News: Gang Member Hacked To Death At So-Called “Mediation”
A Failed Mediation: Report from The Times of India
In what is described as “a scene straight out of a curry western,” in the October 13, 2014 edition of The Times of India, rival gang members met at a gym in South-east Bangalore for a “mediation,” but “soon things started falling apart.” One group drew its weapons, and the other, seriously outnumbered, “suffered serious injuries, while Nakhra was hacked repeatedly till he died on the spot.” The gym owner absconded, “raising suspicion that he set up” the victim for his rivals. A senior police officer opined that “[t]he mediation was just a pretext” providing an opportunity to “strike with precision.”
Apparently the participants failed to follow JAMS or AAA rules for choosing a neutral mediator.
Court Of Appeal Affirms Order Denying Employee’s Petition To Compel Arbitration And Lays Out Framework For Determining Who Decides Class Arbitration Question And Whether Class Arbitration Is Appropriate
Fourth District, Division Three Disagrees With U.S. Supreme Court Decision That Found Class Arbitration Question Is A Procedural Issue For Arbitrators To Decide
Affirming a trial court’s order denying an employee’s petition to compel class arbitration of his wage and hour claims, the Court of Appeal in Network Capital Funding Corporation v. Papke, G049172 (4/3 Oct. 9, 2014) (Aronson, Bedsworth, Fybel) (published) lays out a neat framework for answering the “Who Should Decide Question” and the “Class Arbitration Question.”
The Who Should Decide Question.
The Court explains that the judge decides “arbitrability” gateway issues, whereas the presumption is that the arbitrator gets to decide “procedural” issues. The Court rejects the reasoning of a non-binding plurality decision in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) that the question of whether class arbitration is prohibited is procedural in nature. Absent a “clear and unmistakable agreement to the contrary,” explains the Court of Appeal, relying on other SCOTUS cases, “it is presumed the parties intended courts, not arbitrators, to decide whether the parties agreed to submit a particular dispute to arbitration.”
In Network Capital Funding Corporation, the very broad arbitration provision did not “clearly and unmistakably” delegate the gateway issue to the arbitrator, and thus it was for the judge to decide.
The Class Arbitration Question.
Under Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662 (2010), “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Unfortunately for Papke, the employment agreement with Network Capital Funding Corporation was silent about class action arbitration, and Papke was unable to point to another contractual basis requiring contractual arbitration.
So here the trial judge correctly decided the “who should decide question” and correctly decided the ultimate issue, whether the the parties’ arbitration agreement allowed Papke to pursue class and representative claims in arbitration (it did not).
Arbitration/Employment/PAGA: Second Dist Div 2 Reverses Itself In Light Of Iskanian v. CLS Transportation Of Los Angeles
Private Attorneys General Act of 2004 Claims Brought By Parties Suing In Representative Capacity Do Not Have To Be Arbitrated On An Individual Basis.
I posted on March 16, 2014 about Ybarra v. Apartment Investment and Management Company, B245901 (2nd Dist. Div. 2, March 13, 2014) (Ashmann-Gerst, Boren, Ferns) (Ybarra). At the time, I quoted the following language from the opinion:
“Unless and until the California Supreme Court rules otherwise, we determine that the representative waiver provision in the parties’ arbitration agreement is enforceable, and that Aimco’s motion to compel Ybarra’s PAGA claim on an individual basis should have been granted.”
That was then. This is now:
“Per order of the California Supreme Court, we have vacated and reconsidered our prior opinion in this case, filed March 13, 2014, in light of Iskanian v. CLS Transportation of Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian).”
In its unpublished opinion filed October 7, 2014, the Court of Appeal has affirmed the trial court’s order denying Aimco’s motion to compel arbitration.
Arbitration/Collateral Estoppel: Admission Of Arbitral Award In Jury Proceeding Was Error, But No Matter, The Error Was Harmless Here
The Context: Arbitral Award Against LLC, Jury Trial Against Members Of LLC.
Following a default prove-up, plaintiff listing broker CB Richard Ellis, Inc. obtained a substantial arbitral award from an LLC owing CBRE a commission for the sale of real property. Because the LLC had no assets, CBRE then sued the individual members of the LLC. Over the objections of the defendants, the trial judge admitted into evidence the arbitral award against the LLC. CBRE obtained a judgment against the defendants, prompting an appeal. CB Richard Ellis, Inc. v. Terra Nostra Consultants, No. G049803 (4/3 Oct. 7, 2014) (Ikola, O’Leary, Aronson) (partially certified for partial publication).
