Pacheco v. Baronhr CA2/7

Filed 7/20/21 Pacheco v. Baronhr CA2/7
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

JOSH ALEXANDER B302687
PACHECO,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC722440)

v.

BARONHR, LLC.,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Los
Angeles County, Dennis J. Landin, Judge. Reversed with
directions.
Eric M. Welch, for Defendant and Appellant.
No appearance by Plaintiff and Respondent.
_____________

BaronHR, LLC appeals from the trial court’s denial of its
motion to compel arbitration. The trial court found BaronHR
waived its right to compel arbitration based on Code of Civil
Procedure section 1281.5, subdivision (b),1 as well as the factors
set forth in St. Agnes Medical Center v. Pacificare (2003) 31
Cal.4th 1187 (St. Agnes), by waiting a year following the filing of
the complaint and participating in the litigation before moving to
compel arbitration. Substantial evidence does not support the
trial court’s ruling, and we reverse.2

FACTUAL AND PROCEDURAL BACKGROUND3

A. Pacheco’s Employment
In January 2017 BaronHR a temporary staffing agency,
placed Pacheco with Holiday Inn Express as a maintenance
worker. On June 15, 2017 Pacheco and BaronHR entered into a
written agreement to arbitrate all claims. The agreement,
written in both English and Spanish, provides that BaronHR and
Pacheco “mutually agree that they shall resolve by final and
binding arbitration any and all claims or controversies for which
a court or other governmental dispute resolution forum otherwise
would be authorized by law to grant relief, in any way arising out

1 All further undesignated statutory references are to the
Code of Civil Procedure.
2 Pacheco initially appeared through counsel. However, his
attorney withdrew as counsel, and Pacheco did not file a
respondent’s brief.
3 BaronHR designated an incomplete record on appeal. To
assist our review, on our own motion we augment the record to
include the complaint, BaronHR’s answer, the declaration of
Angie Munguia in support of BaronHR’s motion to compel
arbitration, Pacheco’s opposition to the motion, and the
declaration of Aaron Eslamboly in opposition to the motion. (Cal.
Rules of Court, rule 8.155(a)(1)(A).)

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of, relating to, or associated with Employee’s application for
employment with Employer, Employee’s employment with
Employer, or the termination of any such employment.” The
arbitration agreement provided it was “governed by and
enforceable under the Federal Arbitration Act.”
Pacheco was terminated from his employment at Holiday
Inn Express in September 2017.

B. This Action
On September 19, 2018 Pacheco filed a complaint against
BaronHR, Holiday Inn Express, and other corporate and
individual defendants4 alleging, among other claims, violations of
the California Fair Employment and Housing Act (Gov. Code,
§ 12900 et seq.) relating to an alleged disability, breach of
contract, and wrongful termination. Pacheco alleged that while
working at Holiday Inn Express he “was subjected to dangerous
and unsafe working conditions,” suffered significant workplace
injuries, and was later terminated as a result of the injuries.
BaronHR filed an answer to the complaint on November 8,
2018. The sixth affirmative defense states, “The Complaint, and
each purported cause of action contained therein, is barred by
arbitration because Plaintiff Josh Pacheco validly executed an
Arbitration Agreement in June 2017 with Defendant BaronHR,
LLC.” BaronHR filed a case management statement on
December 19, 2018.
On February 21, 2019 Pacheco served BaronHR with two
sets of form interrogatories, special interrogatories, and requests
for production of documents. Pacheco also served written
discovery on the other defendants. BaronHR responded to the

4 Only BaronHR is a party to this appeal.

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discovery, but its discovery responses included mostly objections.
The parties engaged in a meet and confer process, followed by an
informal discovery conference. The informal discovery conference
was unsuccessful, and Pacheco filed six motions to compel
discovery.
The parties attended a mediation on June 12, 2019, but
they were unable to resolve the matter. On July 29, 2019 the
parties attended a postmediation status conference, at which the
trial court ordered BaronHR to file its motion to compel
arbitration. BaronHR filed its motion on August 5, 2019, setting
a hearing date for August 27, but the trial court granted
Pacheco’s ex parte application to strike the motion for lack of
sufficient notice. BaronHR refiled its motion on August 16, 2019,
setting a November 4, 2019 hearing date. The parties attended
status conferences on August 27, September 11, and October 16,
2019.

C. BaronHR’s Motion To Compel Arbitration
In its motion to compel arbitration, BaronHR asserted
Pacheco signed an arbitration agreement, his claims fell within
the scope of the agreement, the agreement was not
unconscionable, and arbitration was mandatory under the
Federal Arbitration Act, 9 U.S.C. § 1 et seq.
In his opposition, Pacheco argued BaronHR waived its
right to compel arbitration because BaronHR failed to file its
motion within 30 days of service of the complaint, in violation of
section 1281.5, subdivision (b), and after BaronHR filed its
answer, in violation of section 1281.5, subdivision (c). Further,
BaronHR waited for over a year after the complaint was filed and
just three months before trial to file its motion. Pacheco also
argued BaronHR had invoked the “litigation machinery” by

