Arbitration, Authentication, Burden Of Proof: Defendants/Appellants Sufficiently Established Existence Of Agreement To Arbitrate By Authenticating Electronic Signature
Because Defendant Introduced Key Evidence In Supplemental Declaration, Rather Than In Moving Papers, Court Had To Address The Burden Of Proof.
Yes, it happens. Sometimes, a published case deserving a post escapes my net. However, Espejo v. Southern California Permanente Medical Group, (2nd Dist. Div. 4 2016) (Collins, Epstein, Willhite), though filed back on April 22, is worth a post, because it systematically addresses how to authenticate an arbitration agreement with an electronic signature, and who has the burden of proof. I have addressed authentication issues in posts on January 4, 2015 (Ruiz v. Moss Bros. Auto Group) and on December 31, 2014 (JBB Investment Partners).
In Espejo, the defendants moving to compel arbitration submitted key evidence in a supplemental declaration, rather than in their initial moving papers. This put at issue whether the burden to authenticate fell upon them in their moving papers, or whether they could timely present evidence of authentication later after the plaintiff opposing arbitration questioned the authenticity of his electronic signature. The Court of Appeal concluded that while the moving parties had the initial burden of establishing the existence of an arbitration agreement, that burden did not include authentication. Therefore, their introduction of evidence to establish authenticity after plaintiff questioned authenticity was still timely. The Court distinguished Toal v. Tardif, 178 Cal.App.4th 1208 (2009), in which the party seeking arbitration submitted a copy of the contract signed by the party’s attorney – those facts did not satisfy the initial burden of showing that an agreement existed between the parties to arbitrate.
Espejo lays out a roadmap for authenticating an electronically signed document. The employee applicant used a private and unique username and password provided to him orally and by phone. After logging in, he had to re-set his password and choose his own password. Without resetting his password, he could not proceed. He then had to agree to complete employment documents using an electronic signature. Then he was directed to hyperlinks to key documents, including the Dispute Resolution Procedure containing the arbitration provisions. He was prompted on the signature page of the employment agreement to accept or decline it. If he accepted, he was prompted to complete his name, which then populated the signature line. The final employment agreement included the name, date, time, and the IP address where the applicant electronically signed the agreement. The same procedure applied to the Dispute Resolution Procedure.
COMMENT: The procedure for authentication here seems pretty solid, and therefore useful as a yardstick for evaluating whether an electronic authentication procedure measures up to authentication requirements – at least until the next case comes along.
Arbitration, Deadlines, Vacatur, Jurisdiction: Request To Vacate Award Made More Than 100 Days After Service Of Award Is Too Late, And Defective Service Of Award Is Not Jurisdictional
Court of Appeal Distinguishes Between Service For Purposes Of Notice And Service For Purposes Of Jurisdiction.
Claimants appealed a judgment entered after the trial court granted the petition of insurer GEICO to confirm an award in its favor in an uninsured motorist case where there were questions about coverage. GEICO General Ins. Co. v. Schroeder, D068203 (4/1 May 31, 2016) (McDonald, Nares, Prager) (unpublished). Unfortunately for the claimants/appellants, they waited more than 100 days after service of the signed award to seek vacation of the award in the superior court. The statutory scheme requires the court to confirm the award as made unless it corrects the award and confirms it as corrected, vacates the award or dismisses the proceeding. So end of story. Well, not quite.
Claimants argued that the award had been defectively served. In fact, Cal. Code Civ. Proc., section 1283.6, requires the arbitrator to “serve a signed copy of the award on each party to the arbitration personally or by registered or certified mail or as provided in the agreement.” That wasn’t done here.
The Court, however, held that the defect in service was not jurisdictional, distinguishing service of the motion to vacate from service of the award itself. The purpose of service of the award is to confer notice, and Claimants did not contend that they did not get notice, or that they were prejudiced by defective service. In contrast, service of a motion to vacate must be done according to statute, because the court only acquires jurisdiction to vacate on proper service. “Claimants conflate notice with service of process,” wrote the Court, adding, “but the two requirements are distinct.”
Affirmed.
Arbitration, Collateral Estoppel: Collateral Estoppel Effect Of Arbitration Decision Results In Affirmance Of Trial Court Order Sustaining Demurrer To Amended Complaint
Tip From Appellate Justices: Address The Basis Of The Trial Court’s Ruling When You Appeal.
The trial court sustained a demurrer of respondent Sabet to appellant Kavandi’s first amended cross-complaint, without leave to amend, leading to this appeal. Sabet v. Kavandi, No. G050886 (4/3 May 23, 2016) (Bedsworth, Aronson, Thompson) (unpublished). Unfortunately for appellant, a previous final binding arbitration decision encompassed the issues of the cross-complaint, dooming the appeal: “Because Kavandi failed to address the basis of the trial court’s ruling on the demurrer – a conclusive bar to her cross-complaint – we affirm the judgment of dismissal.”
