`by Superior Court of CA,
`County of Santa Clara,
`on 1/12/2022 3:01 PM
`Reviewed By: R. Walker
`Case #21CV375169
`Envelope: 8045491
`
`KOOONONUl-hwwu—t
`
`NNNNNNNNNHHHHHHHHHH
`
`OONONM-PWNHOKOOONONm-PWNHO
`
`SUPERIOR COURT OF CALIFORNIA
`COUNTY OF SANTA CLARA
`
`Case N0. 21CV375 1 69
`ORDER RE: MOTION TO COMPEL
`ARBITRATION AND STAY
`PROCEEDINGS
`
`CITIZEN POWER INITIATIVES FOR CHINA
`and DOE PLAINTIFFS 1-6, the latter
`individually and 0n behalf 0f all other similarly
`situated,
`
`Plaintiffs,
`
`VS.
`TENCENT AMERICA LLC and TENCENT
`INTERNATIONAL SERVICE PTE. LTD.,
`Defendants.
`
`The above-entitled matter came 0n for hearing 0n Wednesday, January 12, 2022, at 1:30
`pm. in Department 3, the Honorable Patricia M. Lucas presiding. The court reviewed and
`considered the written submissions filed by the parties and issued a tentative ruling 0n Tuesday,
`January 11, 2022. N0 party contested the tentative ruling; therefore, the court orders that the
`tentative ruling be adopted as the order 0f the court, as follows:
`INTRODUCTION
`This is a putative class action. According t0 the allegations 0f the Complaint, filed 0n
`January 8, 2021, the Doe plaintiffs in this case (collectively with Citizen Power Initiatives for
`China, “Plaintiffs”) are users 0f an app called WeChat. (Complaint, W 14-19.) WeChat is a
`
`I.
`
`ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
`
`1
`
`
`
`Tencent International Service Pte. Ltd. (collectively, “Defendants”). (/d. at 1.) Plaintiffs alleg
`
`that WeChatholds an effective monopoly on how “the world that speaks Chinese” communicate
`
`with each other electronically. (/bid.)
`
`Plaintiffs state that this case arises from Defendants’ practice of turning over private user
`
`data and communications from California WeChat users to the government of the People’s
`
`Republic of China. (Complaint, 2.) Plaintiffs also challenge provisions in Defendants’ terms
`
`—oOFeYNNHNAFFWONY messaging-and-payments mobile application offered by defendants Tencent America LLC and
`
`of service and privacy policy. (d. at { 3.)
`
`The Complaint sets forth the following causes of action:
`
`(1) Declaratory and injunctive
`
`relief that certain practices and contractual provisions are unlawful and unenforceable;
`
`(2) Violations of the California constitutional right to privacy; (3) Violations of the California
`
`constitutional right to free speech; (4) Violations of the California constitutional right to equal
`
`protection; (5) Intrusion on seclusion; (6) Conversion andtrespass to chattels; (7) Intentional
`
`infliction of emotional distress; (8) Negligence; (9) Unjust enrichment; (10) Violations of the
`
`California Unfair Competition Law; and (11) Violations of the California Invasion of Privacy
`
`Act.
`
`On May 19, 2021, Defendants filed a petition to compel arbitration before the American
`
`Arbitration Association (“AAA”) under the Federal Arbitration Act and California law.
`
`Plaintiffs opposed the motion. Forthe first time in reply, Defendants argued that the court
`
`should compelarbitration either in California under California law and pursuant to the AAA
`
`procedures or in Hong Kong under Hong Konglaw and pursuant to the Hong Kong International
`
`Arbitration Centre Administered Arbitration Rules.
`
`The petition was originally set for hearing on July 21, 2021. At that time, the court asked
`
`for supplemental briefing from the parties regarding the issue of whetheran arbitrator, rather
`
`than the court, should resolve arbitrability questions.
`
`The matter then proceeded to hearing on August 25, 2021. The court subsequently took
`
`the matter under submission. On September 14, 2021, while the matter wasstill under
`
`submission and without seeking leave of court, Defendants filed a “Notice of Supplemental
`
`2
`ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
`
`
`
`Ltd.’s Petition to Compel Arbitration and Stay Further Proceedings,” presenting additional
`
`argument in support of Defendants’ petition. The court then vacated the submission and allowed
`
`Plaintiffs five days to file a response.
`
`On September 30, 2021, the court entered an order denying Defendants’ petition to
`
`—oOFeYNNHNAFFWONY Authority in Support of Defendants Tencent America LLC and Tencent International ServePte.
