Arbitration/Enforceability/Nonsignatories: Defendant Fails To Sustain Burden Of Showing Plaintiff Signed Arbitration Agreement
Declarants Lacked Personal Knowledge
If you want to compel arbitration, it sure helps to have a signed arbitration agreement, as defendant Wells Fargo discovered in Bachenheimer v. Wells Fargo Bank, N.A., B251980 (2nd Dist. Div. 5 July 21, 2014) (Turner, Mosk, Mink) (unpublished).
Plaintiff, who suffered from traumatic brain injury, invested her savings with Wachovia, and lost those savings. Because Wells Fargo took over assets from Wachovia, Wells Fargo was sued. The trial court denied Wells Fargo’s petition to compel arbitration, because Wells Fargo was unable to prove the existence of an arbitration agreement.
Wells Fargo did, however, produce declarations establishing that the ordinary course of business required the investor to sign an arbitration agreement, before an account would be opened. Wells Fargo conceded that the original documents had been lost or destroyed.
The declarations were not good enough to establish an arbitration agreement, because the declarants lacked first-hand knowledge that plaintiff had signed an arbitration agreement.
Thus, the order denying the motion to compel arbitration was affirmed.
Coffey v. Beverages & More, a case that I posted about on April 14, 2014 dealing with an on-line signing procedure, is another example of a defendant failing to establish that the arbitration agreement had been signed.
Arbitration/Nonsignatories/Equitable Estoppel: Dentist Who Voluntarily Arbitrated But Did Not Sign Arbitration Agreement Was Not Equitably Estopped From Refusing To Arbitrate Again
In Which The Trial Court Sums It Up Neatly For The Court Of Appeal.
In Chan v. Delta Dental of California, A138402 (1st Dist. Div. 2 July 10, 2014) (Kline, Richman, Brick) (unpublished), a dental service provider sought to enforce an unsigned arbitration agreement based on an arbitration agreement that a dentist had not signed. The trial court summarized its reasons for denying defendant Delta’s petition to compel arbitration of a contract dispute between it and plaintiff, Susan Chan, D.D.S. (Dr. Chan). Complimenting the trial judge, the Court of Appeal said, “We could not have summed up the proper result in this case better than that.” And so all we need to do now is quote the trial court:
“[Delta] has admitted that there is no signed, written agreement and is seeking to compel arbitration on an estoppel theory. Even if that were possible as a basis to compel arbitration, I find that [Delta] has not shown that Dr. Chan was estopped. The fact that Dr. Chan voluntarily availed herself of the right to mediation or arbitration does not mean there was a binding agreement to arbitrate where under all the evidence that’s before me in this case there’s no evidence she ever signed the 2006 contract.”
Affirmed.
![Pulling monkey teeth, 5/29/[24]](http://lcweb2.loc.gov/service/pnp/npcc/11500/11512r.jpg)
Above: Pulling monkey teeth. 5/29/24. Library of Congress.
Arbitration/Construction Of Agreement/Jurisdiction: Parties’ Arbitration Agreement Expressly Excluded Statutory Wage Claims From Arbitration Because It Excluded Claims “Within The Jurisdiction” Of The California Labor Commission
Just A Matter Of Contract Interpretation
Judges must relax a little when they can say, as does Justice O’Leary, the author of the next opinion, “The sole issue presented in this appeal is simply a matter of contract interpretation.” Rebolledo v. Tilly’s, Inc., G048625 (4th Dist. Div. 3 July 8, 2014) (O’Leary, Ikola, Thompson) (unpublished).
Plaintiff Rebolledo brought claims against her employer for failure to provide meal periods, failure to provide rest periods, failure to pay wages upon termination, failure to itemize wage statements, unfair competition, and enforcement of the Private Attorneys General Act of 2004. The employer brought a motion to compel arbitration, and appealed when its motion was denied.
A 2001 Employment Agreement provided for arbitration, except for “matters governed by the California Labor Commissioner.” A 2004 Employment Agreement excluded from arbitration “any matter within the jurisdiction of the California Labor Commissioner.”. A 2005 Employment Agreement did not include an exception to arbitration.
