PAGA: Iskanian, State and Federal
Split Between State And Federal Blanket Enforcement Of Arbitration Agreements Far From Resolved
The February 19, 2015 issue of the Los Angeles Daily Journal includes an article by John Roemer entitled “9th Circuit to test arbitration ruling.” This “test” concerns the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal.4th 348 (2014) that PAGA claims cannot be forced into arbitration, because the real dispute is between the employer and the State of California, and the State is not a party to the arbitration agreement, though the employee acts as a private attorney general for the State.
Mr. Roemer points out that the issue is now teed up for the 9th Circuit to address, citing to Sakkab v. Luxottica Retail North America Inc., 13-55184, and Sierra v. Oakley Sales Corp., 13-55891.
Meanwhile, the California state courts have been following Iskanian, as they must. See, e.g., Franco v. Arakelian Enterprises, Inc., B232583 (2/1 Feb. 26, 2015) (Chaney, Rothschild, Johnson) (certified for publication) (holding rulings in Concepcion and Iskanian require reversal and remand to trial court of orders denying employer’s petition for arbitraiton, while preserving employee’s rights to prosecute PAGA claims in a non-arbitration forum).
The issue is far from resolved, as the California courts are bound to follow the California Supreme Court, not the Ninth Circuit.
Mediation, Attorney’s Fees: Ex-Husband’s Efforts To Thwart Ex-Wife’s Efforts To Mediate Provide Substantial Justification For Award Of Section 271 Attorney’s Fees In Family Law Matter
The Parties Had Agreed To Mediate.
Efforts to avoid mediation can be costly. For example, in real estate disputes, the standard California Association of Realtors purchase and sale agreement requires mediation before litigation – and participation in mediation becomes a precondition to collecting attorneys fees for a prevailing party. In our next case, a family law case, the parties agreed to mediate their disputes concerning a martial settlement agreement, and the efforts of the ex-husband to thwart mediation resulted in a sanctions award of $10,000 under Family Code section 271. Dyer v. Dyer, H038921 (6th Dist. Feb. 20, 2015) (Mihara, Bamattre-Manoukian, Grover) (unpublished).
Most of the fee award ($50,000) was awarded under section 2030, not 271. To reach its result, the Court of Appeal first had to conclude that a fee provision in a marital settlement agreement was not so broad and exclusive as to preclude fee recovery under section 2030. See today’s post in California Attorney’s Fees.
However, there was also substantial evidence that Wayne Dyer sought to avoid mediation, and that Wayne’s claims about a lack of evidence on this point were not entirely candid: “The record is replete with evidence,” said the Court, “that Wayne repeatedly attempted to avoid mediation even after the court had ordered that it occur.” That litigation conduct resulted in $10,000 in attorney’s fees as a sanction award to Carrie Dyer.
COMMENT: The Court of Appeal notes: “Carrie’s attorney explained that ‘we finally had our mediation, and it was unsuccessful.’ Carrie had decided to dismiss her motion due to her medical condition and lack of financial resources.” Notwithstanding the fees awarded under sections 2030 and 271, will hardball litigation tactics ultimately succeed in their objective?
PAGA: Iskanian Redux –Trial Court Gets To Address Unresolved Procedural Issues
Parties Agree Trial Court Is Best Positioned to Resolve Procedural Issues.
After ruling in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) that the Federal Arbitration Act did not preempt a state law rule prohibiting waiver of Private Attorney General Act of 2004 representative actions, the California Supreme Court left it up to the Court of Appeal to resolve a number of outstanding procedural issues. Convinced by the further briefing of the parties that the procedural issues are best addressed by the trial court, the Court of Appeal has now remanded to the trial court to decide the following issues: “(1) Will the parties agree on a single forum for resolving the PAGA claim and the other claims? (2) If not, is it appropriate to bifurcate the claims, with individual claims going to arbitration and the representative PAGA claim going to litigation? (3) If such bifurcation occurs, should the arbitration be stayed pursuant to Code of Civil Procedure section 1281.2? (4) Has CLS forfeited the contention that the PAGA claims are time-barred, and, if not, are the claims time-barred?” Iskanian v. CLS Transportation Los Angeles, LLC, Case No.B235158 (2/2 Feb. 19, 2015) (Boren, Ashmann-Gerst, Chavez) (unpublished). Have fun with that.
