Arbitration/Agency/Enforceability/CCP 1281.2: Nursing Home’s Petition To Arbitrate Fails For Lack Of Evidence That Husband Delegated Authority To His Wife To Agree To Arbitration
Spouses Are Not Automatically The Agents Of One Another When It Comes To Making Health Care Decisions
Mrs. Goldman signed an arbitration provision on behalf of her husband who entered a nursing home. After Mr. Goldman died, Mrs. Goldman sued on behalf of her husband for elder abuse and related wrongs, and in her individual capacity, for negligent infliction of emotional distress and wrongful death. After defendants lost their motion to compel arbitration, they appealed. Goldman v. Sunbridge Healthcare, LLC, Case No. C069970 (3rd Dist. filed Sept. 27, publication ordered Oct 28, 2013).
The defendants lost their appeal, because they failed to demonstrate that Mr. Goldman lacked the capacity to make health decisions, and that he had delegated authority to Mrs. Goldman to sign an arbitration agreement. When Mrs. Goldman signed, she wrote “stroke”, by way of explaining why Mr. Goldman had not signed. But she was not a doctor, and there was no evidence that Mr. Goldman lacked the ability to sign or make his own health decisions. Agency had to be created by the purported principal, Mr. Goldman, not the purported agent. And the mere fact that Mr. and Mrs. Goldman were husband and wife was not enough to automatically confer agency for making health care decisions.
Lurking in the appeal is an interesting issue that the Court did not have to address, once it found that there was no effective agreement to arbitrate. That issue is whether Cal. Code of Civ. Proc., section 1281.2(c), which allows a trial court judge to adjudicate arbitrable and non-arbitrable claims to avoid inconsistent decisions, is preempted by the Federal Arbitration Act.
Arbitration/Employment: Arbitration Agreement Fails To Clearly And Unmistakably Refer Statutory Discrimination Claims To Arbitration
Collective Bargaining Agreement Must Clearly and Unmistakably Refer Statutory Discrimination Claims to Arbitration in Order Make Arbitration Mandatory
Defendant Mid-Wilshire Health Care Center appealed from an order denying its motion to compel arbitration and to stay a wrongful termination action filed by plaintiff Mendez, a nurse assistant. After determining the provisions of a collective bargaining agreement applied to plaintiff, a union member, even though plaintiff had not signed an arbitration agreement, the Court of Appeal agreed with the trial judge that the arbitration agreement failed to clearly and unmistakably refer statutory discrimination claims to arbitration. A collective bargaining agreement containing a broad arbitration clause coupled with general language about complying with the law will not pass the “clear and unmistakable waiver test.” Mendez v. Mid-Wilshire Health Care Center, Case No. B243144 (2nd Dist. Div. 7, filed Sept. 23, pub. order Oct. 15 2013).
Arbitration/Employment/Public Policy: Private Attorney General Act Claims Need Not Be Arbitrated
PAGA Claims Are Outside the Principles of the FAA and the Supreme Court Decisions Applying It
The Private Attorney General Act of 2004 (PAGA), Labor Code sections 2698 through 2699.5, authorizes actions by aggrieved employees on their own behalf and on behalf of other employees to recover civil penalties from employers for Labor Code violations. Brown v. Ralphs Grocer Co., 197 Cal.App.4th 489 (2011), does not require a plaintiff to arbitrate her individual PAGA claims pursuant to an arbitration agreement.
Employee Shelley Pickett brought a representative action under PAGA against her employer, asserting that employees operating cash registers had not been provided with seats, in violation of Labor Code section 1198, and a Wage Order. The trial court denied the employer’s motion to compel arbitration. The Court of Appeal, with two concurring opinions, followed Brown v. Ralphs Grocer Co., sided with the trial court judge, and affirmed the order denying defendant’s motion to compel arbitration. Pickett v. 99 Cents Only Stores, Case No. B246394 (2nd Dist. Div. 5 Oct. 15, 2013) (Mosk, J., author, with two concurrences) (unpublished).
Following the reasoning in Brown v. Ralphs Grocer Co., a plaintiff does not bring a PAGA claim as an individual claim, but rather as the proxy or agent of the state’s labor law enforcement agencies – who are not parties to an arbitration agreement. Brown has been criticized, but it has not been overruled. Whether arbitration agreements can override the statutory right to bring representative claims under PAGA is an issue currently awaiting review in Iskanian v. CLS Transportation Los Angeles, LLC, 206 Cal.App.4th 949 (review granted Sept. 19, 2012, S204032). For my earlier blog post on Brown, click here; for my earlier post on Iskanian, click here.
