Arbitration, Estoppel, Waiver: Failure To Timely Exercise Right To Baseball Arbitration Is “The Whole Ball Game”
Court Of Appeal Rejects Waiver, Estoppel And Forfeiture Arguments Made By Lessor Who Failed To Timely Exercise Right To “Baseball Arbitration” In Rental Dispute.
Miss Myrtle Rowe holding a baseball bat. March 14, 2010. Library of Congress.
“Baseball arbitration” takes its name from salary arbitration in Major League Baseball, in which the arbitrator must choose which of two positions is the more reasonable position. Baseball arbitration is sometimes employed in lease disputes, as it was in Zawtocki v. Black Angus Steakhouses, LLC, No. E062969 (4/2 8/11/16) (Ramirez, Hollenhorst, Miller) (unpublished).
Zawtocki leased to Black Angus Steakhouse. The lessee exercised an offer to extend the lease, the lessor offered to do so for $220,000/year, and the lessee countered with $140,000.
However, instead of timely exercising a right to require baseball arbitration under the lease, the lessor went sideways by failing to make a timely demand. As a consequence, the trial court denied the lessor’s petition to compel arbitration. The lessor appealed, contending, among other things, that he was entitled to relief from forfeiture, and that the forfeiture should be excused by waiver or estoppel.
The Court of Appeal rejected waiver, estoppel, and forfeiture arguments, analogizing the failure to timely exercise the right to arbitrate to a failure to timely exercise an option – something that is not a forfeiture. Affirmed.
Presumably the lessor is now stuck with the $140,000 rental amount. Or, as the Court of Appeal put it: “The arbitration petition is, so to speak, the whole ball game.”
Arbitration, Class Actions: Uber And Out?–Class Settlement Of Claims Against Uber Is Rejected By District Court, Leaving Uber Drivers Potentially Exposed To Individual Arbitration Depending On 9th Circuit’s Inclinations
Enforceability Of Arbitration Provisions Is Uncertain, Threatening To Upset The Settlement Applecart.
Joel Rosenblatt, reporting for Bloomberg on August 18, 2016, explains why San Francisco District Court Judge Edward Chen’s rejection of a class-settlement between Uber and its drivers may now give Uber the upper hand: the Ninth Circuit is poised to rule on the enforceability of arbitration clauses in Uber driver contracts in another case, and if it enforces the arbitration clauses, Uber could force drivers to individually arbitrate their claims, eviscerating the class action.
Judge Chen, who rejected the $100M settlement as being not generous enough to the Uber drivers, had previously ruled that Uber’s arbitration clauses could not be enforced. However, the Ninth Circuit could overturn his ruling that the arbitration clauses are invalid in another pending case involving Uber drivers. It would be an odd twist of fate if the Judge’s ruling results in a worse outcome for the drivers.
The case brings together some great legal talent that includes Shannon Liss-Riordan for the drivers, and Ted Boutrous for Uber.
Stay tuned.
Mediation, Attorney’s Fees: Fee-Shifting Provision In Davis-Stirling Act Applies To HOA Action To Enforce Settlement Agreement With Homeowner Arising Out Of Mediation Conducted Pursuant To Mandatory ADR Requirements Of The Act
Policy Of Encouraging Parties To Resolve Disputes Without Resort To Litigation Supports Liberal Construction Of Statutory Language.
“This case presents the question of whether the Davis-Stirling Act, and particularly the fee-shifting provision of section 5975, subdivision (c), applies to an action to enforce a settlement agreement arising out of a mediation conducted pursuant to the mandatory alternative dispute resolution requirements of the Act.” Rancho Mirage Country Club Homeowners Association v. Hazelbaker, et al., No. E063272 (4/2 8/9/16) (Hollenhorst, Ramirez, Miller).
Section 5795, the fee-shifting provision, applies to litigation “to enforce the governing documents.” So is an HOA lawsuit to enforce an agreement that was reached during mediation, is an action “to enforce the governing documents” of the HOA? Yes, says the Court of Appeal, on the facts here.
The pre-litigation ADR scheme applying to HOA disputes is intended to encourage the parties to an HOA dispute to settle their dispute through ADR rather than through litigation. The Court reasoned that the policy would be thwarted if an “action to enforce the governing documents” was narrowly construed, because then a party could settle an HOA dispute through mediation, not fulfill its settlement obligations, and avoid cost-shifting entirely. Besides, the gravamen of the HOA’s original complaint here was that the defendants had not taken the steps necessary to bring their property into compliance with the HOA’s CC&Rs.
