JESUS EDEZA v. CARDENAS MARKETS LLC, et al.

The Motion to Compel Arbitration and the Motion to Stay the Action

In response to the lawsuit, Cardenas moved to compel arbitration based on an arbitration agreement that Edeza signed in connection with his employment. The Court denied the motion on the grounds that Edeza demonstrated the contract was procedurally and substantively unconscionable. (11/24/25 Ruling.) On January 23, 2026, Cardenas appealed the ruling and the appeal is still pending.

The Court also stayed the action, but set an OSC re: why the stay should not be lifted. Cardenas thereafter filed the pending motion to continue the stay pending appeal. The motion is made pursuant to the Court’s inherent authority to grant stays under Code of Civil Procedure section 128, subdivision (a), and section 918. The motion is made on the grounds that Cardenas will be unduly prejudiced if a stay is not granted pending the appeal because it will be forced to litigate the case even though the matter may ultimately be forced into arbitration. Cardenas further argues it will raise a substantial question on appeal, namely, whether the Court erred in denying the motion to compel arbitration. The motion is supported by a declaration from attorney Amie Gonzalez and the order denying the motion to compel arbitration.

The motion is opposed by Edeza on the grounds that a stay is not automatic and good cause has not been shown for a discretionary stay, the issuance of a stay would undermine the general rule that stays are not automatic, and the balance of equities favors a denial of the request for stay. The opposition is supported by a declaration from attorney Ruben Guerra, the ruling on the motion to compel arbitration, and a ruling in an unrelated matter in Los Angeles County Superior Court (of which judicial notice is sought).

Cardenas has replied and submits an objection to the request for judicial notice and the corresponding exhibit.

Analysis

Under Code of Civil Procedure section 1294, an order dismissing or denying a petition to compel arbitration is appealable, but “the perfecting of such an appeal shall not automatically stay any proceedings in the trial court during the pendency of the appeal.” (Code Civ. Proc., § 1294, subd. (a).) The cited language from section 1294 was a recent change effective January 1, 2024. The general rule, as outlined in section 1294, makes clear that the case should move forward during the appeal. The reasoning for the change in the law, as outlined in the legislative history materials, is that arbitration puts employees at a “significant disadvantage due to their relative lack of power and knowledge, both when entering into a contract containing an arbitration agreement and during the arbitration process.” (California Bill Analysis, S.B. 365 Sen., 7/12/2023.)

The policy underlying section 1294 is front and center. Cardenas, as the employer, unsuccessfully moved to compel arbitration. Edeza, as the employee, should not have her proceeding, and the corresponding attempt to vindicate her rights, delayed while Cardenas seeks an appeal.

As for the Court’s discretionary authority to stay the litigation pending the appeal, Code of Civil Procedure section 128, subdivision (a)(3), provides that every court has the power to “provide for the orderly conduct of proceedings before it, or its officers.” (See also Landis v. N. Am. Co. (1946) 299 U.S. 248, 254 [power to stay a proceeding is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants and that is done by weighing competing interests and maintaining an even balance].) Code of Civil Procedure section 918 also provides that the trial court may stay enforcement of any judgment or order regardless of whether an appeal is taken.

However, since the Legislature, in amending section 1294, clearly balanced the respective interests of the employer and employee and concluded a stay is generally inappropriate, Cardenas would need to show that the current case falls outside the typical scenario already contemplated by the Legislature in

amending section 1294. The motion raises the potential merits of the appeal, which the Court generally disagrees with (hence the ruling denying the motion to compel arbitration) and the motion also raises the generalized harm that will arise if Cardenas is forced to litigate, but ultimately prevails on the appeal. But such harm was generally already contemplated when the amendment to section 1294 was enacted.

Furthermore, even if Cardenas prevails on appeal, the expenses incurred in the interim will not be entirely wasted since, for instance, any discovery conducted could be used in connection with any arbitration. While more prejudice would exist in the event the case proceeds to trial before the appeal is resolved, no trial date is pending as of yet and the Court can always revisit the stay before the case proceeds to trial and perhaps by then the appeal will be resolved.

