff withdrew his Gentry-related discovery. But defendant asserts plaintiff could have re-served the Gentry-related discovery after September 9, 2010, when defendant indicated its intent to move to enforce the arbitration agreement. But, as noted by the trial court, defendant's decision not to compel arbitration meant the trial court never had the opportunity to evaluate the enforceability of the parties' class action waiver under Gentry.

In addition, plaintiff was prejudiced because defendant took advantage of discovery devices it was not entitled to utilize had plaintiff's claims been arbitrated. The arbitration agreement states, "In arbitration, the parties have the right to conduct civil discovery and bring motions, as provided by the Federal Rules of Civil Procedure." Here, defendant served 188 interrogatories and moved to compel after plaintiff objected to answering more than the first 25 interrogatories. But Rule 33 of the Federal Rules of Civil Procedure states in part, "Unless otherwise stipulated or ordered by the court, a party may serve on another party no more than 25 interrogatories, including all discrete subparts." Defendant argues the interrogatory use to date did not prejudice plaintiff. Defendant argues the excessive interrogatories were propounded before defendant notified plaintiff of its intent not to arbitrate. And plaintiff took advantage of the trial court's discovery rules by exceeding the interrogatory limits in the Federal Rules of Civil Procedure. But, it was not until defendant stated its intent not to compel arbitration that plaintiff agreed to provide additional answers beyond the first 25 interrogatories. Moreover, it is irrelevant whether plaintiff also took advantage of the judicial discovery processes in determining waiver. When evaluating prejudice, we consider defendant's use of the judicial discovery process to secure information from plaintiff. And we consider whether defendant obtained information that it could not have secured had the case been arbitrated. (See St. Agnes, supra, 31 Cal.4th at p. 1204; Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1478.) Plaintiff's use of judicial discovery devices not permitted in arbitration is not controlling.

Likewise, there is no merit to defendant's assertion that no prejudice occurred because of inactivity between when Stolt-Nielsen was decided and the motion to compel arbitration was filed. Defendant argues during that time frame it filed no motions, propounded no discovery devices, and neither noticed nor took depositions. But this argument narrowly focuses on the time period between the time Stolt-Nielsen was decided and when defendant's motion to compel arbitration was filed. Defendant disregards the extensive use of discovery devices discussed above that occurred before Stolt-Nielsen was decided by the United States Supreme Court.

Defendant twice stated its intent not to arbitrate. Defendant waited almost three years to file the motion to compel arbitration. And plaintiff was prejudiced by defendant's delay and use of judicial discovery processes not permitted in arbitration. Because defendant waived its right to arbitrate, we do not need to discuss the parties' arguments regarding whether: the Gentry unconscionability analysis is preempted by the Federal Arbitration Act under AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at pp._-_ [131 S.Ct. at pp. 1751-1753]; the class action waiver violates public policy; the arbitration agreement is procedurally and substantively unconscionable; and the unfair competition law injunctive relief claims are arbitrable in part.

IV. DISPOSITION

The March 8, 2011 order denying the motion to compel arbitration is affirmed. Plaintiff, Terrance L. Burton, shall recover his appeal costs from defendant, 24 Hour Fitness USA, Inc.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

TURNER, P. J. We concur:

KRIEGLER, J.

KUMAR, J.

Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.


Summaries of

Burton v. 24 Hour Fitness USA, Inc.

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE
Jan 18, 2012
B234410 (Cal. Ct. App. Jan. 18, 2012)
Case details for

Burton v. 24 Hour Fitness USA, Inc.

Case Details

Full title:TERRANCE L. BURTON, Plaintiff and Respondent, v. 24 HOUR FITNESS USA, INC…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE

Date published: Jan 18, 2012

Citations

B234410 (Cal. Ct. App. Jan. 18, 2012)