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responding to Pacheco’s discovery, engaging in meet and confer
efforts, and attending mediation and status conferences.
Pacheco did not dispute he signed the arbitration agreement, but
he asserted the arbitration agreement was unconscionable, and
that compelling arbitration with BaronHR, but not the other non-
signatory defendants, risked inconsistent rulings.
In its reply, BaronHR argued the agreement was not
unconscionable and, in any event, any unconscionable provisions
could be severed. As to waiver, BaronHR asserted “Plaintiff was
well informed of the existence of the arbitration agreement, as it
was repeatedly brought to his attention during the early
mediation, Defendant’s discovery responses which indicated the
existence of the arbitration agreement, and Informal Discovery
Conference, wherein Defendant BaronHR, LLC informed this
Court and Plaintiff relating to same.”
At the outset of the November 4, 2019 hearing, the trial
court indicated its “inclination is to deny that motion because it
was not filed in a timely fashion, and considering the factors in
the Saint Agnes case, they all seem to weigh in favor of denying
the motion.” BaronHR’s attorney argued the motion “was timely
brought in accordance with the formal discovery conference and a
date set for BaronHR . . . to file the motion to compel arbitration.”
Further, BaronHR asserted its discovery responses only
preserved its objections and it consistently asserted in its answer,
case management statement, informal discovery conference, and
mediation that there was an arbitration agreement. BaronHR’s
attorney also argued there was a valid arbitration agreement
covering the disputes in the case and the agreement was not
unconscionable.
Pacheco’s attorney responded that the motion was untimely
because it was not filed before the answer or within 30 days of

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filing the complaint. Further, although BaronHR made the court
and Pacheco aware of the arbitration agreement, it failed to file
the motion, and “[w]e’ve been litigating this case for a full year
since August of 2018.”
BaronHR’s attorney replied that “the reason that there was
a delay in bringing this motion for the most part was because we
engaged in mediation for the first six months of—we were
preparing for mediation and we were engaged in mediation with
the plaintiff with regard to this matter. And as soon as that did
not work out, we brought the motion as timely as we could.”
The trial court denied the motion, explaining, “I’m going to
stick with my tentative thoughts on this matter and deny the
motion due to its untimely filing. . . . The statute involved here is
[section 1281.5, subdivision (b)], which has been discussed in the
moving papers. And as I mentioned . . . in the Saint Agnes case .
. . and using those factors, they weigh in favor of . . . denying the
motion to arbitrate.”

DISCUSSION

A. Waiver of the Right To Arbitration
“A motion to compel arbitration is properly denied when
the moving party has waived its right to do so.” (Spracher v.
Paul M. Zagaris, Inc. (2019) 39 Cal.App.5th 1135, 1137; accord,
Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557; see
§ 1281.2 [upon a petition to compel arbitration, “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”].) The
Federal Arbitration Act and California law apply the same

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standards for determining whether a party has waived the right
to seek arbitration. (Lewis v. Fletcher Jones Motor Cars, Inc.
(2012) 205 Cal.App.4th 436, 444 (Lewis).)
The party seeking to compel arbitration bears the burden of
proving by a preponderance of the evidence an agreement to
arbitrate a dispute exists; the party opposing arbitration bears
the burden of proving any defense (such as unconscionability or
waiver). (Pinnacle Museum Tower Assn. v. Pinnacle Market
Development (US), LLC (2012) 55 Cal.4th 223, 236; Rosenthal v.
Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413
[“If the party opposing the petition raises a defense to
enforcement—either fraud in the execution voiding the
agreement, or a statutory defense of waiver or revocation (see
§ 1281.2, subds. (a), (b))—that party bears the burden of
producing evidence of, and proving by a preponderance of the
evidence, any fact necessary to the defense.”].) “[A] party who
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.” (St. Agnes, supra, 31 Cal.4th
at p. 1195; accord, Cox v. Bonni (2018) 30 Cal.App.5th 287, 303
(Cox); Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th
438, 447 (Gloster).) Generally, a determination of waiver is a
question of fact, and we will affirm the trial court’s finding if
supported by substantial evidence. (St. Agnes, at p. 1196; accord,
Spracher v. Paul M. Zagaris, Inc., supra, 39 Cal.App.5th at p.
1137.) But where the evidence is undisputed and only one
reasonable inference may be drawn, the question is one of law.
(St. Agnes, at p. 1196.)
In assessing a waiver claim, a trial court may consider six
factors: “‘“(1) whether the party’s actions are inconsistent with
the right to arbitrate; (2) whether ‘the litigation machinery has

7
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; accord, Cox,
supra, 30 Cal.App.5th at p. 303.)
Although the trial court may consider all six factors, no
single test determines the nature of the conduct that constitutes
a waiver of arbitration. (St. Agnes, supra, 31 Cal.4th at p. 1195.)
However, the presence or absence of prejudice from litigation of
the dispute is “determinative” under federal law and “critical”
under state law. (Id. at p. 1203; accord, Gloster, supra, 226
Cal.App.4th at p. 448 [“‘[W]hether litigation results in prejudice
to the party opposing arbitration is critical in waiver
determinations.’”]; Hoover v. American Income Life Ins. Co. (2012)
206 Cal.App.4th 1193, 1205 [“The presence or absence of
prejudice from the litigation is a determinative issue.”].) “‘“The
moving party’s mere participation in litigation is not enough; the
party who seeks to establish waiver must show that some
prejudice has resulted from the other party’s delay in seeking
arbitration.”’” (Lewis, supra, 205 Cal.App.4th at p. 451; accord,
Gloster, at p. 448.) Nor does the expenditure of funds by the
opposing party to litigate the case establish prejudice. (St. Agnes,
at p. 1203 [“[C]ourts will not find prejudice where the party
opposing arbitration shows only that it incurred court costs and

