Miscellany: Judge Posner Proposes Bluebook Bonfire And Other Legal Reforms
In a March 29, 2016 post, Debra Cassens Weiss, writing for the ABA Journal, quotes the esteemed appellate judge Richard Posner: “The first thing to do is burn all copies of the Bluebook, in its latest edition 560 pages of rubbish, a terrible time waster for law clerks employed by judges who insist, as many do, that the citations in their opinions conform to the Bluebook.” We assume that Judge Posner does not generally favor book bonfires, which have a bad name, but this pinpoint attack is likely to resonate with many of us who labor at brief writing, and not-so-brief writing.
Ms. Cassens also notes that Judge Posner “has his own instructions on citation format, consisting of two pages in an office manual he gives to his law clerks.” Can I get a copy?
Among other legal reforms proposed by Judge Posner are creating a uniform system of lawyer pay (a “single payer” system) to even up disparities in the quality of representation, appointing neutral experts in cases involving difficult technical issues, providing jurors with transcripts that can be read along with testimony, and allowing judges to do Internet research (provided lawyers can contest the results).
Arbitration/Disclosure: Arbitrator Whose Practice Involved Representing Lawyers Against Lawyers Did Not Have To Disclose That Fact In Arbitration Involving Lawyer Versus Client Fee Dispute
Dissent By Justice Rubin Emphasizes That Disclosure Rules Must Be Broader Than Disqualification Rules
I have a sidebar category for “disclosures.” Perhaps I should add one for “disqualification”, because as the lengthy dissent of Justice Rubin explains in Safarian, Choi & Bolstad, LLP v. Minassian, No. B262526 (2/8 April 7, 2016) (Bigelow, P.J.) (unpublished), the requirements for disqualification of an arbitrator are not identical with those for disclosure. As the dissent also points out, the standards for disqualification and disclosure are often confused – so for now, I will stick to one sidebar category, faithfully reflecting the current state of confusion in case law.
The underlying fee dispute between the law firm (SCB) and its client Minassian was straightforward. The client believed that a handshake agreement superseded the written agreement, and that he had been overbilled. The law firm and the client engaged in fee arbitration under a program administered by the LACBA. The arbitration panel determined that the engagement letter was void, because SCB failed to issue monthly invoices and the invoice it did issue failed to clearly identify who worked on what. However, the panel awarded an amount for the value of services rendered. The trial court affirmed the award, and the client appealed.
The issue dividing the appellate majority and the dissent was whether the panel chair should have disclosed the fact that much of his practice consisted of the representation of lawyers against lawyers. The majority held that there was no reasonable basis to believe that the panel chair could not be fair to a client in a fee dispute simply as a result of the nature of his legal practice, in a case where the dispute to be arbitrated was between a law firm and a client, not between lawyers. The majority refused to extend the holding of a key case, Benjamin, Weill & Mazer v. Kors, 195 Cal.App.4th 40 (2011), in which the “arbitration award in favor of a law firm in a fee dispute with a client was reversed because the chief arbitrator failed to disclose his representation of large law firms in similar cases, including of a law firm in a fee dispute with a client and of another law firm in a malpractice action against it.”
While agreeing that the current case was “less egregious” than the Benjamin, Weill case, Justice Rubin wryly adding, “’not as egregious’ arguments rarely take us very far.” Justice Rubin explored the historical development of disqualification rules for arbitrators and for judges, explaining that they have “different blood lines” and that they are not identical. “But the standard for disclosing information that is reasonably relevant to potential disqualification should be identical,” he concludes, “even though the specific grounds for disqualification may differ from judge to arbitrator.”
Justice Rubin also had no doubt that the information that the panel chair’s “law practice was in large measure devoted to representing lawyers was ‘reasonably relevant’ to the issue of disqualification.”
Two themes run through the dissent. One theme is that rules of disclosure must be more broader in their application than rules of disqualification. Otherwise, judges and arbitrators could simply disqualify themselves, and there would be no need for disclosure.
