SHANQUAN BAO VS. META PLATFORMS, INC.

July 31, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ 9:00 AM Line 3 25-CIV-00428 SHANQUAN BAO VS. META PLATFORMS, INC.

SHANQUAN BAO BRUCE J HIGHMAN META PLATFORMS, INC. RACHEL JAN MOROSKI

Defendant’s Motion to Stay Pending Appeal

TENTATIVE RULING:

Defendant Meta, Inc., has moved for a stay of the proceedings in this matter, pending the outcome of its appeal of this Court’s Order denying its motion to compel arbitration.

Defendant’s motion for a stay is DENIED.

BACKGROUND

Plaintiff, a former employee of Defendant Meta, has sued Meta for (1) Libel, (2) Violation of Labor Code Section 1102.5, (3) Violation of the Fair Employment and Housing Act (FEHA), and (4) Tortious Violation of Public Policy. The third cause of action is a retaliation claim premised on Plaintiff’s allegation that Meta took adverse employment actions against him for opposing conduct that he “reasonably believed violated statutes against sexual harassment.” (Complaint, ¶¶ 39-40.) The underlying conduct at issue consists of allegations that Plaintiff’s manager “engaged in unwelcome conduct of a sexual nature” toward an unspecified person by: (1) “showing a picture with his shirt pulled up and showing his belly,” (2) bragging about knowing a beautiful couple, and (3) saying that he wanted children but could not have them because his in-laws were staying with him. (Id. at ¶ 27.)

Plaintiff did not personally observe any of this alleged conduct; he was told about it secondhand or thirdhand by a member of his team. Id. Plaintiff alleges that he reported the manager’s alleged conduct to Meta, that Meta investigated, and that the investigator concluded the manager did not violate any policy. (Id. ¶ 31.)

On March 24, 2026, this Court denied Defendant’s motion to compel arbitration on the basis that Plaintiff’s retaliation claim fell under the Ending Forced Arbitration Act (“EFAA”), rendering the pre-dispute arbitration agreement between the parties invalid. On May 18, 2026, Defendant filed a Notice of Appeal. On July 7, 2026, Defendant filed the instant motion for a stay pending appeal.

LEGAL STANDARD

Under Code Civ. Proc. § 1294(a), trial court proceedings are not automatically stayed during the pendency of an appeal of an order denying a motion to compel arbitration. However, trial courts

July 31, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ retain “inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489; see also Code Civ. Proc., § 128.)

In determining whether to issue a discretionary stay, California courts engage in a “balancing of equities.” Daly v. San Bernardino County Bd. of Supervisors (2021) 11 Cal.5th 1030, 1054; Alpha Media Resort Investment Cases (2019) 39 Cal.App.5th 1121, 1134, fn.10 [trial courts must balance the nature and substantiality of the injustices claimed on either side when deciding whether to grant or deny a stay].)

The balancing of equities includes the likelihood that substantial questions will be raised on appeal. (People ex rel. San Francisco Bay Conservation & Dev. Comm’n v. Town of Emeryville (1968) Cal.2d 533, 537 (hereafter, “Emeryville”) [a trial court is normally “the appropriate forum to weigh the relative hardships on the parties, including the likelihood that substantial questions will be raised on appeal”].) A stay is only warranted where the case involves difficult questions of law and the fruits of a reversal would be irrevocably lost unless the status quo is maintained. (Ibid.; Daly, supra, 11 Cal.5th at p. 1039;)

Citing federal caselaw, Defendant argues that the following factors are relevant in deciding whether to stay court proceedings during the pendency of appeal: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceedings; and (4) where the public interest lies.” (Hilton v. Braunskill, 481 U.S. 770, 776 (1987).)

As noted above, California state courts apply the “balancing of equities” framework and have not adopted the Hilton test identified by Defendant. However, the core inquiry is largely the same: whether the appeal has sufficient merit and whether the harm from proceeding outweighs the harm from delay. Plaintiff acknowledges that the first three factors of the Hilton test “amount to a balancing of the equities.” (Oppo., at p. 5:17-20.) Thus, while the Court does not adopt Hilton test as controlling authority, the Court nonetheless considers federal cases addressing those issues for their persuasive authority.

LEGAL ANALYSIS

1. Defendant’s Appeal Raises Substantial Issues

The balancing of equities includes the likelihood that substantial questions will be raised on appeal. (Emeryville, 69 Cal.2d at p. 537.) Unlike federal courts, California courts do not require a strong showing of likelihood on the merits but instead focus on whether there are “substantial questions” or “difficult questions of law” raised on appeal. (Ibid.)

Defendant argues that its appeal raises substantial questions, including (1) whether the EFAA applies to retaliation claims where the plaintiff reported sexual harassment but did not personally suffer or witness the alleged conduct; and (2) whether state courts must apply the federal

July 31, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ pleading standard when assessing whether a plaintiff’s complaint adequately alleges conduct constituting sexual harassment.