In a part of the opinion not certified for publication, the Court of Appeal found the court erred by admitting the entire arbitral award, complete with the arbitrator’s factual findings and reasoning, because the arbitral award against the LLC could not collaterally estop the members of the LLC, who were the defendants. As a result, the arbitral award was irrelevant (except to provide background and context), though it could prejudice the jury. But the Court of Appeal concluded that the error was harmless, and did not make a difference to the outcome, because there was plenty of evidence to support the judgment.
The Court of Appeal affirmed the judgment, and reversed a postjudgment order denying recovery of attorney fees. For discussion of the attorney’s fees issue, see post on California Attorney’s Fees.
PRACTICE TIP from the Court of Appeal: “To the extent the jury needed background information concerning the arbitration to make sense of the case, the information could have been provided to the jury without revealing the arbitrator’s factual findings and legal reasoning.”
Arbitration/Class Actions/Awards: Arbitrator Awards Fees Of $10.45 M To Class Counsel In Canadian Lawsuit
Arbitrator Focused On Risk Incurred By Counsel And Degree Of Success Achieved
![[Royal Canadian northwest mounted policemen on horseback, Dawson, Yukon Territory, Canada]](http://lcweb2.loc.gov/service/pnp/cph/3c00000/3c09000/3c09700/3c09718r.jpg)
Above: Ever-vigilant Canadian mounted policeman. ca. 1917. Library of Congress.
Shawn Irving and Catherine Gleason-Mercier of the Canadian law firm Osler, Hoskin & Harcourt LLP reported on September 30, 2014, that an arbitrator has awarded $10.45 M to class counsel in Fulawka v. The Bank of Nova Scotia. This very significant class action involved a class certified in 2010, consisting of approximately 14,000 persons, and suing to recover overtime wage claims.
Interestingly, Canada has a Class Proceedings Act, 1992, providing a procedure for calculating a multiplier (“multiplicateur”) and the base fee (“honoraires de base”).
Here, the parties took a creative approach, resorting to an arbitrator to address the issues remaining after a merits decision, one of which was the amount of class counsels’ fees.
Despite defense objections to duplicative work, the arbitrator only reduced the base fee by 3%. Focusing on the risk incurred by class counsel in undertaking novel and large-scale litigation, and the significant degree of success, the arbitrator determined the multiplier to be 2.75, resulting in fees of $10.45 M.
While employee class actions may be hobbled in the United States by arbitration clauses and class action waivers, Fulawka v. The Bank of Nova Scotia is evidence of a successful class action across the border.
Arbitration/Employment/Enforceability: Fifth District Holds Agreement For Advisory Arbitration Is Not Enforceable Under The California Arbitration Act
But Federal Law Is Not So Clear
The issue in Operating Engineers Local Union No. 3 v. City of Porterville, Case No. F067635 (5th Dist. Oct. 2, 2014) (Kane, Levy, Detjen) (unpublished) is whether an agreement between a city and a union to submit an employment dispute to advisory arbitration is enforceable under the California Arbitration Act. The Court’s answer: No.
An advisory arbitration does not satisfy all three elements necessary to be considered arbitration under the CAA: “[1] a third party decision maker, [2] a final and binding decision, and [3] a mechanism to assure a minimum level of impartiality with respect to the rendering of that decision.” Cheng-Canindin v. Renaissance Hotel Associates, 50 Cal.App.4th 676, 687-688 (1996). An advisory opinion does not satisfy the “final and binding” requirement.
NOTE: Federal law appears to be unclear as to whether a different result would follow under the Federal Arbitration Act. Cf. Wolsey Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1209 (9th Cir. 1998) (arbitration need not be binding in order to fall within scope of the FAA) and Advanced Bodycare Solutions v. Thione Intern., 514 F.Supp.2d 1326, 1333 (S.D. Fla. 2007) (arbitration agreement that does not require parties to arbitrate to final decision “does not mesh with the concept of ‘arbitration’ within the contemplation of the FAA”). Of course, the California Court of Appeal was not required to follow Wolsey, and instead it followed Cheng-Canindin.