Arbitration/Pending Cases: Casas v. Carmax Is Now Certified For Publication
Second District, Division 2 Opinion Reversing Trial Court’s Order Denying CarMax’s Motion To Compel Arbitration Is Now Certified For Publication
On February 27, 2014, I posted about Casas v. CarMax Auto Superstores California LLC, Case No. B246392 (2nd Dist. Div. 2 Feb. 26, 2014) (Johnson, Chaney, Miller). At that time, the opinion, filed February 26, 2014, was not certified for publication in the Official Reports. On March 20, 2014, the opinion was certified for publication.
News: Thereby Hangs A “Tail” As Mediation Successfully Resolves Taxidermy Heist
Alleged Juvenile Taxidermy Thieves Are Spared A Criminal Record, Thanks To Mediation
Occupational portrait of taxidermist Martha A. Maxwell with animal specimens, palette, and rifle. October 27, 1876. Library of Congress.
When I saw the following headline from the March 12, 2014 edition of the Spokesman-Review in Spokane, Washington, I knew I had to pass it on to our readers: “Teen taxidermy thieves finish mediation.”
Here is the dastardly actus reus: “The teenagers were accused of breaking into Drury’s taxidermy shop and making off with more than $27,000 worth of mounted animals to mimic a YouTube video.” As the result of a successful mediation between the teenagers and the owner of the taxidermy shop, the teenagers ended up having to make restitution and do community service – but they were spared a criminal record.
Better than being skinned, hung out to dry, and stuffed, wouldn’t you say?
The full article is here.
Arbitration/Waiver/Employment/Class Action/FAA Preemption: Second District, Division 2, Holds That Employee Can Be Compelled To Arbitrate A Private Attorney General Act Employment Claim Individually, Thereby Enforcing Class Action Waiver
Court Acknowledges That Private Attorney General Laws “May Be Severely Undercut By Application Of The FAA”
On March 12, at the end of my previous post, I commented “we are still 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.”
The next day, the Court of Appeal issued an unpublished decision that addresses this very issue: Ybarra v. Apartment Investment and Management Company, B245901 (2nd Dist. Div. 2, March 13, 2014) (Ashmann-Gerst, Boren, Ferns) (Ybarra).
Employee Ybarra had successfully opposed a motion to compel her to arbitrate her individual PAGA claims, arguing that individual claims were not viable. Employer appealed, relying on preemption by the Federal Arbitration Act (FAA) and recent SCOTUS cases, to argue the arbitration agreement needed to be enforced against the employee.
The argument for not enforcing arbitration of PAGA claims is that the employee is essentially stepping into the shoes of the attorney general to enforce the labor laws, and thus the public benefits from public enforcement. The state attorney general could not be compelled to arbitrate claims, because the attorney general is not a party to the arbitration agreement. However, even though the employee may be acting as a private attorney general, the employee here was a party to the arbitration agreement. Should the “private attorney general” be treated like the state attorney general who is not a party to the arbitration agreement?
Rejecting Ybarra’s argument, the Court of Appeal relied on SCOTUS’s recognition that the FAA “reflects an emphatic federal policy in favor of arbitral dispute resolution,” and in particular, two cases I have blogged about: American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013) [June 25, 2013 post] and Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012) [March 27, 2012 post] .
Interestingly, the Court acknowledged that “the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by the FAA” – but believed that SCOTUS “had spoken on the issue.” Thus, while insisting that it was bound by SCOTUS authority, the Court must understand the view expressed by Justice Kagan that enforcing an arbitration agreement may make it impossible for a party to effectively vindicate rights through individual acts. In her American Express dissent, Justice Kagan pithily wrote: “And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.”
Reversing the trial court in Ybara, the Court of Appeal held:
“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.”
Arbitration/Employment/Unconscionability/FAA Preemption: Second District, Division 4, Holds That Labor Code Section 229 Only Exempts Unpaid Wage Claim From Arbitration
And Employer Failed To Sustain Burden Of Proving That California Statutory Right Of Employee To Avoid Arbitration Of Unpaid Wages Claim Was Preempted By Federal Arbitration Act
Francis Capital Management LLC (FCM) appealed from an order denying its motion to compel Lane, a former employee, to arbitrate all his employment claims against FCM. Lane v. Francis Capital Management LLC, B245661 (2nd Dist. Div. 4 March 11, 2014) (Manella, Epstein, Willhite). The trial court had determined that Labor Code section 229 allowed Lane to maintain his claims in court, and further, that the agreement was unconscionable.
The Court of Appeal easily found that the broad arbitration provision, which encompassed all “wage, hour and benefit claims,” “contract claims,” and “claims for wrongful termination,” was intended to cover all eight claims brought by Lane: (1) wrongful termination; (2) breach of oral contract; (3) failure to pay wages; (4) unpaid overtime; (5) unpaid meal period wages; (7) waiting time penalties; (7) itemized wage statement violations; and (8) unfair competition. Furthermore, the Court of Appeal found that there was no unconscionability.
The hard issue was whether Labor Code section 229, which provides a statutory right to arbitrate labor claims in California, applied. Yes, it did apply, said the Court of Appeal, but on its face, it only applied to the third cause of action to collect unpaid wages. All the other claims had to be arbitrated.
