Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-00227/USCOURTS-caed-2_04-cv-00227-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1331 Fed. Question

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

RICHARD HUSE and JEFF DUNCAN,

Plaintiffs, CIV. S-04-0227 DFL/JFM

v. MEMORANDUM OF OPINION 

AND ORDER

AUBURN HONDA, JAY COOPER, JIMMY

RAY MULLINS, AMERICAN HONDA MOTOR

CO., and DOES 1-30,

Defendants.

_________________________________/ 

On September 21, 2004, the court granted a motion for

summary judgment in favor of defendants Auburn Honda, Jay Cooper,

and Jimmy Ray Mullins, finding that the arbitration agreement

between plaintiffs and defendants was enforceable. (9/21/2004

Order at 16.) Plaintiffs now bring a motion to compel

arbitration under 9 U.S.C. § 4. Plaintiffs’ motion is GRANTED.

I. 

Following the filing of plaintiffs’ complaint in February

2004, defendants filed a motion for summary judgment, which the

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court granted in September 2004. (9/21/2004 Order at 16.) 

Shortly thereafter, defendants’ request to enter judgment under

Fed.R.Civ.P. 54(b) was denied. (12/20/2004 Order at 3.) 

However, on December 21, 2004, the court granted defendants’

request, made at oral argument, to dismiss plaintiffs’ claims

against them as stated in plaintiffs’ amended complaint. 

(12/21/2004 Order.) In February 2005, defendant American Honda

Motor Company, Inc. filed a motion for summary judgment. 

Plaintiffs opposed the motion and filed a separate motion

requesting that the court compel all parties to join and proceed

to trial. In plaintiffs’ reply to their motion to proceed to

trial, they also requested that the court compel arbitration

under 9 U.S.C. § 4. At oral argument, defendants opposed this

motion and requested an opportunity for further briefing. 

Defendants Auburn Honda and Cooper submitted an opposition and a

response to plaintiffs’ motion to compel, in which defendant

Mullins has joined.

II.

A. Waiver of Right to Compel Arbitration

Defendants’ central argument is that plaintiffs waived their

right to compel arbitration. (Opp’n at 6-12.) Waiver of the

right to compel arbitration is governed by the Federal

Arbitration Act (“FAA”). Sovak v. Chugai Pharm. Co., 280 F.3d

1266, 1270 (9th Cir. 2002). The burden on the party attempting

to show waiver is high. Britton v. Co-op Banking Group, 916 F.2d

1405, 1412 (9th Cir. 1990). The only issue in this case is

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whether defendants have shown that plaintiffs’ actions -- which

have arguably been inconsistent with the right to compel

arbitration -- have caused defendants to suffer prejudice. Id. 

When looking at alleged prejudice, courts review “the amount

of litigation, the time elapsed from the commencement of

litigation to the request for arbitration, and the proximity of a

trial date when arbitration is sought.” Creative Telecomm., Inc.

v. Breeden, 120 F.Supp.2d 1225, 1233 (D. Haw. 1999). In this

case, a scheduling order has not yet issued, no discovery has

taken place, and a trial date has not been set. Nonetheless,

defendants assert that plaintiffs unreasonably delayed filing

their petition to compel arbitration, causing defendants delay

and litigation costs. (Opp’n at 6-12.) The court is not

persuaded. 

Defendants aver that plaintiffs unreasonably delayed

arbitration by challenging the terms of their agreements in court

instead of resolving the issue before an arbitrator. (Id. at 8.) 

Defendants cite California law to support their argument;

however, the enforcement of the arbitration agreement is governed

by the FAA, and, under that statute, the validity of the

arbitration clause may be decided by a court. Circuit City

Stores v. Adams, 279 F.3d 889, 892 (9th Cir. 2002). Plaintiffs

asserted that the arbitration agreements were unconscionable, an

argument available to them in response to defendants’ summary

judgment motion. Thus, any delay resulting from plaintiffs’

decision to ask a court to resolve the issue of enforceability

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was not unreasonable. 

