Waiver: Waiting Too Long To Move To Compel Arbitration While Propounding Discovery Leads To Waiver
Lawsuit Was Filed In March 2015 And Motion To Compel Arbitration Was Filed In March 2023.
Plaintiff Joseph Semprini sued his employer Wedbush in March 2015, alleging 11 causes of action unique to him, and 7 putative class action claims for wage and hour violations. He added a representative PAGA claim in April 2015. For several years, the class and PAGA claims were litigated, the parties having stipulated that the 11 personal causes of action would be arbitrated. In 2022, however, two events occurred to give the employer an argument that the litigated claims should be arbitrated, notwithstanding the earlier stipulation.
First, Viking River Cruises was decided in June 2022, holding that an employer could enforce an agreement to arbitrate PAGA claims. Second, in the wake of Viking River Cruises, the employer was able to get a number of employees to execute arbitration agreements. Perhaps this could have opened up an opportunity to compel arbitration of the remaining claims. However, the employer did not move to compel until March 2023, and meanwhile conducted discovery. If the employer might have resuscitated a right to arbitrate, that right was waived and died because of the employer's delay and continuing litigation conduct.
The order denying Wedbush's motion to compel arbitration was affirmed. Semprini v. Wedbush Securities, Inc., G062662 (4/3 4/18/24) (Goethals, Sanchez, Delaney).
This is an example of the "you snooze you lose" adage.
Employment, Existence Of Arbitration Agreement: Employer Failed To Show Arbitration Agreement Existed During Second Employment Stint
Termination Of Employment Stint #1 Terminated Arbitration Agreement.
Plaintiff Jasmin Vazquez sued SaniSure, Inc. for Labor Code violations. SaniSure moved to compel arbitration based on the existence of a broad arbitration clause in Vazquez's employment agreement. SaniSure failed in the trial court and in the Court of Appeal. Vazquez v. SaniSure, Inc. (2/6 4/3/24) (Baltodano, Yegan, Cody).
SaniSure was unsuccessful because the arbitration clause it relied upon only existed in a first stint of Vazquez's employment from July 2019 to May 2021. However, she terminated her employment, and the arbitration agreement terminated. The employer could not show that an agreement to arbitrate existed during her second stint of employment, and the court was not going to imply the existence of the agreement from the first employment stint.
COMMENT: The employer could have avoided its predicament by the execution of another arbitration agreement during employment stint #2.
Vestigial Jurisdiction: Once Trial Court Granted Motion To Compel Arbitration, It Lacked Jurisdiction To Dismiss
What Vestigial Jurisdiction Does The Court Retain After Granting A Motion To Compel Arbitration?
Plaintiff Dee Lew-Williams, the successor in interest to her late physician husband, sued defendants for embezzlement. Defendants successfully moved to compel arbitration. But Lew-Williams, claiming lack of funds, was unable to prosecute the arbitration, and so defendants moved the trial court successfully to dismiss the case for lack of diligent prosecution. Lew-Williams appealed the dismissal. Lew-Williams v. Petrosian, B330387 (2/7 4/2/24) (Feuer, Segal, Raphael).
Reversed. "If a party fails to diligently prosecute an arbitration, the appropriate remedy is for the opposing party to seek relief in the arbitration proceeding (and, if necessary, the opposing party may need to initiate the arbitration for this purpose)."
Bonus: Coccycx (Tailbone): Vestigial.
Settlement Agreements: An Agreement Is Enforced Under CCP 664.6 Despite $250K Liquidated Damages Clause
Liquidated Damages Of $250K Were Reasonable In Proportion To $2.2M Settlement.
After an all-day tele-mediation the parties executed a term sheet providing that defendant/cross-complainant would pay $1.6M to plaintiff, and cross-defendant would pay $600K. Defendant/cross-complainant had second thoughts the next day and reneged on payment. Cross-defendant paid $600K. And plaintiff successfully enforced the settlement in the trial court under CCP § 664.6. Defendant appealed — unsuccessfully. BTHHM Berkeley, LLC v. Stewart Johnson v. Holda Novelo, A166242 (1/4 3/28/24) (Goldman, Brown, Streeter).
