Arbitration, Nonsignatories, Equitable Estoppel: Nonsignatory Defendant Is Able To Compel Nonsignatory Plaintiff Because All The Claims Are “Inextricably Intertwined”
Plaintiffs’ Pleading Allegations Didn’t Help Their Argument.
The somewhat anomalous circumstances in this case allowed a nonsignatory defendant to arbitrate its claims with a nonsignatory plaintiff. O’Donnell Strategic Industrial REIT v. Super. Ct., G049498 (4/3 Jan. 28, 2015) (Thompson, Bedsworth, Moore) (unpublished).
In a dispute concerning the setting up and operation of a real estate investment trust, plaintiffs sued defendants for breach of contract, fraud, breach of fiduciary duty, and declaratory relief. Defendants/respondents successfully sought to compel arbitration of the dispute under a broad clause in an Advisor Operating Agreement providing for arbitration of, “[a]ny dispute, controversy, or claim arising out of or in connection with this Agreement . . . “ Furthermore, the Advisor Operating Agreement, together with a related Dealer Management Agreement, had to be read as a single unified contract. As a result of the broadly construed arbitration provision and the unified contract, the trial court and Court of Appeal found all claims were covered by the arbitration clause.
The greater problem was that not all the parties were signatories to the arbitration agreement, and in fact, not all the parties existed at the time the arbitration agreement was signed. The Court dealt with this problem by noting – based on plaintiffs’ pleadings — “Plaintiffs also acknowledge the causes of action against each of the defendants are substantially intertwined with those against the others.” Also, all the parties were related to and affiliated with each other. The Court reasoned, “nonsigning parties could be compelled to arbitrate if the claims were sufficiently dependent on each other.” Petition denied.
If all the parties, except for one, could be compelled to arbitrate, proceedings could have gotten messy, so perhaps pragmatic considerations also played a part.
Miscellaneous: Reference Rot — Plague and Partial Solutions
Damn Those Hyperlinks That Rot In Cyberspace !
Jill Lepore, Professor of American History at Harvard, has written a fascinating article in the January 26, 2015 edition of the The New Yorker. Her subject, which interests and plagues every blogger, is archiving the Internet before the information vanishes into cyberspace.
If you have been reading this blog, or the other blog to which I contribute with my colleague Mike Hensley, California Attorney’s Fees, or any other blog, you are familiar with the problem. All the hyperlinks degrade over time and become useless. You click on a hyperlink, and you get an annoying message: “Page Not Found” (“link rot”). Or the page has been overwritten. Or the page has moved, and something else appears in its place (“content shift”). These are examples of “reference rot.”
This problem should be of particular concern to attorneys, because an astounding number of legal footnotes relying on web addresses now rely on invalid addresses, a problem that includes footnote references in SCOTUS opinions.
The sheer petabyte volume of Internet information makes the archiving problem a Sisyphean task. There are, however, some constructive efforts to ameliorate the problem.
There is, of course, the famous internet archive “Wayback Machine,” a valuable Internet resource for people searching for old information on the Internet. “Wayback Machine” alludes to Mr. Peabody and Sherman’s fictional “WABAC Machine”, allowing time travel through Peabody’s Improbable History, a feature of the Rocky and Bullwinkle show.
There is also a nifty patch, currently in Beta development phase, for the legal footnote problem. Perma.cc has been developed by the Harvard Library Innovation Lab as a way to create a permanent link (“permalink”) for legal footnotes. Perma.cc is powered by various libraries, and now used by the Michigan Supreme Court, as well as the Harvard Law Review. A Perma.cc account allows you to “create links to archived versions of web pages cited in your work.” Cool!
Even Perma.cc won’t guarantee that the permalink it creates to reference a source will last as long as a diamond. However, Perma.cc does claim that a permalink will last for two years, with the possibility of renewal, and that it may last longer for a person, such as a legal librarian, who is given “vesting rights.”
I note that most of the links on my blog are to newly filed California appellate opinions. Those links become stale after a few months. However, if the case is of lasting interest, you should be able to find it on LexisNexis, on Westlaw, or on Google Scholar with the case information provided in my post.
HAT TIP to Deborah Tint, librarian, artist, and Wonder Woman fan, who pointed me to Jill Lepore’s article. Professor Lepore is also the author of the wonderful new book, The Secret History of Wonder Woman.
QUERY: How long will the links on this page last?
Arbitration, Employment, Public Policy, Standard Of Review: Cal Supreme Court Rules Arbitrator May Have Erred About Employee’s Unwaivable Statutory Rights, But Valid Alternative Ground Existed For Dismissing Employee
California Supreme Court Leaves Employer’s “Honest Belief Defense” Unsettled.
This case fits under the rubric “no harm, no foul.”