The Court distinguished the “broad presumption against the arbitration of statutory claims” set forth in Hoover v. American Income Life Insurance Company, 206 Cal.App.4th 1193 (2012), as being “overly broad”: “[T]he plain language of section 229 is limited to actions for the collection of due and unpaid wages brought under sections 200 through 244; section 229 does not apply to all statutory wage and hour claims.” See my June 14, 2012 post on Hoover.
What about preemption by the Federal Arbitration Act of Labor Code section 229? It was FCM’s burden of proof to demonstrate FAA preemption of section 229 – meaning that FCM had to show that interstate commerce was involved. But Lane was a California resident, and FCM was a California entity, doing business in California. FCM’s “bare assertion” that “Mr. Lane was a security analyst at a firm which manages capital investments” was insufficient to support a finding that his employment involved interstate commerce.
Affirmed in part (as to the cause of action for unpaid wages) and reversed in part.
Comment: Depending on the particular California court, we are still 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.
Arbitration/Nonsignatories: In Case Of First Impression, First District, Div. 5 Holds That An Arbitration Clause In Trust Document Does Not Bind Trust Beneficiary
Court Would Not Compel Arbitration Here Where The Beneficiary Had Not Sought The Benefits Of The Trust Instrument, But Rather Challenged Its Validity
Pamela McArthur v. Kristi McArthur, A137133 (1st Dist. Div. 5 March 11, 2014) (Bruiniers, Jones, Needham) is a case arising out of an inharmonious “sister act.”
The scenario is not uncommon. In 2001, mom McArthur creates trust for her three daughters, making them equal beneficiaries. In 2011, mom amends trust in a way that favors daughter Kristi over daughter Pamela. In 2012, mom dies.The trust, as amended in 2011, contains a “Christian Dispute Resolution” provision that did not exist in the 2001 trust. The provision, which requires mediation and if necessary arbitration, states in part:
“The Trustor and Co-Trustees [(Frances and Kristi)] are Christians and believe that the Bible commands them to make every effort to live at peace and to resolve disputes with each other in private or within the Christian church (see Matthew 18:15-20; 1 Corinthians 6:1-8). Therefore, the Trustor and Co-Trustees agree that any claim or dispute arising from or related to the Trust as amended shall be settled by biblically based mediation and, if necessary, legally binding arbitration before the Institute for Christian ConciliationTM, a division of Peacemaker® Ministries, in accordance with its Rules of Procedure for Christian Conciliation (the ‘Rules’ found at www.peacemaker.net).”
Alas, a more apt biblical citation for the case could be Gospel of John, chapter 11, verse 35, the shortest verse in the King James Version: Jesus wept. For after mom died, sister Pamela sued Kristi, alleging financial elder abuse and undue influence on mom, and challenging the validity of the 2011 trust amendment. Sister Kristi moved to compel arbitration of Pamela’s claims. After the trial court denied sister Kristi’s motion, because Pamela was not a signatory, Kristi appealed.
The Court of Appeal affirmed the order denying Kristi’s motion to compel arbitration, because Pamela was neither a signatory to the arbitration clause, nor did she seek benefits under the 2011 trust instrument. Instead, Pamela sought benefits of the 2001 trust, which trust did not contain an arbitration clause. If Pamela had sought benefits under the 2011 trust, this would be a different case.
The Court of Appeal recognized that in some situations, there will be a “statutory scheme that justified flexibility in binding nonsignatories to arbitration clauses”, leaving it up to the Legislature to devise such rules if it wants to.
Arbitration/Appealability: Second District, Division 5 Holds That Order Denying Renewed Petition To Compel Arbitration Brought Under CCP section 1008(b) Is Not Appealable
Case Has Nice Discussion Of Those Elusive Little Differences Between CCP 1008(a) and (b).
In ongoing litigation against Ralphs Grocer Co. and The Kroger Co. for Labor Code violations (defendants), the trial court denied defendants’ renewed petition to compel arbitration filed pursuant to Cal. Code of Civ. Proc. section 1008(b). Defendants appealed. Brown v. Ralphs Grocer Company, et al., B247297 (2nd Dist. Div. 5 March 6, 2014) (Mosk, Kriegler, Mink) (unpublished).
There is plenty of case law concerning the appealability of an order denying a motion for reconsideration under 1008(a). Not appealable. But what about 1008(b). And what’s the difference between (a) and (b) anyway?
Subsection (a) relates to reconsideration motions, whereas subsection (b) relates to renewal motions. A motion to renew differs from a motion for reconsideration in that the former seeks to renew a motion rather than reconsider an order, has no time limit, and may be heard by a new judge. The motion for reconsideration under (a) is brought by any party affected by the order, whereas the renewal motion under (b) is brought by a party who originally made an application for an order. But in either case, the moving party seeks a new result based upon “new or different facts, circumstances, or law.”
Here, the Court of Appeal followed the reasoning in Tate v. Wilburn, 184 Cal.App.4th 150, 160 (2010), that an order denying a renewal motion under section 1008(b). just like one brought under 1008(a) is nonappealable. As the court reasoned in Tate, another result would mean that “a party would have two appeals from the same decision.”
Appeal dismissed.