COMMENT: The HOA dispute originally arose over unapproved changes to a patio area. The prevailing party here, the HOA, sought $31,970 in attorney’s fees, and the trial court awarded only $18,991 in attorney’s fees. Now the Court of Appeal has awarded the HOA its additional costs and attorney’s fees on appeal . Kinda argues in favor of the mediation process, and carrying out settlement obligations after an agreement has been reached.
Mediation: Evidence Of Its Benefits Are Found In Maryland Study
The Evidence Supports Mediation’s Selling Points.
The Maryland Judiciary has commissioned research to be conducted by independent researchers on the efficacy of mediation with small claims-type cases. The research claims to be “the only research in the country that compares the attitudes and changes in attitudes of participants who went through ADR to an equivalent comparison group who went through the standard court process.” The research also examines the long-term and short term effects of employing different mediation strategies, such as reflecting back the emotions and interests of the participants, and eliciting solutions, offering solutions, and caucusing.
The research showed significant benefits for those who went through the ADR process. Participants were more likely to resolve all their issues. They had an increase in their rating of their level of responsibility for the situation. Participants were more likely to be satisfied with the judicial system than others. They were more likely to emerge with a better attitude toward the other side, and with a higher satisfaction with the outcome.
The study also found interesting results regarding the strategies employed by mediators. In the short run, reflective strategies seemed to make participants feel more positive, though such strategies seemed not to have a statistically significant effect in any positive or negative outcomes. Frequent caucusing correlated with lower satisfaction, and with a higher likelihood of return to court. Also, “eliciting strategies” – asking participants to suggest solutions, summarizing the solutions, and asking them how the solutions would work for them – were strategies associated with a lower rate of return to court in the long run. Being directive by offering solutions was a less successful strategy than eliciting solutions.
Query whether reflecting back the emotions of participants, keeping them all in the same room without caucusing, and avoiding evaluation and directive solutions will work with equal success in more complex mediations.
Here is a link to the studies.
Pending Cases, Federal Arbitration Act: Nursing Homes Petition SCOTUS
Can Kentucky Require That Nursing Home Resident’s Power of Attorney Reference Arbitration In Order To Effectively Bind Attorneys-In-Fact To Arbitrate Wrongful Death Cases? – Or Does Federal Arbitration Act Preempt State Requirement?
Above: Nurse training. Nov. 1942. Fritz Henle, photographer. Library of Congress.
At the beginning of the week, we reported that SCOTUSBlog’s “Petition of the Day” involved an arbitration/FAA/preemption/standard of review issue. In fact, the case, R.J. Reynolds Co. v. Maryland, is the subject of our immediately preceding post. Now, just a few days later, another case involving arbitration/FAA/federal preemption is the subject of a writ of certiorari to SCOTUS.
The case is Kindred Nursing Centers Limited Partnership v. Clark et al, No. 16-32.
The question presented by the Petition is:
”Whether the FAA preempts a state-law contract rule that singles out arbitration by requiring a power of attorney to expressly refer to arbitration agreements before the attorney-in-fact can bind her principal to an arbitration agreement.”
The redoubtable Andrew J. Pincus of Mayer Brown is listed as Counsel of Record. Mr. Pincus led AT&T to victory in AT & T v. Concepcion, 563 U.S. 333 (2011), the landmark case holding the FAA preempts state laws prohibiting contracts from disallowing class-wide arbitration,
Pending Cases, Federal Arbitration Act, Standard of Review: Tobacco Companies Petition SCOTUS
SCOTUSBlog’s “Petition of the Day” Presents Arbitration Issues.
“The Jolly Smoker.” Currier & Ives. c1880. Library of Congress.
On July 29, 2016, Kate Howard reported on the “Petition of the Day” in R.J. Reynolds Co. v. Maryland, 15-1537, presenting the issues:
“(1) Whether, when the Federal Arbitration Act (‘FAA’) governs an arbitration, the FAA’s judicial review standards apply in state court and preempt application of different state-law judicial-review standards; and (2) whether, when arbitrators have jurisdiction to resolve a contract dispute, the FAA prohibits a court from holding that they ‘exceeded their powers’ based on the court’s conclusion that their contract interpretation is ‘plainly’ and ‘irrationally’ incorrect on the merits.”
Stay tuned . . .