Vacating Arbitration Award: Plaintiff Waived Request For Continuance When Her Counsel Stipulated To Proceed With Arbitration Without Live Testimony
Failure To Postpone Arbitration Hearing Upon Sufficient Cause May Be Grounds For Vacating Award – But Not When Request For Continuance Is Waived !
Plaintiff sought to postpone an arbitration hearing in a wrongful death/medical malpractice action, because she was studying abroad, and counsel’s medical condition adversely affected his cognitive status and performance. However, based on the record, it appeared that the arbitrator never actually ruled on plaintiff’s request for a continuance. Instead, the parties stipulated to proceed with a hearing by submitting declarations and medical records, in lieu of live testimony. The arbitrator ruled in favor of defendant Kaiser, the trial court confirmed the arbitration award, and the Court of Appeal affirmed the judgment. Anderson v. Kaiser Permanente Medical Group, B252061 (2/3 Jan. 12, 2015) (Kitching, Aldrich, Kussman) (unpublished).
Motions for a continuance – and the ruling — need to be carefully documented. Here, there was substantial evidence to support the court’s factual finding that the arbitrator didn’t even rule on the motion.
Arbitration, Deadlines, Vacatur: Court of Appeal Rejects Carrier’s Argument That Arbitrator Exceeded Her Powers And That Award Was Untimely.
Lanois v. Employers Fire Insurance Company, Case No. B251403 (2/1 Jan. 9, 2015) (Chaney, Rothschild, Johnson) (unpublished) involved an underinsured motorist insurance carrier’s challenge to an arbitration award, on the grounds that the award was rendered untimely, and that the arbitrator exceeded her powers by adding interest to a 950K award, after the parties had agreed that the insurer’s liability for damages under its policy could not exceed 950K. The trial court disagreed with the carrier, confirming the award and denying the carrier’s motion to vacate. The carrier appealed – unsuccessfully.
The carrier’s policy was for $1M. However, because the plaintiffs had already been paid $50K under another policy, the parties agreed the maximum liability the arbitrator could award under the underinsured motorist policy was $950K. The arbitrator awarded $1M in an award on November 8, 2012, and subsequently corrected the award to $950K, adding pre-judgment interest from November 8, 2012.
First, regarding the carrier’s contention the arbitrator could not add interest on top of the 950K award, the Court held: “Neither Insurance Code section 11580.2, subdivision (p)(4), nor any provision in the insurance policy precludes plaintiffs’ recovery of prejudgment interest because, when added to the liability damages award (which does not exceed the policy limit), plaintiffs’ total recovery exceeds Employers’ maximum liability under the policy.” So the interest award was not improper.
Second, the carrier contended the initial November 8, 2012 award, an Interim Binding Arbitration Award, resolved the liability incorrectly, and then the arbitrator exceeded her powers by waiting more than 30 days to correct the amount to $950K. The Court of Appeal disagreed, pointing out that the arbitrator’s time to correct did not run from the interim award, particularly so here, because there was evidence that other issues remained open at the time of the initial reward, as a result of which the final binding award could be issued later.
Automobiles: On Balance, Arbitration Provisions In Auto Sales Contract Are Found Not To Be Unconscionable
Unconscionability Challenge To Identical Arbitration Provision In Industry-Drafted Automobile Sales Contract Is Still Pending In Sanchez Before California Supreme Court.
Our next case is a fine example of ad hoc justice, for the Court of Appeal concludes that “on balance”, the arbitration provisions in a standard automobile industry sales contract are not unconscionable. A touch of procedural unconscionability here, but not so much substantive unconscionability as to overpower the recipe. Self-help and small claims court exclusions were noted, as were exceptions to finality that favored the dealer. “On balance,” concludes the Court, “the arbitration clause provides the parties with greater efficiency and speed, lower costs, and a more focused dispute resolution forum than would litigation.” Hernandez v. Thomas, Case No. D064036 (4/1 Jan. 8, 2015) (Haller, McConnell, McIntyre) (unpublished).
The Court notes that during “almost three years that Sanchez [v. Valencia Holding Co., LLC, 201 Cal.App.4th 74, review granted Mar. 21, 2012] has been pending, the high court has granted and held numerous petitions for review of Court of Appeal decisions addressing similar (if not identical) challenges to the identical arbitration provision.” Citing nine cases in addition to Sanchez, the Court observes, “intermediate courts have reached conflicting conclusions based on several different theories and rationales.”
Arbitration, Severability, PAGA: Second District, Div. 4 Affirms Order Denying Motion To Compel Arbitration Because PAGA Claims Could Not Be Arbitrated, And PAGA Claims Were Not Severable
Court of Appeal Recognizes It Is Bound By Iskanian, Until SCOTUS Resolves Validity Of PAGA Waivers.