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legal expenses.”]; Cox, supra, 30 Cal.App.5th at p. 304 [“The fact
that plaintiff expended money and resources in the trial court
does not establish prejudice.”].) Rather, the party claiming
waiver must show “substantial expense and delay were caused by
the unreasonable or unjustified conduct of the party seeking
arbitration.” (Iskanian v. CLS Transportation Los Angeles, LLC
(2014) 59 Cal.4th 348, 377.)

B. Substantial Evidence Does Not Support the Trial Court’s
Finding That BaronHR Waived Its Right To Arbitration
BaronHR contends the trial court erred in finding waiver
under the St. Agnes factors based on BaronHR’s delay of more
than a year in filing its motion to compel arbitration. We agree
substantial evidence does not support the trial court’s finding.5
As to the first St. Agnes factor, BaronHR’s conduct in the
litigation was not inconsistent with its right to arbitrate. (St.
Agnes, supra, 31 Cal.4th at p. 1196.) BaronHR asserted its right
to arbitrate from the outset of the litigation, raising the
arbitration agreement as an affirmative defense in its answer
and in its discovery responses. Thus, Pacheco was well aware
that BaronHR sought to arbitrate its claims. As to the second
factor, BaronHR did not substantially invoke the “litigation

5 The trial court also incorrectly relied on section 1281.5,
subdivision (b), in denying the motion to compel arbitration.
That section applies only to actions to enforce a mechanic’s lien,
not at issue here. (See § 1281.5, subd. (a) [setting requirements
for “[a]ny person who proceeds to record and enforce a claim of
lien . . . .”]; Crown Homes, Inc. v. Landes (1994) 22 Cal.App.4th
1273, 1281 [“section 1281.5, subdivision (b) provides for a special
waiver rule that comes into play when a party fails to seek
arbitration of a dispute subject to a mechanic’s lien”].)

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machinery.” (Ibid.) Although BaronHR participated in several
status conferences, an informal discovery conference, and a one-
day mediation, it did not file any motions (other than to compel
arbitration), nor did it propound discovery. Pacheco pointed out
in the trial court that BaronHR had responded to his discovery,
but according to BaronHR, it only preserved its objections,
asserting its right to arbitrate.
As to the third factor, BaronHR delayed almost a year
before filing its motion to compel arbitration, and the hearing
was three months before the scheduled trial date. (St. Agnes,
supra, 31 Cal.4th at p. 1196.) But Pacheco failed to show
prejudice from the delay or that BaronHR gained a litigation
advantage from using judicial procedures not available in
arbitration (the fifth and sixth factors).6 (See id. at pp. 1203-1205
[reversing trial court finding of waiver where party delayed four
months before filing petition to compel arbitration, but the
parties did not litigate the merits or take discovery, and there
was no prejudice to opposing party other than the costs incurred
in responding to petitioner’s motion to change venue]; Gloster,
supra, 226 Cal.App.4th at pp. 442, 449-450 [reversing trial court
order finding waiver where defendants waited a year to file
petition to compel arbitration, but they pleaded right to
arbitration as affirmative defense and asserted intent to file
petition in their case management statement, and opposing party
suffered no prejudice other than costs of litigation]; cf. Lewis,
supra, 205 Cal.App.4th at p. 451 [affirming trial court’s finding of
waiver where moving defendant filed three demurrers, two
motions to strike, and three motions to compel discovery

6 BaronHR also did not file a counterclaim without
requesting a stay of the proceeding (the fourth factor).

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responses and refused to extend deadline for plaintiff to file
discovery motions].)
Further, Pacheco failed to show BaronHR’s conduct in
delaying the filing of the motion was unreasonable. To the
contrary, as counsel for BaronHR explained at the hearing, the
delay resulted from an effort to settle the case over a six-month
period, culminating in an unsuccessful mediation, and “as soon as
that did not work out, [BaronHR] brought the motion as timely as
[it] could.”7

DISPOSITION

7 Although the trial court did not reach Pacheco’s argument
the arbitration agreement was unconscionable, Pacheco has not
filed a respondent’s brief presenting any other basis on appeal for
affirming the trial court’s order.

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 The November 4, 2019 order denying BaronHR’s motion to
compel arbitration is reversed. The trial court is directed on
remand to vacate its order denying BaronHR’s motion to compel
arbitration and to enter a new order granting the motion.
BaronHR is to bear its own costs on appeal in the interest of
justice.

FEUER, J.

We concur:

SEGAL, Acting P. J.

McCORMICK, J.*

* Judge of the Orange County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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