Appellate Insights

Orders denying petitions to compel arbitration have long been, and remain, immediately appealable.  The California Supreme Court held long ago that such appeals automatically stay trial court proceedings. And the United States Supreme Court recently held that such a stay applies in federal courts as well.

But on January 1, 2024, the California Legislature eliminated the automatic stay of state court actions, with new language in CCP section 1294(a).  This has serious consequences:

• Clients entitled to the benefit of an arbitration provision—avoidance of trial court litigation—will generally lose that benefit pending appeal from an order denying the right to arbitrate.  Conversely, clients entitled to litigate in court will no longer have to wait 1-2 years to do so, until the appeal is resolved.

• Trial courts retain discretion to grant a stay pending appeal, and failing that, the appellate court can do so on a Petition for Writ of Supersedeas.  But these remedies are likely to be denied more often than granted.

• Appeals from denial of a petition to compel arbitration qualify for preference (i.e. speedier processing).  The Civil Case Information Statement is the place to tell the court so.  Counsel should prepare to brief the appeal with no time-extensions, or very short ones.

►  The practical message:  In California state courts, plaintiffs resisting arbitration now have a major practical advantage they lacked before: the right to continue litigating while a defendant pursues appeal of a claimed right to arbitrate.