Arbitration, Civil Rights: Ninth Circuit Rules Employer Can Expressly Require Arbitration Of Title VII Claims
1991 Amendment To Title VII Facilitates Waiver Of Statutory Remedies In Favor Of Arbitration
“Before 1991, ‘Title VII had been interpreted to prohibit any waiver of its statutory remedies in favor of arbitration. Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299, 1304 (9th Cir. 1994). But Congress reversed course with amendments to Title VII [i.e., Section 118 of the Act] in the Civil Rights Act of 1991. . . ‘” Ashbey v. Archstone Prop. Mgmt., No. 12-55912 (9th Cir. May 12, 2015) (Bea, Bybee, Christen). Before Ashbey, Ninth Circuit opinions were loathe to find that an employee asserting Title VII claims had waived the right to a jury trial by agreeing to arbitrate. Kummetz v. Tech Mold, Inc., 152 F.3d 1153 (9th Cir. 1998); Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756 (9th Cir. 1997). Relying on the Section 118 amendment to the Civil Rights Act of 1991, however, Ashbey holds that an employee may be required to arbitrate a claim alleging unlawful retaliation in violation of Title VII, where the employee “knowingly” waives the right to a jury trial by agreeing to submit such disputes to arbitration.
The Ninth Circuit concluded that Ashbey’s waiver was “knowing” in circumstances where he was explicitly notified of a Dispute Resolution Policy, and that policy unambiguously stated: it “is governed by the the Federal Arbitration Act,” all disputes are to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial, and it “applies, without limitation, to disputes arising out of the employment relationship . . . including, without limitation, disputes over . . . harassment and claims arising under the . . . Civil Rights Act of 1964.”
COMMENT: The opinion states that the employer “presented Ashbey the ‘express’ choice lacking in both Kummetz and Nelson.” What exactly is that express choice? It’s not the choice of accepting employment and choosing to waive or not to waive the right to a judicial forum. Rather, the choice appears to be between accepting employment and agreeing to waive the right to a judicial forum or not accepting employment. Under those circumstances, we predict that employers will make use of the waiver language in Ashbey, and employees will choose to be employed rather than unemployed. Thus Title VII claims will be channeled into arbitration.
Miscellaneous: Natalie Portman To Play RBG
From Queen Padmé Amidala To Ruth Bader Ginsburg . . .
Every now and then we get the irresistible urge to blog about something that has nothing whatsoever to do with mediation and arbitration. Today, the “off topic” item comes from Amy Howe’s Monday round up on SCOTUSblog, reporting Natalie Portman is about to take on the role of another powerful woman:
“Perhaps the biggest Court-related news at the end of last week was that actress Natalie Portman will play Justice Ruth Bader Ginsburg in a movie about Ginsburg’s career as an advocate for women’s rights. Coverage comes from Lily Karlin and Sam Levine in The Huffington Post, from Andrea Towers for Entertainment Weekly, and from Deadline Hollywood.”
Arbitration, Construction of Agreement, Scope: Law Firm’s Efforts To Compel Arbitration Of Malpractice Claim Are Doomed By Arbitration Provision That Did Not Clearly Encompass Earlier Transactional Work
Arbitration Provision Clearly Applied To Litigation, But Not To Earlier Transactional Work.
Nordman Cormany Hair & Compton, formerly in business for 75 years in Ventura County, appealed an order denying its petition to compel arbitration of a legal malpractice lawsuit. Aggeler v. Nordman Cormany Hair & Compton, B253566 (2/6 April 27, 2015) (Gilbert, Yegan, Perren) (unpublished).
The Nordman firm had done transactional work for plaintiffs in 2005 in connection with their ownership of a mobilehome park. After the owners became embroiled in a legal dispute with the residents in 2009, the Nordman firm represented the owners in litigation. The retention agreement for the litigation matter contained an arbitration provision.
In 2013 the owners sued the Nordman firm for malpractice. However, the owners’ alleged malpractice claims involved the Nordman firm’s “drafting of a contract” in 2005. Unfortunately for the law firm, it was not clear that the arbitration provision, prepared in connection with the 2009 litigation, applied retroactively to cover the 2005 transactional work that was the source of the malpractice claim.
Affirmed.
COMMENT: The Court explains, “We consider how a reasonable client would interpret the provision as well as the reasons why the client sought the professional services.” The problem here was that the agreement did not explicitly mention legal services provided in 2005, and thus a reasonable client would not necessarily know that the agreement would apply retroactively. Lawyers get saddled with the consequences of poorly drafted retention agreements “because of the fiduciary nature of the relationship.”