The Court of Appeal sorted this out as follows: (1) Plaintiff’s claims were “within the jurisdiction of the California Labor Commissioner” if they were claims potentially within the jurisdiction of the California Labor Commissioner, regardless of whether they were ever brought before the Commissioner; (2) because the 2001 Employment Agreement required three signatures to amend it, and the 2005 agreement did not have those signatures, the 2005 agreement did not remove the exception to arbitration in the 2001 agreement.
The order denying arbitration was affirmed.
Arbitration/Standard of Review: Arbitrator Acted Within Power Under Arbitration Clause In Awarding Fees, But Sanctions Award Is Denied As Appeal Was Not Wholly Frivolous
Standard Of Review Pretty Much Ordained The Result Here, And Nothing Was Changed By Appealing
This is one of those “Cain v. Abel” disputes, in which beneficiaries/brothers (Douglas and Martin Buser), fought over their parents’ family trust. It appears Douglas fought tooth and nail, but unsuccessfully, getting hit with attorney’s fees assessed against his share of the trust estate, and monetary sanctions for his pursuit of an unmeritorious renewed motion or reconsideration petition. Buser v. Buser, D63381 (4th Dist. Div. 1 July 3, 2014) (Huffman, McIntyre, Aaron) (unpublished). Nothing was changed by Douglas’ appeal, except that Martin failed to get appellate sanctions, because the Court could not say that Douglas’ appeal was wholly frivolous.
The battling brothers had agreed to a settlement that included a broad arbitration provision, which settlement the trial court enforced, sending the disputed matters to arbitration. Because the brothers’ dispute was resolved with an arbitration award, the losing brother, Douglas, had a tough row to hoe to try and show the arbitrator exceeded his powers. As the Court made clear:
"’Our review of an arbitration award requires us to extend to it every intendment of validity and the party claiming error has the burden of supporting his contention.’ (Ibid., citing Cobler v. Stanley, Barber, Southard, Brown & Associates (1990) 217 Cal.App.3d 518, 526 (Cobler).) It is well accepted ‘ “ ‘[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.’”’”
Arbitration/Class Action/Waiver: Two Ninth Circuit Opinions Hold Class Action Waivers In Arbitration Agreements Are Valid
Yesterday, June 23, 2014, the California Supreme Court agreed that an arbitration class action waiver in Iskanian v. CLS Transportation Los Angeles was enforceable. See my June 23 post. On the same day, the Ninth Circuit Court of Appeals agreed that class action waivers are valid – at least in the circumstances of the two cases decided that day. One case involved an opportunity to “opt out” of arbitration. The other case concluded that the employer had given employees reasonable notice of a change in its arbitration policy.
Johnmohammadi v. Bloomingdale’s, Inc., No. 12-55578 (9th Cir. June 23, 2014) (Judge Watford, author).
The panel in Johnmohammadi addressed, then ducked, an issue raised by Justice Werdegar’s dissent yesterday in Iskanian: whether the class-action waiver, enforceable under California law, is nevertheless unenforceable under the Norris-LaGuardia Act, and the National Labor Relations Act, making it illegal for an employer “to interfere with, restrain, or coerce employees in the exercise” of certain rights, including certain “concerted activities” protected by the Norris-LaGuardia Act. While the panel concluded that “[t]here is some judicial support for her position,” the plaintiff failed to show interference, restrain, or coercion. Why? Because the employer, Bloomingdale’s, offered plaintiff an opportunity to “opt out” of arbitration, and she did not take that opportunity. Had she opted out, explained Judge Watford, “she would be free to pursue this class action in court.”
Davis v. Nordstrom, Inc., No. 12-17403 (9th Cir. June 23, 2014) (Judge Smith, author).