Arbitrations/Automobiles: Fourth District, Division 2, Finds Form Purchase And Sale Agreement Used By Many New Car Dealers Not Unconscionable
Appellate Opinion Is Divided And Issue Is Before The California Supreme Court
Automobile wreck. Between 1918 and 1920. Library of Congress.
The Fourth District, Division 2, has added one more appellate opinion to the mix of opinions concerning whether a form purchase and sale contract used by many new car dealers in California and including a form arbitration clause is unconscionable. It’s not unconscionable, says the Court, reversing the trial court judge. The Court finds “minimal” procedural unconscionability and no substantive unconscionability. Gonzalez v. Metro Nissan of Redlands, Case No. E056160 (4th Dist. Div. 2 Sept. 12, 2013) (Richli, J. author 3:0) (unpublished). As noted by the Court, the California Supreme Court has granted review of the issue in no fewer than five published appellate opinions so far, but has yet to decide any of them.
California Mediation and Arbitration has its own sidebar category for “automobiles”, because automobile dealers make widespread use of arbitration clauses in consumer contracts. Those clauses have generated quite a few appellate opinions – and those opinions are divided on the question of unconscionability.
Arbitration/Enforceability: Arbitration Agreement Is Valid Notwithstanding Absence Of Agreed Method For Appointing Arbitrator
California Code of Civil Procedure Section 1281.6 to the Rescue
The failure of an arbitration agreement to provide a method for appointing an arbitrator need not be fatal.
Our next case arose from Plaintiffs’ efforts to recover allegedly unpaid progress payments under a construction contract for remodeling Defendants’ home. Plaintiffs sued Defendants for money, and Defendants petitioned to arbitrate under an arbitration provision prepared by Plaintiffs. The trial court denied the petition, reasoning that the arbitration agreement was uncertain because it did not specify “before what agency o[r] person the matter will be arbitrated, [or] how the arbitrator will be selected, but merely sets for[th] alternative options for these terms.” Defendants appealed the order denying their petition. HM DG, Inc. v. Amini, Case No. B242540 (2nd Dist. Div. 3 Sept. 20, 2013) (Heeseman, J., author 3:0).
A “plain reading” of Cal. Code of Civ. Proc., section 1281.6 makes clear the parties needn’t agree upon a specific method for appointing an arbitrator to form a binding arbitration agreement. Here, the arbitration provision evinced an intention to arbitrate, and set forth alternative options. That did not make the arbitration agreement unenforceable, as the court, in the absence of an agreed method, or if the agreed method fails for appointing an arbitrator, shall appoint the arbitrator. Section 1281.6. Consequently, the trial court’s order was reversed.
That does not mean that the trial court is authorized to appoint an arbitrator in a manner inconsistent with the parties’ arbitration agreement. Thus, if the arbitration agreement had provided for arbitration before the AAA, pursuant to the rules of the AAA, and the AAA refused to accept arbitration, the trial court would not be able to send the dispute to JAMS arbitration pursuant to JAMS rules – that would be inconsistent with the agreement of the parties.
Arbitration/Employment/Class Action/Waiver: Fourth District, Division 2 Reverses Trial Court’s Denial Of Petition To Compel Arbitration Of Employee Claims
The Court Of Appeal Also Directs Entry Of Order Granting Employer’s Petition To compel Arbitration On An Individual Basis
Employee Arroyo’s complaint alleged his employer engaged in wage and hour practices that violated the California Labor Code. The trial court denied the employer’s petition to compel arbitration, but this denial was reversed on appeal with directions to compel arbitration of employee claims on an individual (as opposed to a class) basis. Arroyo v. Riverside Auto Holdings, Inc., Case No. E056256 (4th Dist. Div. 2 Sept. 13, 2013) (Richli, J. author 3:0) (unpublished).
We glean three points of interest from this unpublished decision.
First, the Court of Appeal reads AT&T Mobility LLC v. Concepcion, __ U.S. __ [131 S.Ct. 1740 (2011) (Concepcion) as broadly holding that the FAA preempted class action arbitration, and refuses to distinguish between consumer and employment situations.
Second, the Court of Appeal acknowledges that “[o]ne of the most volatile issues in this area of the law concerns the argument that the FAA preempts class action claims in arbitration agreements, particularly when statutory rights, such as the Labor Code provisions cited in this case, are asserted.”
Third, the Court of Appeal, while discerning “a strong argument for preemption,” continues to assume that “Gentry remains good law until it is expressly overruled by our Supreme Court.” Gentry held that class arbitration waivers in employment arbitration agreements may be unenforceable when certain conditions – the “Gentry factors” – are satisfied. However, Arroyo had failed to meet the factual burden of proof required by Gentry.