Arbitration, Scope, Nonsignatories, Agents: Broadly Worded Arbitration Clause Not Broad Enough To Include Labor Code Claims
But Court Of Appeal Does Reject Arguments That Nonsignatories Lacked Standing And That They Waived Right To Compel Arbitration – Before Addressing “Crucial Issue Of Scope
In Williams v. Digius, et al., D064183 (4/1 April 24, 2015) (McDonald, McConnell, Haller) (unpublished), the Court of Appeal agreed with appellants, who had not signed an arbitration agreement, that they nevertheless had standing as agents of a signatory to demand arbitration, and also agreed that, despite appellants’ conduct inconsistent with arbitration, they had not caused so much prejudice to respondent as to have waived their right to arbitrate. Then, however, the Court of Appeal addressed the “crucial issue” – the scope of the arbitration clause – and sided largely with respondent, concluding that his Labor Code section 229 claims were outside the scope of the broad arbitration clause.
This case involved an employment dispute between Williams, an on-site property manager, and parties whom he alleged were agents of his employer. A plaintiff who wishes to avoid arbitration must be careful with his allegations: “[A] plaintiff’s allegations of an agency relationship among defendants is sufficient to allow the alleged agents to invoke the benefit of an arbitration agreement executed by their principal even though the agents are not parties to the agreement.” Thomas v. Westlake, 204 Cal.Ap.4th 605, 614-615 (2012).
The arbitration provision included broad language that would include contract and tort claims — “arising out of or related to this Agreement.” However, the Court held that this language did not clearly cover statutory claims based on violations of the Labor Code that arise independently of the contract. Spared from the net of the arbitration clause were six causes of action for failure to pay minimum wage, failure to provide accurate itemized wage statements, failure to comply with the request to inspect personnel file, failure to pay wages on discharge, fees, costs and penalties for violations of the Labor Code, and unfair competition. Captured by the arbitration net were causes of action for breach of the implied covenant of good faith and fair dealing, and for conversion.
COMMENT: The Court actually offers drafting advice for requiring arbitration of Labor Code or other statutory claims: “[T]hey could have expressly provided for arbitration of any and all disputes or claims arising out of, or related to, Williams’s employment, including but not limited to claims for damages and violation of state or federal laws, including claims for violation of the Labor Code.” Even so, the Court expressly refuses to “decide whether some or all of Williams’s statutory claims may not be subject to arbitration regardless of our interpretation of the Contract’s arbitration provision . . . “ As readers of this blog know, PAGA and other statutory claims may not be subject to arbitration. This is an area of dispute “in flux.”
Arbitration, Vacatur: Death Of Party Arbitrator Provided No Basis For Panel To Continue Arbitration Hearing Date Given Party’s “Total Noncompliance With The Governing Rules And Procedures”
Court Shows No Sympathy For Circumstance Of Defendant/Appellant Whose Party Arbitrator Died.
Here, the arbitration panel proceeded with arbitration after the death of defendant/appellant Mitchell’s party arbitrator, refusing to continue the hearing to permit Mitchell to select another party arbitrator. That sounds pretty harsh, but read on: “As troublesome as this circumstance may appear at first blush, the record fully supports the finding of the panel that Mitchell had ‘evinced his unwillingness to participate in [the arbitration] proceedings repeatedly during the scheduling of this matter . . . ‘“ Perhaps we should add that Mitchell is an attorney, and that the arbitration involved a fee dispute between Mitchell and his own attorneys who represented him in marital dissolution proceedings. Schapiro-Thorn, Inc. v. Mitchell, A140800 (1/3 April 21, 2015) (Pollak, McGuiness, Siggins) (unpublished).
The Court suggested AAA rules “reflect the fundamental policy that a recalcitrant party should not be permitted to obstruct the expeditious resolution of disputes submitted to arbitration.” The Court concluded the decision of two panel members to proceed in the absence of Mitchell’s party arbitrator, who had died, “given Mitchell’s total compliance with the governing rules and procedures, was in full accord with this policy and neither an abuse of discretion nor beyond the arbitrators’ authority.”
Moral: Parties – especially attorneys – who wish to take advantage of the rules, do well to play by the rules. Live by the sword, die by the sword.
Review: The Perils Of Blogging
Daily Journal Publishes My April 17, 2015 Article On The Perils Of Blogging
Published by The Daily Journal on April 17, 2015, my article on the legal perils of blogging will interest those of you who blog, or who are considering blogging. With the permission of the Daily Journal, I am making it available to my readers. Click here if you wish to read it. Note you may have to rotate the article in your viewer or enlarge the text to make it easier to read.