My Article On Summary Contempt and Due Process: England, 1631, California, 1888
The Article Is About Two Extraordinary Cases In Which Judges Exercised The Summary Contempt Power.
Thanks to the generous permission of California Litigation, The Journal of The Litigation Section, State Bar of California, “Summary Contempt and Due Process: England, 1631, California, 1888” is now available on my website by clicking here.
An abbreviated version of this article appeared earlier as an August 6, 2014 post on California Attorney’s Fees, a blawg to which I co-contribute.
Arbitration: Court Of Appeal Affirms Finding That Arbitration Agreement Is Unconscionable, But Concludes That Unconscionability May Be Cured Through Severance
Denying All Discovery In Arbitration Of Professional Malpractice Claims Is Unconscionable.
![Surgery [scalpels]](http://lcweb2.loc.gov/service/pnp/jpd/01200/01259r.jpg)
Surgery scalpels. 1878. Library of Congress.
The Second District, Division Four, has affirmed the trial court’s finding of unconscionability, but concludes that unconscionability may be cured through severance in an arbitration of professional malpractice claims. Lateral Link Group v. BLA Schwartz, Case No. B253862 (2/4 Oct. 31, 2014) (Collins, Willhite, Manella) (unpublished).
The unconscionability problem arose here because the retainer agreement containing the arbitration clause included the proviso, “except that in no event will the parties be entitled to conduct pre-hearing discovery.” The Court agreed that this carve-out resulted in a high degree of substantive unconscionability, because it greatly favored the attorneys over their clients. Though the plaintiffs were entitled to their client files, they could be denied access “to other essential documents and witnesses,” whereas the attorneys would have “the bulk of such documents and records.” The problem created by the discovery prohibition was compounded by a good faith meet-and-confer procedure requiring plaintiffs to disclose the basis of any claim against defendants before arbitrating. The Court labeled the resulting problem as one of “informational asymmetry.”
Interestingly, the lack of discovery also magnified problems of procedural unconscionability, because it clashed with the incorporation of AAA Commercial Rules giving arbitrators the right to control discovery.
Because the root of the unconscionability problem derived from the single phrase denying discovery, the Court concluded that the arbitration agreement was not “permeated” with unconscionability. Using the judicial scalpel, the Court severed the malignant provision – and presto ! – the arbitration agreement survived.
Defendants get to arbitrate, and plaintiffs get discovery.
Arbitration/Employment/Unconscionability: Perplexed Court Of Appeal Offers Pointers On Drafting An Enforceable Arbitration Provision
How To Avoid Drafting An Unconscionable Arbitration Agreement.
We usually summarize opinions, but here, the Court of Appeal does a good job itself of summing up how to draft an enforceable arbitration provision in an employment agreement. The case is Woods v. JFK Memorial Hospital, Inc., G050286 (4/3 Oct. 30, 2014) (Moore, Rylaarsdam, Thompson) (unpublished), in which the Court of Appeal reverses an order granting a motion to arbitrate, on the grounds that the arbitration agreement is both substantively and procedurally unconscionable.
Expressing the Court’s perplexity (exasperation?), Justice Moore explains how to draft an enforceable arbitration agreement:
We are, frankly, perplexed that we continue to see arbitration agreements such as this one. The years since Armendariz have produced a veritable flood of cases about arbitration between employers and employees. Employers should be well aware by now that to insulate their agreements from unconscionability claims, particularly when they are adhesive contracts, there is a simple list of do’s and don’ts. The arbitration agreement should be conspicuous (and preferably labeled as such, in a document separate from a lengthy handbook). The document should be written in plain English, attach or make readily available all referenced documents, be fundamentally fair and mutual, and in all respects abide by the guidance provided in Armendariz. Further, employers should give the employee a meaningful opportunity to review the agreement and decide whether to sign it (meaning a day or two rather than a minute or two). We do not understand why any of this is particularly difficult or challenging for employers, and yet time and time again, our courts see cases with confusing, convoluted and fundamentally unfair employer/employee arbitration schemes that are deemed unconscionable and unenforceable.
Vacatur: Arbitrator’s Consideration Of Theory Allegedly Not Asserted In Complaint Was No Ground To Vacate Award
Arbitrator Did Not Exceed Powers Or Commit Misconduct.
We see many cases in which a party seeks to vacate an award on the grounds the arbitrator exceeded his or her powers. This is usually an uphill battle, as it was in our next case.