Defendants also argue that plaintiffs were dilatory in

waiting a year to bring a motion to compel. (Opp’n at 8.) 

However, the order disposing of defendants’ summary judgment

motion was not issued until September 2004. Plaintiffs sent a

letter to defendants requesting arbitration immediately following

that order, and that request appears to have been ignored by

defendants. (Mot. Ex. 3A.) Defendants do not address this

correspondence in their opposition brief and instead argue that

plaintiffs did not request arbitration until January 2005. 

(Opp’n at 7.) 

However, defendants have not provided the court with any

evidence showing they did not receive plaintiffs’ September

request; therefore, defendants must take partial responsibility

for the delay that ensued. Instead of arbitrating with

plaintiffs in September, defendants chose to file a motion to

enter judgment under Rule 54(b). While plaintiffs could have

filed a motion to compel arbitration at any point between October

2004 and now, their failure to do so does not show unreasonable

delay -- especially in light of their two informal attempts to

commence arbitration. Defendants contributed to any delay by

filing their own motions and by apparently stonewalling any

efforts by plaintiffs to arbitrate without a separate court

order. Therefore, any prejudice from such delay is equally

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 Defendants also argue that plaintiffs did not promptly 1

request arbitration, resulting in waiver of their right to

compel. (Opp’n at 9-10.) However, whether the arbitration

agreement required a “timely” request to arbitrate is a

procedural question that the arbitrator must resolve. Retail

Delivery Drivers v. Servomation Corp., 717 F.2d 475, 478 (9th

Cir. 1983). 

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shared by the parties.1

Next, defendants argue that because of plaintiffs’ delay in

moving to compel, defendants are now at a tactical and financial

disadvantage. (Id. at 10.) They assert that witnesses may have

moved, and memories have faded. (Id.) However, if this were

truly a concern, defendants were free to move to compel

arbitration at any point during the past year. Also, the sevenmonth delay between the summary judgment order and the present

hardly seems long enough to lose critical memories and witnesses. 

Defendants also argue that they have accrued over $60,000 in

attorneys fees and costs to date and that, if they are forced to

arbitrate, they will accrue even more cost and expense. However,

the litigation costs defendants complain of are due, in part, to

defendants’ own procedural maneuvering. In addition, while the

fees thus far are substantial, defendants have not conducted

discovery or incurred any other traditional litigation costs. 

Defendants have not shown sufficient prejudice to defeat

plaintiffs’ motion to compel. 

B. Jurisdiction, Dismissal, and Statute of Limitations

In addition to their waiver argument, defendants argue that

plaintiffs cannot compel arbitration because: (1) the court lacks

jurisdiction to hear a motion to compel at this stage; (2) the

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dismissal of plaintiffs first amended complaint should be

construed as having been dismissed with prejudice; and (3)

plaintiffs’ claims are barred by the applicable statute of

limitations. (Id. at 4-6, 12-13.) 

The thrust of defendants’ first argument is that the court’s

grant of summary judgment to defendants divested the court of

subject matter jurisdiction over the action. Defendants assert

that in order for plaintiffs to file a motion to compel

arbitration, they must file in a separate court under a separate

case number. (Id. at 4.) They cite no support for this

proposition, and the court was unable to find any. 

Quite the contrary, where courts have found claims to be

arbitrable, they have also found that they maintain subject

matter jurisdiction over the case itself. For example, the Ninth

Circuit found that a district court had jurisdiction to grant a

Rule 41(b) motion even after the court previously granted an

order to stay litigation pending arbitration. Morris v. Morgan

Stanley & Co., 942 F.2d 648, 655 (9th Cir. 1991); see also

Anaconda v. Am. Sugar Refining Co., 322 U.S. 42, 44, 64 S.Ct. 863

(1944) (Section 3 of the FAA “obviously envisages action in a

court on a cause of action and does not oust the court’s

jurisdiction of the action...”); Green Tree Fin. Corp.-Ala. v.