`
`compel arbitration. The court held that the delegation clause did not clearly and unmistakably
`
`delegate gateway questions of arbitrability to an arbitrator and therefore the court would decide
`
`whether Plaintiffs could be compelled to arbitration. The court then determined that, as a matter
`
`of due process, there was no request properly before the court to compelarbitration in Hong
`
`Kong under Hong Kong law and pursuant to the Hong KongInternational Arbitration Centre
`
`Administered Arbitration Rules. Consequently, the court considered the petition only with
`
`respect to the request for arbitration under the AAA rules. Finally, the court held that Plaintiffs
`
`did not assent to the relevant arbitration clause.
`
`On October 27, 2021, Defendants filed a Notice of Appeal of the court order denying
`
`their petition to compelarbitration. That appeal (Sixth District Court of Appeal Case No.
`
`H049519) is still pending.
`
`That same day, Defendants filed the matter currently before the court: a second petition
`
`to compel arbitration, seeking to compel arbitration in Hong Kongandto stay proceedingsin this
`
`court. Plaintiffs oppose the petition.
`
`I.
`
`DISCUSSION
`
`Asa threshold matter, the court addresses the effect on this proceeding ofthe filing of the
`
`Notice of Appeal.
`
`Code of Civil Procedure section 916, subdivision (a) stays all further trial court
`
`proceedings “upon the matters embraced” in or “affected” by the appeal. (Varian Medical
`
`Systems, Inc. vy. Delfino (2005) 35 Cal.4th 180, 189 (Varian).)
`
`In determining whether a proceeding is embraced in or affected by the appeal,
`
`[courts] must consider the appeal andits possible outcomesinrelation to the
`
`proceeding andits possible results. “[W]hether a matter is ‘embraced’ in or
`
`3
`ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
`
`
`
`—oOFeYNNHNAFFWONY
`
`‘affected’ by a judgment[or order] within the meaning of[section 916] depends
`
`on whether postjudgment [or postorder] proceedings on the matter would have
`
`any effect on the ‘effectiveness’ of the appeal.” [Citation.] “If so, the
`
`proceedingsare stayed; if not, the proceedings are permitted.” [Citation.]
`
`(Varian, supra, 35 Cal.4th at p. 189.)
`
`[A] proceeding affects the effectiveness of the appeal if the very purpose of the
`
`appealis to avoid the need for that proceeding. In that situation, the proceeding
`
`itself is inherently inconsistent with a possible outcome on appeal and must
`
`therefore be stayed under section 916, subdivision (a). Thus, an appeal from the
`
`denial of a motion to compelarbitration automatically stays all furthertrial court
`
`proceedings on the merits. [Citation.]
`
`(Varian, supra, 35 Cal.4th at p. 190, citing Prudential-Bache Securities, Inc. v. Superior Court
`
`(1988) 201 Cal.App.3d 924, 925-926 [“Bache appealed the order denying arbitration. That
`
`appeal affects the entire case. Thus, further trial court proceedings are stayed under Code of
`
`Civil Procedure section 916.” (Emphasis added.)]; Coast Plaza Doctors Hospital v. Blue Cross
`
`of California (2000) 83 Cal.App.4th 677, 683, fn. 4 [“[A]fter Blue Crossfiled its notice of appea
`
`from the denial of its petition to compel arbitration, there was a mandatory stay ofall
`
`proceedings (Code Civ. Proc., § 916) that the trial court refused to lift and thereafter enforced
`
`when Coast Plaza attempted to continue pursuit of third party discovery efforts despite the
`
`stay.”] (Emphasis added).)
`
`Here, Defendant’s appeal of the September 30, 2021 order denying their petition to
`
`compel arbitration affects the entire case. A possible result of the appealis that Plaintiffs are
`
`ordered to arbitrate the dispute in California under California law and pursuant to the AAA
`
`procedures: a result irreconcilable with the order sought on the current petition which would
`
`require Plaintiffs to arbitrate in Hong Kong under Hong Kong law and pursuant to the Hong
`
`Kong International Arbitration Centre Administered Arbitration Rules. Moreover, the purpose
`
`of the appeal is to avoid the need for further proceedingsin the trial court. The petition to
`
`compel arbitration currently before the court is hardly an ancillary or collateral matter. The
`
`4
`ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
`
`
`
`proceeding itself is inherently inconsistent with a possible outcome 0n appeal. Accordingly,
`because it violates the stay imposed by Virtue 0f Defendants’ notice 0f appeal, Defendants’
`second petition t0 compel arbitration is ordered OFF CALENDAR.
`
`KOOONONUl-hwwu—t
`
`Dated: January 12, 2022
`
`Patricia M. Lucas
`Judge 0f the Superior Court
`
`NNNNNNNNNHHHHHHHHHH
`
`OONONM-PWNHOKOOONONm-PWNHO
`
`5
`ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
`
`