Montano v. The Wet Seal Retail, Inc., B244107 (2/4 Jan. 7, 2015) (Epstein, Willhite, Manella) (published) is the latest case to follow the holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), that waiver of the employee’s right to litigate Private Attorneys General Act (PAGA) (Lab. Code, section 2699) representative claims is unenforceable. In Montano, this had even greater consequence, because the paragraph containing the PAGA waiver provision stated if the waiver was found to be unenforceable for any reason by a court, then the entire arbitration agreement was void and unenforceable. Thus, because the PAGA waiver was not severable, the entire arbitration provision failed.
The Court of Appeal recognizes in footnote 5 “that several federal district courts in this state have found PAGA waivers to be enforceable under the FAA and Concepcion.” However, until SCOTUS rules on the issue, the Court of Appeal is “bound to follow the California Supreme Court’s decision in Iskanian that PAGA waivers are invalid under state law.” In Iskanian, the parties filed a petition for certiorari on September 22, 2014, No. 14-341. So stay tuned!
Arbitration, CCP 1281.2, Construction Of Agreement, Scope: Plaintiff’s Equitable Claims Were Outside Scope Of Arbitration Agreement
Second District, Division 2, Rejects Appellants’ “Tortured” Reading Of Arbitration Provision And Affirms Order Denying Motion To Compel Arbitration.
Plaintiffs, investors in an independent bookstore, refused the request of defendants, the bookstore and its prior owner, to arbitrate a business dispute. The key language in the arbitration provision read: “Notwithstanding the foregoing, no arbitrator shall have the power to render equitable relief of any kind, and requests for such relief shall be referred to a court of competent jurisdiction.” The trial court denied defendants’ motion to compel arbitration, finding that plaintiffs’ equitable claims – the sole remaining claims at issue – were excluded from arbitration by the language in the arbitration provision. Appellants advanced a rather creative reading of the arbitration provision, distinguishing between the arbitrator’s ability to try any action and the court’s ability to grant equitable relief. Bachrach v. Compagno, Case No. B252454 (2/1 Jan. 6, 2015) (Johnson, Chaney, Bendix) (unpublished).
Appellants argued that under the clear language of the arbitration provision, any action to enforce or interpret the agreement had to be arbitrated, and that once the substantive issues were resolved, a party could turn to the court to obtain equitable relief. The Court of Appeal, however, rejected “a tortured conclusion that the trial court has the power only to perform the ministerial act of rubber-stamping an arbitrator’s conclusive ruling.”
Affirmed.
Arbitration, Burden Of Proof, Enforceability, Employment, CCP 1281.2: Petition To Compel Arbitration Fails Because Employer Is Unable To Authenticate Electronic Signature.
Burden Of Proof Shifted To Employer Because Employee Didn’t Remember Signing Arbitration Agreement.
Ruiz v. Moss Bros. Auto Group, Inc., E057529 (4/2 Dec. 23, 2014) (King, Hollenhorst, Codrington) is one more reminder of the pitfalls when dealing with electronic signatures. After employer Moss Bros. unsuccessfully petitioned for an order compelling arbitration of employee Ruiz’s employment-related claims based on an arbitration agreement Ruiz allegedly electronically signed, Moss Bros. appealed – also without success.
The employer’s declaration stated, in conclusory fashion, that Ruiz had signed the arbitration agreement. Indeed, Ruiz’s name had been electronically affixed to an arbitration agreement. Ruiz, however, did not remember signing the agreement. This shifted the burden to the employer to authenticate the signature, and the employer’s conclusory declaration failed to do so. The employer’s declaration failed to establish that the electronic signature was “the act of” Ruiz. Cal. Civ. Code, section 1633.9(a).
COMMENTS: Citing Condee v. Longwood Management Corp., 88 Cal.App.4th 215 (2001), the Court of Appeal explains, “Condee holds that a petitioner is not required to authenticate an opposing party’s signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged.” Because Ruiz failed to recall signing the 2011 agreement, the burden of authenticating the signature shifted to the employer, whose conclusory declaration failed to satisfy that burden.
On December 31, 2014, I posted on another electronic signature case, J.B.B. Investment Partners, Ltd. v. Fair, Case Nos. A140232, A141228 (1/2 Dec. 30, 2014), in which the Court failed to enforce a settlement agreement under CCP 664.6, due to problems with the electronic signature. The analysis was quite different, however, than the analysis in Ruiz. The problem in Ruiz was that the employer failed to authenticate the electronic signature as the act of Ruiz. The problem in J.B.B. Investment Partners, Ltd. was different – the party relying on the signature failed to show that the parties agreed to conduct business with electronic signatures under the California Uniform Electronic Transactions Act (UETA).
The lesson here is that relying on electronic signatures can be tricky business, because electronic signatures present problems of compliance with the UETA and problems of authentication.