The Court agrees. As this Court previously acknowledged, “[n]o California appellate authority has . . . expressly held that a claim for retaliation for reporting sexual harassment constitutes a sexual harassment dispute or that a case involving such a claim is subject to the EFAA.” (Order, March 24, 2026, at p.4.) The Court is further not aware of any cases addressing whether a retaliation claim is subject to the EFAA where the plaintiff did not personally suffer or witness the alleged conduct constituting sexual harassment but rather reported the alleged conduct after hearing of it second-hand from co-workers.

Based on the ruling in this Court’s Order denying Defendant’s motion to compel – including but limited to the fact that the plain language of the EFAA broadly applies at the election of “the person alleging conduct constituting a sexual harassment dispute” (see 9 U.S.C. § 402, subd. (a).) – the Court does not find that Defendant has established an actual likelihood of success on the merits. However, under Emeryville, Defendant has established that its appeal raises substantial legal issues.

2. Defendant Has Not Established Irreparable Harm or Unjust Injury

Defendant further argues that if a stay is denied, it will suffer irreparable harm by losing the benefits of arbitration. However, California district courts have held that ordinary litigation costs and the theoretical loss arbitration’s benefits of speed and efficiency do not constitute irreparable injury, particularly in the early stages of litigation. (See, e.g. Trompeter v. Ally Fin., Inc. (N.D. Cal. 2012) 914 F.Supp.2d 1067, 1078 [no irreparable harm where party may incur some costs of litigation in exchange of initial discovery and motion practice]; Mohamed v.

Uber Technologies, et al. (N.D. Cal. Jul. 22, 2015) 115 F.Supp.3d 1024 1032-35 [finding defendant would not be harmed by reasonable discovery, explaining that the arbitration agreement contemplated civil discovery]; Bradberry v. T–Mobile USA, Inc. (N.D. Cal. Aug. 2, 2007) No. C–06–6567 CW, 2007 WL 2221076, at *4 [“The cost of some pretrial litigation does not constitute an irreparable harm to Defendant.”]; Morse v. Servicemaster Global Holdings, Inc. (N.D. Cal. Jan. 8, 2013) No. C10–628–SI, 2013 WL 123610, at *2 [recognizing that “the money and time a party must expend [during the litigation] process, while burdensome, does not alone constitute irreparable injury”] Guifu Li v.

A Perfect Franchise, Inc. (N.D. Cal. Jun. 8, 2011) No. 10–cv–1189–LHK, 2011 WL 2293221, at *2 incurring litigation expenses does not amount to an irreparable harm.”].)

The Court finds that Defendant has not established a probability of irreparable harm absent a stay. And like Mohamed, supra, Defendant’s arbitration agreement contemplates that discovery shall be allowed under the Federal Rules of Civil Procedure, further undermining Defendant’s argument that it will incur costs that would otherwise be avoidable. (See McKenna Decl., July 3, 2025, Ex. B, Arbitration Agreement, at p. 3.)

Defendant has not met its burden to show that the balance of equities favors granting its motion for a stay.

July 31, 2026 Law and Motion Calendar

HONORABLE MICHAEL L. MAU, Department 20 ________________________________________________________________________ 3. Section 1294(a) Is Not Preempted by the FAA

Defendant alternatively argues that Code Civ. Proc., Section 1294(a) is pre-empted by the Federal Arbitration Act (“FAA”). Defendant explains that a state statute or rule is preempted by the FAA if it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” (MPA, at p. 19:9-11, citing AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352.) Defendant argues that “[t]he exception to Code Civ. Proc. section 916, subd. (a) created by SB 365 is preempted because it is specific to arbitration and will make valid arbitration agreements effectively meaningless, since litigation will have already occurred by the time the court of appeal finds that an agreement is binding and enforceable.” (MPA, at p. 15-18.)

The Court does not find Defendant’s argument compelling. Defendant fails to cite relevant case law applying the preemption analysis or otherwise explain how Section 916(a) “will make valid arbitration agreements effectively meaningless.” Plaintiff has not established that Section 916(a) stands as an obstacle to the objectives of the FAA. Rather, Section 916(a) simply establishes that a stay of court proceedings is not mandatory where an appeal is pending after a court has ruled, as contemplated under the FAA, that the subject arbitration agreement is not binding on the claims in the case – including where, as here, federal law provides that an otherwise valid arbitration agreement is unenforceable.

As Plaintiff notes, orders denying motions to compel arbitration are immediately appealable whereas orders compelling arbitration are not, which adequately favors arbitration consistent with both federal and state law. Section 916(a) also does not prohibit courts from granting a discretionary stay pending an appeal of an order denying a motion to compel arbitration, where a party has established that a discretionary stay is warranted.

Of course, Defendant’s argument also misses the mark since the FAA has been found essentially inapplicable to this action due to the EFAA, which question is the very subject of the appeal.

Accordingly, Defendant’s Motion for a Stay Pending Appeal Is DENIED.

Any party who contests a tentative ruling must email Dept20@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the prevailing party shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to CRC Rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the CRC. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be filed or e-filed only, do not email or mail a hard copy to the Court.