Collateral Estoppel and Res Judicata. Justice Bedsworth reminds us that the California Supreme Court “admonished one and all to stop throwing the term ‘res judicata’ around without due consideration for its true meaning . . . “ Res judicata applies to claim preclusion, whereas issue preclusion prohibits relitigation of the same issue. The distinction matters because “claim preclusion applies only between the same parties or their privities, while issue preclusion (the former collateral estoppel) is not so restricted.” Footnote 2.
Pending Cases: Baxter v. Bock Is Now Partially Published
Case Involved The Mandatory Fee Arbitration Act.
We just posted on Baxter v. Bock on May 22, 2016, a case involving the MFAA and an acknowledged arbitrator’s error that was not a basis for vacating an award, as well as disclosure requirements. We can now report that the case is partially published as of May 24, 2016.
Collective Bargaining/Public Policy Exception: Ninth Circuit Reverses District Court’s Decision That Vacated Arbitrator’s Award On Erroneous Grounds Arbitrator’s Interpretation Of Agreement Was Not “Plausible” And Was Contra
Opinion Clarifies Limited Role Played By Courts In Reviewing Labor Arbitration Awards.
In Southwest Regional Council of Carpenters v. Drywall Dynamics, Inc., No. 14-55250 (9th Cir. May 19, 2016) (Berzon, Owens, Marbley), the Ninth Circuit reverses a district court order vacating an arbitration award in a labor case, along the way criticizing use of “plausibility” as a guide to review, and pointing out that the so-called “public policy exception” allowing for review of an arbitrator’s award, is in fact a limited exception requiring violation of an “explicit, well-defined, and dominant public policy.”
Perhaps the facts troubled the district court judge. Respondent Drywall Dynamics, Inc., (“Drywall”) entered into a labor agreement with petitioner Southwest Regional Council of Carpenters (“SWRCC” or “Union) by which Drywall assigned to a contractors’ association authority to bargain on its behalf. Drywall attempted to terminate the agreement, but the Union and association had executed a Memorandum of Understanding (“MOU”) extending the agreement before Drywall could terminate it – something that happened more than once. The arbitrator found in favor of the Union, in particular finding that the termination was not timely.
The district court ruled that the arbitration panel’s interpretation of the contracts was not “plausible” – the first problem. The Ninth Circuit has now clarified that “plausibility” is not the standard of review, to the extent that “plausibility” requires looking at the merits of the decision. Instead, the question is “whether [the arbitrator] made any interpretation or application of the agreement at all,” adding: “If so, the court’s inquiry ends.” Another formulation of this is: “Did the arbitrator look at and construe the contract, or did he not?”
The second problem arose when “the district court determined that the arbitrator’s award violated ‘a clear public policy in favor of voluntary relationships among employers and multi-employer bargaining units’.” The district court had in mind “the voluntary nature of multiemployer bargaining.” However, the Ninth Circuit found no such clear public policy, but rather competing interests that include the right to withdraw from a multiemployer unit and the stability of multiemployer units. With competing policies, no clear public policy exists, thus, no violation of a clear public policy, thus, no exception allowing for review of the arbitrator’s award. Query whether Drywall is in a sort of Catch-22 situation — stuck with outcomes it does not like, and unable to find a simple way to extricate itself from multiemployer bargaining.
Arbitration/Standard Of Review/MFAA: Arbitrator’s Error In Stating Amount Of Fees Paid By Client Not A Reason To Overturn Arbitrator’s Award In Attorney-Client Fee Dispute
But Court’s Decision On Fee Award Is Vacated, Because There Was No Reasonable Basis For Assigning Different Hourly Rates To Two Attorneys.
Baxter v. Bock, A142372, A142984, A143689 (1/1 May 18, 2016) (Margulies, Humes, Dondero) (unpublished) rather starkly illustrates the application of different standards of review to the arbitration award in an attorney’s fees dispute, and to the trial judge’s award of attorney’s fees to the client who successfully defended against the attorney’s efforts to collect more.
Although the parties acknowledged that the arbitrator erred in stating the amount of fees paid by the clients when calculating the amount in dispute in fees between attorney and client, that was no basis for the trial court, which confirmed the award, to vacate the award. As we know, mistakes of law or fact are ordinarily not a basis for overturning an arbitrator’s award.
However, when the clients then moved the trial court successfully for an award of attorney’s fees expended defending against the attorney’s claims, a different standard of review applied – an abuse of discretion standard when reviewing a trial court order awarding attorney fees. Here, the Court of Appeal found no reasonable basis in the record for applying different rates to two of the client’s attorneys. therefore, the matter was remanded to the trial court solely for reconsidering the lodestar compensation rate for one of the attorneys.
Another issue involved in this case is whether the arbitrator should have made an additional disclosure relating to bias, because part of his business involved auditing attorney client bills. The Court of Appeal concluded that the general disclosure requirements of the MFAA and the California Arbitration “are, for practical purposes, the same, and decisions under the ‘impartiality’ disclosure requirements of the CAA may be applied in evaluating arbitrator disclosure obligations under the MFAA.” However, the arbitrator’s practice was not devoted exclusively to one side of fee disputes; his law firm’s expertise was “in reviewing attorney bills, rather than in representing one side or the other in fee disputes.” So the disclosures were adequate.