Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_24-cv-02812/USCOURTS-caed-2_24-cv-02812-0/pdf.json

Parties Involved:
Candice Davis
Plaintiff
Movement Mortgage, LLC
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CANDICE DAVIS,

Plaintiff,

v.

MOVEMENT MORTGAGE, LLC and DOES 

1 through 100, inclusive,

Defendants.

No. 2:24-cv-02812 WBS JDP

ORDER RE: DEFENDANT’S MOTION 

TO COMPEL ARBITRATION

----oo0oo----

Plaintiff Candice Davis, an employee of defendant 

Movement Mortgage, LLC, filed this action in Placer County 

Superior Court on August 23, 2024, bringing wage-and-hour claims 

under the California Labor Code and gender discrimination claims 

under the Labor Code and California Fair Employment and Housing 

Act. (Docket No. 1-2.) Defendant removed to this court on the 

basis of diversity. (Docket No. 1.) Defendant now moves to 

compel the arbitration of all claims. (Docket No. 6.)

Plaintiff previously initiated an arbitration before 

the American Arbitration Association (“AAA”), alleging wage-andCase 2:24-cv-02812-WBS-JDP Document 16 Filed 12/10/24 Page 1 of 4
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hour violations under the Labor Code. (Docket No. 6-3.) The 

arbitration was terminated following defendant’s failure to pay 

the required fee, which defense counsel attributes to 

inadvertence. (See Docket No. 6-1 ¶ 5.)

It is undisputed that the parties are subject to a 

valid arbitration agreement that covers the claims at issue. 

Plaintiff argues that defendant’s failure to pay the arbitration 

fee constitutes waiver of its right to arbitrate. 

Even assuming defendant’s failure to pay the fees 

constituted a waiver, the arbitration demand provided “no 

indication” that plaintiff would also assert discrimination 

claims, and defendant “cannot be said to have ‘known’ that it 

could compel arbitration on claims that it did not even know 

existed.” See Musharbash v. JPMorgan Chase Bank, No. 2:22-cv02320 DAD KJN, 2024 WL 919186, at *5 (E.D. Cal. Mar. 1, 2024) 

(quoting Morgan v. Sundance, Inc., 596 U.S. 411, 417 (2022)). 

Indeed, the new discrimination claims involve entirely different 

legal theories and would require different proof, for example

evidence of discriminatory intent and pay disparity in comparison 

to other employees.

As the complaint in this action “unexpectedly change[d]

the scope or theory of the plaintiff’s claims,” defendant is 

permitted to “rescind [its] earlier waiver.” See Krinsk v. 

SunTrust Banks, Inc., 654 F.3d 1194, 1202 (11th Cir. 2011) (cited 

with approval in Burton v. Ghosh, 961 F.3d 960, 967 (7th Cir. 

2020)); cf. Kim v. Hanlees Seven, Inc., No. 18-cv-00472 JSW, 2019 

WL 13256105, at *4 (N.D. Cal. July 1, 2019) (defendants’ “right 

to compel arbitration has not been revived by the filing of the 

Case 2:24-cv-02812-WBS-JDP Document 16 Filed 12/10/24 Page 2 of 4
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amended complaint” because the newly asserted claims were 

“contained within the scope of Plaintiff’s original complaint”).

Accordingly, defendant has not waived its right to compel 

arbitration.

Separately, plaintiff argues that the motion should be 

denied based on California Code of Civil Procedure § 1281.97, 

which provides: “In an employment or consumer arbitration that 

requires . . . the drafting party to pay certain fees and costs 

before the arbitration can proceed, if the fees or costs to 

initiate an arbitration proceeding are not paid within 30 days 

after the due date the drafting party is in material breach of 

the arbitration agreement, is in default of the arbitration, and 

waives its right to compel arbitration.”

Defendant argues that this statute is preempted by the 

Federal Arbitration Act (“FAA”). There is a split among the 

district courts on this issue, see Lee v. Citigroup Corp. 

Holdings, No. 22-cv-02718-SK, 2023 WL 6132959, at *2 (N.D. Cal. 

Aug. 29, 2023) (recognizing split), which is pending 

consideration by the California Supreme Court, see Keeton v. 

Tesla, 555 P.3d 2 (Cal. 2024); Hohenshelt v. Superior Ct., 549 

P.3d 143 (Cal. 2024). For the following reasons, this court 

sides with the courts that have found the California statute 

preempted.

The FAA “preempts any state rule discriminating on its 

face against arbitration.” Viking River Cruises, Inc. v. 

Moriana, 596 U.S. 639, 650 (2022). This rule is premised on the 

FAA’s “equal-treatment principle,” under which “a court may 

invalidate or refuse to enforce an arbitration agreement based on 

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generally applicable contract defenses . . . but not on legal 

rules that apply only to arbitration or that derive their meaning 

from the fact that an agreement to arbitrate is at issue.” Id.

(cleaned up); see also Kindred Nursing Centers Ltd. P’ship v. 

Clark, 581 U.S. 246, 252 (2017) (indicating that rules that are 

“too tailor-made to arbitration agreements” are preempted by the 

FAA); Morgan, 596 U.S. at 418 (the policy underlying the FAA is 

to “make arbitration agreements as enforceable as other 

contracts, but not more so”) (cleaned up, emphasis added). 

Section 1281.97 “violates the equal-treatment principle under 

[the FAA] because it makes arbitration provisions unenforceable 

on arbitration-specific grounds.” Belyea v. GreenSky, Inc., 637 

F. Supp. 3d 745, 756 (N.D. Cal. 2022); see also Lee, 2023 WL 

6132959, at *2; Russell v. Siemens Indus. Software Inc., No. 23-

cv-03884 LJC, 2024 WL 4545970, at *10 (N.D. Cal. Oct. 21, 2024). 

Section 1281.97 is therefore preempted by the FAA and is 

inapplicable here.

IT IS THEREFORE ORDERED that defendant’s motion to 

compel arbitration (Docket No. 6) be, and the same hereby is, 

GRANTED. IT IS FURTHER ORDERED that this case is STAYED pending 

arbitration.

The Clerk shall close this file administratively, 

subject to it being reopened upon the application of either party 

after arbitration has been fully completed.

Dated: December 10, 2024

Case 2:24-cv-02812-WBS-JDP Document 16 Filed 12/10/24 Page 4 of 4