The Problem To Be Solved Is How To Achieve Equal Access To Justice.
"Does a trial court that granted a defendant’s petition to compel arbitration have jurisdiction to lift the stay of trial court proceedings where a plaintiff demonstrates financial inability to pay the anticipated arbitration costs? If so, may the court require defendant either to pay plaintiff’s share of arbitration costs or to waive the right to arbitration? We answer both questions in the affirmative . . . " Gerald Aronow v. Superior Court of San Francisco (Respondent); Emergent LLP, et al (Real Parties in Interest), No. A162662 (1/4 3/28/22) (Ross, Streeter, Brown).
The problem presented in Aronow occurs when a party to an arbitration cannot afford to pay for the arbitration. In this case, Aronow sued his former attorneys for legal malpractice. They responded by compelling arbitration and staying legal proceedings. Aronow sought to lift the stay, arguing he was in forma pauperis. The trial court, noting that authority was divided over whether it had jurisdiction to remove the stay, did not do so, and certified the question to the Court of Appeal. The arbitration statutes do not address the scope of jurisdiction the trial judge has to terminate a stay on arbitration because of a party's failure to pay.
The Court of Appeal in Aronow takes the position that, in the case of an indigent party, the trial court should give the party seeking arbitration the choice of paying plaintiff's share of costs or waiving the right to arbitration. Otherwise, a person like Aronow who claims to be without financial resources would not have access to justice and would be unable to air his grievances.
We note (as did the opinion), that there are numerous instances in which the courts waive fees for an indigent party. Examples include filing fees, court reporter fees, jury fees, fees for a court ordered reference, and bonds. What is different in the case of private arbitration is that there is no way to compel the private arbitrator to waive fees. So instead, the court in Aronow gives the party seeking arbitration the choice of paying fees or waiving arbitration.
Is this inconsistent with requirements in the California and Federal Arbitration Acts that courts must allow arbitrations to be had according to the terms of the arbitration agreement? Depends on how one interprets "had." If an arbitration is had when a claim to arbitrate is filed, and then it does not proceed in normal fashion because a party cannot pay, the court can conclude that an arbitration has been had.
In Aronow, the court provides some help to the party seeking arbitration, Emergent, for it recognizes that limited discovery into the financial condition of may be appropriate. If limited discovery into financial condition takes place, the court assures Emergent that it will not waive its right to arbitrate. Such discovery should occur early, before arbitration is compelled (well, not in this case). Also, the person claiming inability to pay may be able to establish financial condition with a declaration, exhibits, or a limited evidentiary hearing.
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