The second theme is that case law and standards are muddled by confusing terms such as “might”, “could”, and "would", with would “used pretty uniformly throughout to describe the judge’s likely ability to be impartial, not the state of mind of the litigant that triggers disclosure.” For example, the majority wrote, “We fail to see how this [failure to disclose] would cause a person to reasonably entertain a doubt that Rolston would be able to be impartial to a client.” (italics added). Justice Rubin believes that proper application of the test would be whether the failure to disclose “might” or “could” cause a person to reasonably entertain doubt that the arbitrator would be impartial.
DISCLOSURE: The panel chair, Berne Rolston, was a founder of Fulop, Rolston, Burns & McKittrick, a Beverly Hills law firm. Rex McKittrick moved on to found McKittrick, Jackson, DeMarco & Peckenpaugh. I was a shareholder of the latter firm. I don’t know Berne Rolston. But as you can see, I do have a connection, which, however, has not affected my absolute impartiality.
Arbitration, Unconscionability, Employment: California Supreme Court Holds That Carve-Out For Preliminary Injunctive Relief Does Not Make Agreement Substantively Unconscionable
The Exception To Arbitration Simply Restates Existing Law.
The California Supreme Court has ruled that an employment agreement providing for arbitration of disputes, but authorizing the parties to seek preliminary injunctive relief in the superior court, does not make the agreement one-sided and substantively unconscionable, even if employers are more likely to seek injunctive relief than employees. Baltazar v. Forever 21, Inc., S208345 (Sup. Ct. March 28, 2016) (Kruger, J.). Here, the contract simply restates existing law, which has a carve-out for preliminary injunctive relief. Code Civ. Proc., section 1281.8(b).
We posted earlier about the judgment of the Court of Appeal on December 21, 2012. The Supreme Court affirms the judgment of the Court of Appeal.
COMMENT: Note that here, the clause excepted preliminary injunctive relief from arbitration, and this restates existing law. A provision that excepted injunctive relief from arbitration would not restate existing law. Compare Carbajal v. CWPSC, Inc., G050438 (4/3 Feb. 26, 2016) (Aronson, Bedsworth, Ikola) (arbitration provision resulting in substantive unconscionability included allowing the employer, but not the employee, to seek injunctive relief in court) about which we posted on February 28, 2016.
Arbitration/Employment: Arbitration Award Of Fees Against Employee Losing Overtime Claim Properly Vacated Under Public Policy Exception To Arbitral Finality
Arbitral Award Was Properly Corrected To Take Into Account That Labor Code Section 1194 Is A One-Way Fee Shifting Award.
California Attorney’s Fees posts today on Ling v. P.F. Chang’s China Bistro, Inc., Case No. H039367 (6th Dist. Mar. 25, 2016) (published), an employment law case in which the Court of Appeal agreed (in part) with the trial judge that Labor Code section 1194 works as a one-way fee shifting provision in favor of the employee, such that a substantial arbitral award fee award in favor of the employer required correction. This is an example of the “public policy” exception to arbitral finality applied in the employment law context.
Arbitration: Enforceability/Nonsignatories: Arbitration Provision In Internet Browsewrap Agreement Fails For Lack Of Conspicuousness
Court Of Appeal Advises Online MerchantsTo Include Conspicuous Textual Notice With Terms Of Use.
Consumers may be bound by arbitration provisions in internet “clickwrap” or “browsewrap” agreements – except when they are not – as was the case in Long v. Provide Commerce, Inc., B257910 (2/3 March 17, 2016) (Jones, J.).
Internet contracts “come primarily in two flavors: ‘clickwrap’ (or ‘click-through’) agreements, in which website users are required to click on an ‘I agree’ box after being presented with a list of terms and conditions of use; and ‘browsewrap’ agreements, where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen,” quoting from Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir. 2014). The Second District panel informs us, “[N]o California appellate court has yet addressed what sort of website design elements would be necessary or sufficient to deem a browsewrap agreement valid in the absence of actual notice.”
Nguyen, which I previously posted about on August 18, 2014, explained, “the defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.” The determination of the validity of the browsewrap agreement turns on whether the user has actual or constructive knowledge of a website’s terms and conditions – and that, in turn, depends on how conspicuous the terms and conditions are.
