76 Cal.App.5th 865
Cal. Ct. App.2022Background:
- Aronow sued his former attorneys (Emergent LLP and partners) for legal malpractice; the retainer required binding arbitration at ADR Services, Inc.
- The trial court granted Emergent’s petition to compel arbitration and stayed the litigation under Code Civ. Proc. §1281.4.
- The arbitrator required a $1,500 advance and charged substantial hourly/day rates; ADR Services waived its usual administrative fee as a consumer concession.
- At the initial arbitration conference Aronow said he could not afford the fees; arbitration did not proceed. Aronow moved to waive fees or lift the stay; the trial court denied relief, citing MKJA and finding Aronow had not sufficiently documented inability to pay.
- The trial court certified the question under §166.1 and the Court of Appeal (following the Supreme Court’s reasoning in Jameson and the approach in Roldan) issued a writ directing the trial court to permit Aronow to try to prove indigency and, if proven, to give Emergent the choice to pay Aronow’s share of arbitrator fees or waive arbitration.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction to lift a §1281.4 stay when plaintiff cannot afford arbitration costs | Court may lift stay or otherwise provide judicial relief to prevent deprivation of access to a forum | §1281.4 preserves arbitrator jurisdiction; once stay entered, trial court lacks authority to let litigation proceed (MKJA) | Court has jurisdiction to decide ability to pay and may act to prevent denying access to a forum (follow Roldan and Jameson) |
| Appropriate remedy if plaintiff cannot pay arbitration fees | Defendant must pay plaintiff’s pro rata share or waive arbitration so plaintiff can proceed in court | Court cannot order defendant to pay arbitration costs; forum or arbitrator controls fees | If plaintiff shows inability to pay, court may require defendant to choose to pay plaintiff’s share or waive arbitration for that plaintiff |
| Process for determining inability to pay and related discovery | Use in forma pauperis procedure or Judicial Council financial forms; limited discovery/declarations or evidentiary hearing as needed | Require formal IFP showing; reserve right to probe finances and take discovery | Court may use fee-waiver forms (clerk can grant initial waivers), accept declarations/supporting exhibits, permit limited discovery, and hold a hearing if necessary; granting limited discovery does not automatically waive arbitration |
Key Cases Cited
- MKJA, Inc. v. 123 Fit Franchising, LLC, 191 Cal.App.4th 643 (Cal. Ct. App. 2011) (held trial court may not lift stay merely because a party claims inability to afford arbitration costs)
- Roldan v. Callahan & Blaine, 219 Cal.App.4th 87 (Cal. Ct. App. 2013) (held trial court should determine indigency and, if unable to pay, give defendant option to pay pro rata arbitration cost or waive arbitration)
- Jameson v. Desta, 5 Cal.5th 594 (Cal. 2018) (Supreme Court approved Roldan’s reasoning and emphasized protecting indigent litigants’ access to justice)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (arbitration must meet minimum fairness requirements, including consideration of cost burdens)
- Solorzano v. Superior Court, 18 Cal.App.4th 603 (Cal. Ct. App. 1993) (trial court may not appoint privately compensated referees in a way that makes litigation unaffordable for indigent litigants)
- Weiler v. Marcus & Millichap Real Estate Investment Services, Inc., 22 Cal.App.5th 970 (Cal. Ct. App. 2018) (followed Roldan; held forcing indigent plaintiff to bear arbitration fees risks depriving access to a forum)