The plaintiff received an arbitrator’s award in the amount of $524,069.86 for architectural services, and confirmed the award. Defendants contended the trial court erred in declining to vacate the award, and appealed. Dighe v. Dutt, B248363 (2/1 Oct. 29, 2014) (Chavez, Boren, Hoffstadt) (unpublished).
Appellants argued that the trial court erred in determining the arbitrator didn’t exceed his powers in granting the award based on a theory of implied-in-fact contract, when no such theory was asserted in the complaint, and furthermore, and also argued that the arbitrator’s act of considering the unpleaded theory constituted misconduct under CCP 1286.2(a)(3). The Court of Appeal rejected appellant’s arguments.
The arbitration clause was brought enough to include claims “arising out of or relating to” the agreement – language broad enough to include an implied-in-fact agreement. And the complaint sought money owed for professional services – a claim not necessarily limited to the written contracts. As for the “misconduct” argument, the Court of Appeal observed, “[a]ppellants cite no authority. . . “
Affirmed.
Nonsignatories: Nonsignatories Are Unable To Take Advantage Of Arbitration Agreement Where There Is No Evidence Identifying Person With Whom Plaintiff Allegedly Contracted
It Helps To Be Able To Identify The Parties To An Arbitration Agreement !
As the next case illustrates, sometimes the basics can trip one up when it comes to enforcing an arbitration agreement.
Plaintiff filed a complaint alleging medical malpractice related to her sister’s death after lap band surgery. Defendants – a surgical center and physicians – moved to arbitrate, alleging they were “contracting parties and/or third party beneficiaries and/or alleged agents.” The trial court denied the motion, and defendants appealed. Pelter v. 1 – 800 – Get-Thin, LLC, B250124 (2/1 Oct. 28, 2014) (Johnson, Rothschild, Chaney) (unpublished).
Defendants’ problem was that only the decedent signed the arbitration agreement. Now sometimes a party who has not signed can enforce an agreement against a party who has signed. Here, however, the agreement did not clearly identify the parties: “there is no evidence identifying the person or entity with whom [the decedent] allegedly contracted.” And that made it impossible for the nonsignatory defendants to show they were entitled to enforce as third party beneficiaries or agents of . . . of whom? That’s the problem.
Affirmed.
NOTE: On June 11, 2014, I blogged about another case, Prewitt v. 1-800-Get-Thin, LLC, in which the 2nd District, Division 7, upheld the denial of a petition to arbitrate, based on delay and prejudice.
PAGA: Brown v. Superior Court Redux–6th District Again Concludes Plaintiffs Cannot Be Compelled To Waive PAGA Claim
Result Follows Iskanian, And Court Of Appeal’s Disposition Provides Trial Court With Roadmap For Trying The PAGA Claim.
The Supreme Court directed the 6th District to vacate its previous decision in Brown v. Superior Court, 216 Cal.App.4th 1302 (2013), and to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). Earlier, the 6th District had held that class action waivers of Private Attorneys General Act of 2004 claims are unenforceable, because the waivers prevent “the exercise of a statutory right intended for a predominantly public purpose,” and no case had held that the Federal Arbitration Act requires enforcement of such agreements. Thus, the 6th District was in accord with the conclusion in Iskanian.
The Court of Appeal answers now three questions in Brown v. Superior Court, H037271 (6th Dist. Oct. 24, 2014) (Premo, Rushing, Elia) (unpublished):
1. Did the defendant employer waive its right to compel arbitration by failing to move to compel arbitration until after Concepcion was decided? Answer: No.
2. Is the class action waiver preempted by the collective-action requirement of the National Labor Relations Act? Answer: No – following Iskanian.
3. Does Concepcion permit arbitration agreements to override the statutory right to bring representative claims under the PAGA? Answer: No.
The disposition of the case, vacating the superior court’s order and requiring entry of a new order, is interesting, because it is a reminder that after it is determined that the class action waiver is ineffective as to the PAGA claims, a decision still needs to be made as to whether the claims will be tried by a judge or by an arbitrator.
Thus, the Court of Appeal directs the superior court to “enter a new order after determining (1) whether the parties would prefer to resolve the representative PAGA claim through arbitration; (2) if not, whether it is appropriate to bifurcate the claims, with individual claims going to arbitration and the representative PAGA claim to litigation; and (3) if such bifurcation occurs, whether the arbitration should be stayed pursuant to Code of Civil Procedure section 1281.2.”
Decisions, decisions.