However, the motion also addresses federal law, which is implicated by Cardenas’ reference to the case of Coinbase, Inc. v. Bielski (2023) 599 U.S. 736 (Coinbase) in its moving papers. Under 9 U.S.C. § 16(a), “when a district court denies a party’s motion to compel arbitration, that party may take an interlocutory appeal. Section 16(a) creates a rare statutory exception to the usual rule that parties may not appeal before final judgment.” (Id. p. 740). In Coinbase, the Supreme Court addressed whether a district court “must stay its proceedings while the interlocutory appeal on arbitrability is ongoing.” (Id. at p. 740.) The court answered “yes” and noted that although section 16 does not address the issue, “because the question on appeal is whether the case belongs in arbitration or instead in the district court, the entire case is essentially “involved in the appeal.”” (Ibid.)

The Coinbase court then indicated a stay “reflects common sense. Absent an automatic stay of district court proceedings, Congress’s decision in § 16(a) to afford a right to an interlocutory appeal would be largely nullified. If the district court could move forward with pre-trial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost—even if the court of appeals later concluded that the case actually had belonged in arbitration all along.

Absent a stay, parties also could be forced to settle to avoid the district court proceedings (including discovery and trial) that they contracted to avoid through arbitration.”” (Coinbase, supra, 599 U.S. at pp. 742–743.) While the FAA does not explicitly indicate a stay is required, the United States Supreme Court relied upon existing federal common law principals (announced in Griggs v. Provident Consumer Discount Co. (1982) 459 U.S. 56) to prevent the nullification of section 16. (Coinbase, Inc. v.

Bielski (2023) 599 U.S. 736, 743– 744.)

The rule announced in Coinbase, and the corresponding policy reasons, ostensibly conflict with Code of Civil Procedure section 1294. The interlocutory rule is clearly procedural in nature and the California Supreme Court has indicated that “[a]lthough the CAA’s procedural rules apply by default to cases brought in California courts, including those in which the FAA governs the arbitrability of the controversy, the FAA’s procedural rules may apply if the parties expressly agree they do or if the CAA’s procedural rules are preempted.” (Quach v.

California Commerce Club, Inc. (2024) 16 Cal.5th 562, 582.) Even the California Legislature has acknowledged the potential preemption issue related to Code of Civil Procedure section 1294 because the Legislative History material indicates Coinbase “likely makes the procedural change advanced by this bill more vulnerable to legal challenges.” (California Bill Analysis, S.B. 365 Sen., 7/12/2023.)

In this case, the arbitration agreement contains a choice of law provision indicating the contract was entered into under the Federal Arbitration Act (FAA) and “shall be interpreted and construed in accordance with the law and procedures developed under that statute.” (8/5/25 Casteñeda Decl., Ex. A [the arbitration agreement] at ¶ 9 [emphasis added]; court takes judicial notice of said Declaration on its

own motion.) As a result, and given the apparent conflict recognized in Coinbase that a stay would nullify the FAA, the court intends to grant the stay pending the appeal based on federal preemption grounds.

TENTATIVE RULING

The Court rules as follows:

(1) Cardenas’s evidentiary objections are sustained and Edeza’s request for judicial notice of the trial court order in the unrelated case in Los Angeles County Superior Court is denied.

a) Trial court orders in unrelated cases generally have no value as legal precedent. (City of Bakersfield v. West Park Home Owners Assn. & Friends (2016) 4 Cal.App.5th 1199, 1210 [“Accordingly, we will neither rely upon, nor take judicial notice of, these orders”].

(2) The motion to stay this proceeding pending the appeal is granted.

a) Denying the stay would effectively nullify section 16 of the FAA (Coinbase, Inc. v. Bielski (2023) 599 U.S. 736, 743–744) and although Code of Civil Procedure section 1294 is procedural, “the FAA’s procedural rules may apply if the parties expressly agree they do or if the CAA’s procedural rules are preempted.” (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 582.) The agreement in this case indicates the FAA’s procedural rules apply (8/5/25 Casteñeda Decl., Ex. A [the arbitration agreement] at ¶ 9), and even the California Legislature has acknowledged the potential preemption issue related to Code of Civil Procedure section 1294. (California Bill Analysis, S.B. 365 Sen., 7/12/2023.)