In an opinion penned by Judge Smith, the panel reversed the district court’s order denying Nordstrom’s motion to compel arbitration of an employee’s claims brought as a putative class action. The key issue here was whether Nordstrom’s complied with a provision requiring it to give employees 30 days written notice of any substantive changes to the arbitration provision – and the change in arbitration policy, precluding most class action lawsuits, was substantive. Here, sending a letter to Davis and other employees “informing them of the modification, and not seeking to enforce the arbitration provision during the 30 day notice period,” constituted reasonable notice of a change.
Arbitration/Employment/Class/Waiver/FAA/Public Policy: California Supreme Court Rules in Iskanian: Yes On Waiver Of Class Action, No On Waiver Of PAGA Claims
Iskanian Decision Yields Opinion Of Four, Plus Justice Chin, Concurring, Plus Justice Werdegar, Concurring And Dissenting
In a much-awaited decision, the California Supreme Court has ruled that a state’s refusal to enforce a class action waiver on grounds of public policy or unconscionability is preempted by the Federal Arbitration Act (FAA), but that the FAA does not preempt a state law that prohibits waiver of Labor Code Private Attorneys General Act of 2004 (PAGA) representative actions in an employment contract. Iskanian v. CLS Transportation Los Angeles, LLC, No. S204032 (Sup. Ct. June 23, 2014).
Class Action Waiver
In a majority opinion penned by Justice Lui, with Chief Justice Cantil-Sakauye and Justices Corrigan and Kennard concurring, the court holds that Gentry v. Superior Court, 42 Cal.4th 443 (2007) has been abrogated by SCOTUS precedent. The Justices reject the argument that the employee class action waiver is unlawful under under the National Labor Relations Act.
PAGA Representative Action.
In March 12, and March 16, 2014 posts, I wrote that we are,
"in a somewhat fuzzy area regarding FAA preemption of California statutory rights to file a court action – especially in those instances where the beneficiary of the statutory right may include the public, and not just the individual who is a party to the arbitration agreement. Example: Private Attorney General Act (PAGA) employment claims.”
Not so fuzzy anymore with respect to PAGA.
The Iskanian majority explains that “an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy.” The PAGA action is analogous to a qui tam action, brought by an individual, but benefitting the public. Furthermore, the majority concludes that a PAGA action does not frustrate the FAA’s objectives:
“Simply put, a PAGA claim lies outside the FAA’s coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship. It is a dispute between an employer and the state, which alleges directly or through its agents . . . that the employer has violated the Labor Code.”
Concurrences and Dissent.
Justice Chin agrees that Gentry is inconsistent with SCOTUS precedent interpreting the FAA, while disagreeing with some of the majority’s reasoning. He does not agree that the approach to unconsionability of a majority of the court “may ‘be’ squared’ with the high court’s FAA decisions.” While agreeing the PAGA waiver is unenforceable, Justice Chin takes a different route to get there: he believes that “the conclusion that the arbitration agreement here is invalid insofar as it forbids Iskanian from asserting his statutory right under PAGA in any forum does not run afoul of the FAA.”
Justice Werdegar agrees that Iskanian’s PAGA claims are not foreclosed by his employment contract or by the FAA. But she believes that “[t]oday’s class waivers are the descendants of last century’s yellow dog contracts.” She believes that the enforcement of class waivers in employment contracts violates the employees’ rights to collective action, and thus constitutes an unfair labor practice.
BLAWG BONUS: Justice Werdegar explains that employment contracts prohibiting collective action date to the 19th century, and were first known as “ironclads,” also as “yellow-dog contracts.” Wikipedia explains:
“A yellow-dog contract . . . is an agreement between an employer and an employee in which the employee agrees, as a condition of employment, not to be a member of a labor union. In the United States, such contracts were, until the 1930s, widely used by employers to prevent the formation of unions, most often by permitting employers to take legal action against union organizers. In 1932, yellow-dog contracts were outlawed in the United States under the Norris-LaGuardia Act.”
Further note: Before the Norris-LaGuardia Act, SCOTUS declared an act banning yellow-dog contracts unconstitutional in Adair v. United States, 208 U.S. 161 (1908).