GOTTA KEEP ‘EM SEPARATED: ARBITRATION MOTIONS AND STAY REQUESTS
When a lawsuit is filed, Code of Civil Procedure section 1281 et seq. allows a party (often the defendant) to file a motion to compel arbitration. Further, section 1281.4 gives the party two options to request a mandatory stay of all proceeding. First, the party can request a stay that takes effect when the court orders the matter to arbitration. Second, the party can request a stay that is effective while the motion to compel arbitration is pending.
The first scenario is the most common, and the court will hear and decide both matters at the same time. However, if there is any risk that the opposing party might cause mischief by seeking expedited relief – for example, a temporary restraining order and/or preliminary injunction – the party seeking the stay should consider filing a motion for an order shortening time so that the order to stay all proceedings can be granted right away.
In California v. Maplebear, Inc., the City of San Diego (“City”)1 filed a lawsuit against Maplebear, Inc. dba Instacart (“Instacart”) for allegedly misclassifying its Full-Service Shoppers as independent contractors rather than employees. Instacart subsequently filed a motion to compel arbitration and to stay all proceedings. Instacart’s moving papers stated it was seeking an order “staying this case immediately . . . until the instant motion is resolved.”
A month before Instacart’s motion was to be heard, the City filed a motion for a preliminary injunction to enjoin Instacart from misclassifying Full-Service Shoppers as independent contractors. Two weeks later, the court issued a preliminary injunction ordering that Instacart “is hereby enjoined and restrained from failing to comply with California employment law with regard to its Full-Service Shopper employees within the City of San Diego.” During these proceedings, Instacart did not address its motion for a stay pending a hearing on its motion to compel arbitration.
Instacart appealed the order granting the preliminary injunction. Instacart’s primary argument on appeal was that the trial court did not have authority to issue the preliminary injunction because Instacart had filed a motion to stay all proceedings pending its motion to compel arbitration.
The Fourth District Court of Appeal found that the trial court did not err when it granted the preliminary injunction. Despite the fact that a stay under section 1281.4 is mandatory, the Court did not deny Instacart’s request; it simply ruled on another, expedited motion first. Instacart failed to take the necessary steps to ensure that its request for a stay was heard and decided while its motion to compel arbitration was pending. The appellate court noted that while section 1281.4 does not require a separate pleading requesting a stay, the trial court is not obligated to issue a stay before the hearing date. Rather, Instacart should have filed a motion for an order shortening time so that the mandatory stay could be issued before the trial court heard any other motion.
Fortunately for Instacart, the appellate court granted its appeal despite this procedural gaffe. Specifically, the appellate court found the preliminary injunction was impermissibly vague because it enjoined Instacart “from failing to comply with California employment law with regard to its Full-Service Shoppers,” but did not explain what Instacart needed to do, or not do, in order to comply with the law.
In sum, filing a motion to compel arbitration and a stay of all proceedings does not, by itself, immediately stay all proceedings. If there is any risk the party opposing arbitration might seek injunctive or other expedited relief, a prudent attorney should file a separate motion for an order shortening time so that the mandatory stay can be issued immediately.
1 This case is unpublished. California Rules of Court, rule 8.1115, restricts citation of unpublished opinions in California courts. However, this case offers insight into an uncommon but critical issue that may arise when one moves to compel arbitration and how to avoid pitfalls.
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