Randolph, 531 U.S. 79, 86-87, 121 S.Ct. 513 (2000) (following

arbitration, court has jurisdiction to confirm, vacate, or modify

the resulting arbitration award in a subsequent proceeding); PMB

Distributing Co., Inc. v. Huber & Suhner, 863 F.2d 639, 642 (9th

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Cir. 1988) (finding that the issuance of a § 4 order to compel

did not divest the court of jurisdiction to adjudicate an

application for a writ of possession); John Ashe Assocs., Inc. v.

Envirogenics Co., 425 F.Supp. 238, 241 n.3 (E.D.Pa. 1977)

(stating that arbitration agreements limit scope of court’s

review, not its subject matter jurisdiction (collecting cases)). 

In this case, the court granted defendant’s motion for

summary judgment, finding that the arbitration agreement between

the parties was enforceable. Whether the court stayed the

litigation, compelled arbitration, or made a summary judgment

ruling, the court maintains jurisdiction over the case. No

judgment has been entered. Where, as seems to be the case here,

a party is unwilling to arbitrate in the absence of a court

order, the court, consistent with the goals of the FAA, must be

able “to retain control over the case to the extent necessary to

prevent a complete breakdown of the process.” Morris, 942 F.2d

at 653. Therefore, the court has jurisdiction to hear

plaintiffs’ motion.

Defendants also assert that the dismissal of plaintiffs’

first amended complaint should be deemed with prejudice so as to

foreclose any further action in this case, including a motion to

compel. (Opp’n at 5.) They cite Stewart v. U.S. Bancorp, 297

F.3d 953, 956 (9th Cir. 2002), to support their contention. In

Stewart, the appellate court had to determine the effect of a

district court’s order of dismissal where the district court was

silent. In this case, the court retains the power both to modify

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its order under Fed.R.Civ.P. 60(a) and to determine the effect of

its dismissal. Plaintiffs’ claims against defendant were

dismissed without prejudice pending arbitration; therefore,

plaintiffs’ motion to compel arbitration of those claims is

properly before the court. 

Finally, defendants argue that plaintiffs cannot compel

arbitration because the statute of limitations for their

statutory claims has run. (Opp’n at 12.) The parties do not

appear to dispute that plaintiffs’ February 2004 complaint was

filed within the requisite statute of limitations period. 

Instead, defendants argue, without citation to authority, that

the dismissal of plaintiffs’ complaint prohibits any tolling of

the statute of limitations period, such that plaintiffs’ April

2005 motion to compel is a separate untimely filing. 

But the motion to compel is not a separate filing of a new

case. The original case is still here because judgment has yet

to enter. Further, even if the court found that the statute of

limitations for plaintiffs’ motion had passed, equitable tolling

would apply. See Lantzy v. Centex Homes, 31 Cal.4th 363, 370, 2

Cal.Rptr.3d 655 (2003) (equitable tolling “suspend[s] or

extend[s] a statute of limitations as necessary to ensure

fundamental practicality and fairness”); Williams-Scaife v. Dep’t

of Def. Dependent Schools, 925 F.2d 346, 346 (9th Cir. 1991) (a

district court may toll the statute of limitations requirements

for federal claims “for equitable reasons in appropriate

cases.”). Defendants will not suffer surprise, as they were

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consolidated, unless the parties otherwise agree. 

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timely notified of the nature of these claims and could have

arbitrated them as early as October 2004.

III.

Procedural maneuvering by both counsel is defeating the fair

and efficient resolution of these actions. Counsel are urged to

knock it off and get these cases to arbitration. For the reasons

discussed above, plaintiffs’ motion to compel arbitration is

GRANTED. 

2

IT IS SO ORDERED.

Dated: __6/10/2005

DAVID F. LEVI

United States District Judge

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