The panel rejected arguments that the settlement agreement lacked enough specificity. Although it contemplated future events, such as execution of a stipulation, releases, and assistance if necessary by the mediator, those aspects did not negate the sufficiency of the agreement, which by its terms was "admissible and enforceable in court" and "a good faith settlement."
Sometimes it is argued that the liquidated damages clause in an agreement amounts to an unreasonable forfeiture and is not enforceable. The argument did not fly here. Civil Code § 1671(b) creates a presumption that liquidated damages are valid unless the party challenging shows the damages are unreasonable. With a non-consumer contract and a $2.2M settlement, Justice Goldman explained that the liquidated damages were not unreasonable.
However, the panel did remove some prejudgment interest. Prejudgment interest is an element of damages, and the settlement agreement set the damages. The panel would not create a new damage term that the parties did not agree to.
COMMENT: What probably weighed in favor of enforcing the settlement? The trial judge found that defendant's declaration seeking to avoid enforcement was "self-serving." The parties were sophisticated, this was a commercial transaction, and they received legal advice. The settlement term sheet included the following language: "Parties agree the Agreement is admissible and enforceable in court pursuant to CCP § 664.6. The parties agree that this is a good faith settlement between adverse parties. . . ." And while defendant did not pay $1.6M toward the settlement, another party did pay its share of $600K.
Arbitration, Agents, Health Care: Arbitration Provision Failed Because Health Care Agent Was Not Making Health Care Decision
California Health Care Decisions Law Allows For Appointment Of A Health Care Agent.
The problem in Harrod v. Country Oaks Partners, LLC, S276545 (CA S.Ct. 3/28/24) (Jenkins, J.) is that the health care agent who signed an agreement with a skilled nursing home facility containing an arbitration clause was acting outside the scope of the agency.
The California Health Care Decisions Law enables a principal to "appoint a health care agent to make health care decisions should the principal later lack capacity to make them." That happened in the Harrod case. The "health care agent" signed two separate agreements with the nursing care facility. The first allowed the patient to enter and be cared for. The second agreement, which contained the arbitration provision, was optional, and required all disputes to be decided in arbitration. The California Supreme Court holds that the agent was not making a health care decision when executing the agreement with the arbitration provision, and thus the agreement does not bind the principal.
Internet Commerce: Second District Div. 2 Rejects Invitation To Broadly Enforce Browserwrap Arbitration Agreement
The Court Also Rejected Argument That Federal Preemption Required Enforcement Of Browserwrap Arbitration Provision.
Plaintiff Brinan Weeks sued Interactive Life Forms, LLC in a putative class action, alleging that it made false claims, alleging "that he purchased a device called a Stamina Training Unit (STU) from the fleshlight.com website (the website) on or around September 21, 2021, on the basis of Interactive’s claims that the device would help him 'perform better,' 'last longer,' and 'improve [his] sexual stamina.'" Weeks v. Interactive Life Forms, LLC, B323430 (2/1 3/25/24) (Weingart, Chaney, Bendix). Interactive Life Forms, LLC tried to enforce an arbitration provision in a browserwrap.
Justice Weingart explains, "Prior cases hold that so-called “browsewrap” provisions on a website, which deem a consumer to have agreed to the website’s terms of use simply by using the website and without taking any affirmative steps to confirm knowledge and acceptance of the terms of use, generally do not form an enforceable agreement to arbitrate under California law." The Court agrees with those prior cases, and also rejects an argument that federal law favoring the enforcement of arbitration agreements preempts California law. The law favoring the enforcement of arbitration agreements still requires that the party seeking arbitration establish the existence of an agreement to arbitrate.