Plaintiff Richey sued his employer AutoNation, Inc., for terminating his employment after he went out on sick leave, thereby violating his right to reinstatement under the California Family Rights Act (CFRA). While on sick leave, Mr. Richey worked to start up a restaurant, in violation of his employer’s policy that employees must not seek outside employment.
The arbitrator rejected Richey’s claims, concluding the employer could terminate Mr. Richey if it had an “an ‘honest’ belief that he is abusing his medical leave and/or is not telling the company the truth about his outside employment.” The trial court confirmed the award. The Court of Appeal reversed, concluding the arbitrator violated plaintiff’s right to reinstatement by applying an “honest belief” defense of the employer to the employee’s claim, thereby eliminating the employee’s unwaivable statutory right to reinstatement. The employer appealed. Richey v. AutoNation, Inc., S207536 (Cal. S. Ct. Jan. 29, 2015) (Chin, J., author).
In fact, “[a]rbitrators may exceed their powers by issuing an award that violates a party’s unwaivable statutory rights or that contravenes an explicit legislative expression of public policy.” And the interesting question in this case is whether the arbitrator exceeded his powers by adopting the employer’s “honest belief” defense that it can terminate an employee based on a reasonable belief the employee is violating company policy while on sick leave under the California Family Rights Act or its federal counterpart.
The Court acknowledges this is “an unsettled question of law.” Unsettled it remains, for the Court concluded that the question need not be resolved here, because the “arbitrator found plaintiff’s firing was based on a clear violation of company policy – a legally sound basis for upholding the arbitrator’s award . . . “As for the employee’s argument that the company policy “forbidding outside employment in this context is an illegal restraint on his CFRA leave”, that had been forfeited by a failure to raise it in the trial court.
An interesting case for the narrow issue it resolves, as well as for the important issues it leaves unresolved.
PAGA: Under Settled Principles Of Stare Decisis, Fourth District, Div. 2 Follows California Supreme Court Opinion In Iskanian, Not SCOTUS Opinion In Concepcion
Court Concludes Trial Court Correctly Denied Petition To Compel Employee To Arbitrate His PAGA Claims.
On January 20, 2014, we blogged that SCOTUS had denied petitioner’s writ of certiorari in the United States Supreme Court (petition for cert filed Sept. 22, 2014, No. 14-341). That denial of cert is already having consequences, for in Salazar v. Apple American Group, LLC v. Apple American Group, LLC, Case No. E059562 (4/2 Jan. 26, 2015) (McKinster, Miller, Codrington) (unpublished), the Court of Appeal brushed aside the request of appellant/employer to stay its appeal of an order denying its petition to compel employee Salazar to arbitrate his representative claim for penalties under the Private Attorneys General Act of 2004.
The Court succinctly stated: “Under settled principles of stare decisis, we do not have the luxury to question whether Iskanian was correctly decided and we are duty bound to apply it in this appeal. Moreover, the United States Supreme Court has now denied the petition for writ of certiorari.”
Interesting: California state and federal courts are not on the same page on PAGA/FAA analysis. However, without a split among state supreme courts or federal courts of appeal, there may be no urgency for SCOTUS to address the issue.
Employment: After Rehearing, Court Of Appeal Again Reverses Trial Court’s Order Denying Employer’s Motion To Compel Arbitration
Same As Before – Only This Time A Third Judge Signs On To The Opinion
I blogged about this very same case in a post on August 27, 2014. So I was puzzled at first as to why another published opinion was issued following rehearing on January 20, 2015. Cruise v. Kroger Co., B248430 (2/3 Jan. 20, 2015) (Aldrich, Kitching, Klein) (published). The disposition before and after rehearing is identical: “The order denying the motion to compel arbitration and stay the action is reversed with directions to grant the motion.” The opinions are not identical, but are substantially the same.
This time around, Justice Kitching’s concurrence is added, making it a threesome. The first time around, a third judge was unavailable, and the Court relied on a provision allowing judgment upon the concurrence of two judges. Cal. Const., art. VI, § 3. Puzzle solved.
PAGA: SCOTUS Punts On Iskanian, Denying Cert Petition
PAGA Issue Will Continue To Percolate Through Federal Courts.
The United States Supreme Court today denied the petition for a writ of certiorari brought by CLS Transportation Los Angeles, LLC, No. 14-341. Left intact, for now, is the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), that the Federal Arbitration Act does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract.
The denial of the petition should not come as a great shock. There was no conflict among decisions of state supreme courts or federal courts of appeal.
However, the issue is percolating through the federal district courts in California, and the outcomes have been mixed. The issue is also pending in the Ninth Circuit in Hopkins v. BCI Coca Cola Bottling Co., No. 13-56126.