Tips For Successful Enforcement Of Arbitration Clauses In Fee Retainers
California Attorney’s Fees has a short post dated February 18, 2015, with tips for successful enforcement of arbitration clauses in fee retainers found in a recent article in the Daily Report, authored by Randy Evans and Shari Klevens of McKenna Long.
Class, Collective Bargaining, CCP 1281.2: Court Of Appeal Reverses Order Staying Individual Arbitrations Pending Trial Of “Non-Arbitrable Claims”–Because All Claims Are Arbitrable
“Judicial Economy Was Not . . A Proper Basis For Delaying Arbitration.”
What’s a judge to do when confronted with the possibility of compelling thousands of individual grievances to arbitration, versus staying the arbitration of arbitral issues, while one case is tried? Here, the trial judge expediently stayed the individual arbitrations, and got reversed by the Court of Appeal because the part of CCP section 1281.2 upon which the trial judge relied was inapplicable. Association for Los Angeles Deputy Sheriffs v. County of Los Angeles, B254982 (2/5 Feb. 17, 2015) (Mosk, Kriegler, Goodman) (published).
The scenario was that the County of Los Angeles Sheriff’s Department sought to compel individual arbitrations of numerous grievances for wage issues by union employees. The trial court refused to compel the arbitrations, ruling that section 1281.2(c) gave it discretion to stay the arbitration of arbitral issues while it resolved issues between the parties that were not subject to arbitration.
Section 1281.2(c) gives the trial court the discretion to delay its order to arbitrate arbitrable claims if it first determines that adjudication of the nonarbitrable claims in court might make arbitration unnecessary. That’s the section the trial court relied upon to stay arbitration of thousands of individual claims.
The problem here is that all the Unions’ grievances, which the County sought to arbitrate, were the same as the claims raised in a cross-complaint brought by the Unions. Collective bargaining agreements or memoranda of understanding required arbitration of individual claims, without provision for class-wide arbitration. Because no non-arbitrable claims had been raised that could be tried first, i.e., all the claims were the same and arbitrable – there was no basis for staying the individual arbitrations. As for judicial economy, “California courts have no inherent authority to deny arbitration simply because it would be more efficient to litigate the claims in court.” Acquire II, Ltd. v. Colton Real Estate Group, 213 Cal.App.4th 959, 980 (2013).
Arbitration, Record, Waiver, Class Actions: Court Of Appeal Affirms Order Denying FATCO’s Motion To Compel Individual Arbitration
State Of The Record And Substantial Evidence Of Waiver Result In Affirmance.
Defendants appealed the trial court’s order denying First American Title Insurance Company and First American Title Company’s motion to compel individual arbitration of plaintiffs’ claims. Kaufman v. First American Title Insurance Company, No. B248689 (2/5 Feb. 2, 2010) (Turner, Kriegler, Goodman) (unpublished).
The Court of Appeal reached three conclusions resulting in affirmance of the trial court’s orders denying arbitration: (1) defendants “failed to fairly summarize all of the material evidence”; (2) defendants “failed to provide a proper record”; and (3) substantial evidence supported trial court’s finding defendants waived the right to compel individual arbitration.
Regarding the issue of waiver, the intensity of the litigation, evidenced by millions of dollars in attorney’s fees, considerable costs, many documents, and discovery that included the appointment of discovery referees, provided the “substantial evidence” of waiver.
The most interesting argument made by defendants/appellants was that before AT&T Mobility LLC v. Concepcion was decided by SCOTUS in 2010, a motion to compel arbitration would have been futile, because the unconscionability analysis in Discover Bank v. Superior Court applied to class action claims in California, making the arbitration agreement unenforceable before Concepcion.
However, the Court of Appeal rejected the futility argument because there was substantial evidence that the Discover Bank rule, had it been applied, would not have prevented arbitration, because Plaintiffs could not have satisfied each of the elements Discover Bank required to torpedo a motion to compel arbitration. Besides, even if the Discover Bank rule had applied, defendants continued to litigate after the cert petition was granted by SCOTUS in Concepcion
NOTE: Mayer Brown, the law firm that represented appellants in this case, is the same law firm that represented AT&T Mobility in the landmark Concepcion case.