The Ninth Circuit in Nguyen, and now the California Court of Appeal in Long, agreed that the browsewrap agreement at issue was not enforceable. In Long, the hyperlink to terms of use appeared at the bottom of pages, in a light green typeface on a lime green background, and was situated among many other hyperlinks of the same color, font, and size. Clicking on the hyperlink would have led to the Terms of Use, and proceeding further would have led to the Agreement to Arbitrate Disputes. The consumer plaintiff argued that the placement of the Terms of Use hyperlinks, the checkout flow, and the hyperlink to “Terms” in a subsequent order confirmation email were too inconspicuous to put the plaintiff on inquiry notice of the contents of the agreement.
All may not be lost for the e-merchant who relies on a browsewrap agreement. “Online retailers would be well-advised to include a conspicuous textual notice with their terms of use hyperlinks going forward,” says the Court of Appeal. For now, clickwrap agreements are a safer bet than browsewrap agreements.
Foreign Arbitration/Enforceability: Wake Up And Smell The Coffee: Ninth Circuit Holds Foreign Arbitration Foiled By Sham Agreement Concerning Coffee Franchise
. . . In Which We Inaugurate A New Sidebar Category (Foreign Arbitration) And Petitioners Who Successfully Compelled Arbitration In District Court Lawsuit Concerning Coffee Franchise Dispute Get Roasted On Appeal.
Our next case involves a dispute between an Italian corporation seeking to open a coffee franchise in the United States, and two entrepreneurs planning to open an Italian-style coffee house in the United States. Casa Del Caffe Vergnano v. ItalFlavors, No. 13-56091 (9th Cir. March 15, 2016) (Korman, J., writing for maj.; Callahan, J., dissenting). The Rabellinos’ dream of opening a successful coffee shop as a franchise of the Italian corporation, Casa Del Vergnano, failed, and the Rabellinos sued in federal district court in San Diego, alleging that they did not receive the support they had been promised.
The parties, however, had executed a Commercial Contract with an arbitration provision providing for the application of Italian law to contract construction, and arbitration in Geneva under the UNCITRAL Arbitration Rules. Along with the Commercial Contract containing the arbitration clause, the parties had also executed a Hold Harmless Agreement providing that the Commercial Contract “does not have any validity or effectiveness between the parties, as it was prepared and delivered by Casa del Caffe Vergnano S.p.A. solely for the purpose of allowing Mr. Hector Rabellino to submit a copy of it to the pertinent international agencies in order to obtain an entry visa to work in the United States . . .”
The district court held that “the issue of whether the broad arbitration clause contained in the Commercial Contract survives after the [Hold Harmless Agreement] took effect should be submitted to the arbitrator.”
The panel majority held that the parties’ Commercial Contract was not binding, because the Hold Harmless Agreement showed that there was no mutual intention to be bound – and if the Commercial Contract was a sham, the arbitration provision within it could not be enforced, anymore than other terms of a sham contract could be enforced. To reach this conclusion, the Court had to address the parol evidence rule, because the Hold Harmless Agreement, evidencing the sham nature of the Commercial Contract, was executed after the Commercial Contract.
However, because the Commercial Agreement and the Hold Harmless Agreement were executed on the same day, and the latter referred to the former, the panel majority construed the agreements together. Applying principles of federal common law, the panel also held that the parol evidence rule “does not prohibit us from considering the Hold Harmless Agreement because that agreement goes to the issue of whether the parties entered into a binding contract.”
Judge Callahan, dissenting, agreed the majority cited the applicable law, but disagreed on the factual conclusion. She believed that the facts sufficiently supported the district court’s conclusion that the Hold Harmless Agreement was signed separately, and that a dispute over whether and when the Commercial Contract was terminated should have been referred to arbitration. She also observed that the subsequent conduct of the parties showed that they intended to be bound by a contract.
BONUS: (1) A YouTube link to Bach’s coffee cantata. (2) The Wikipedia article includes the translation: “If I couldn’t, three times a day, be allowed to drink my little cup of coffee, in my anguish I will turn into a shriveled-up roast goat”; (3) and – a link to Frank Sinatra’s 1946 hit, “They’ve got an awful lot of coffee in Brazil.”