Mediation/Condition Precedent: Following Its Own Precedent, 4th Dist. Div. 3 Reminds Us To Mediate First If Mediation Is A Condition Precedent For Receiving Attorney’s Fees
Here, The Prevailing Party Fails To Mediate, And Fails To Recover Attorney’s Fees
In our next case, plaintiffs’ claims arose from mismanagement of their property. They sued, and obtained a substantial recovery – but no attorney’s fees. Why? Because mediation was a precondition in their contract for the prevailing party to receive attorney’s fees, and they failed to mediate. Following its own precedent, the Fourth District, Division Three, upheld the denial of attorney’s fees. Brown v. Modaffari, Case No. G047443 (4th Dist. Div. 3, November 26, 2013) (unpublished); see Frei v. Davey, 124 Cal.App.4th 1506, 1508 (2004) (enforcing condition precedent in contractual attorney fee provision denying prevailing party right to recover fees if party does not attempt to mediate before suing).
Arbitration/Sanctions: Sixth District Holds CCP 128.7 Sanctions Are Unavailable In Arbitration Where Attorney Has Not “Presented” Pleading To Court
Trial Court’s Order Denying Sanctions Under CCP 128.7 Is Affirmed
In Optimal Markets, Inc. v. Salant, Case No. H038571 (6th Dist. Nov. 26, 2013) (unpublished), the Court explains: “There is no authority supporting the position that a superior court, after a matter has been stayed and ordered to binding arbitration, may impose section 128.7 sanctions for an attorney’s prosecution of a client’s meritless claim before the arbitrator.” Thus, the trial court did not err here, where the matter had been stayed and ordered to binding arbitration, in denying section 128.7 sanctions for matters presented to the arbitrator, but not to the trial court.
Employment: Fourth District, Div. 3 Upholds Trial Court’s Order That Employee Must Arbitrate Individual Claims And Dismisses Class Claims Without Prejudice
Court Summarizes Fractured Opinion About Gentry
Rivera v. Hilton Worldwide, Inc., Case No. G047644 (4th Dist. Div. 3 Nov. 26, 2013) (unpublished) is one more wage and hour case in which the employee is ordered to arbitrate individual claims and the Court upholds dismissal of class claims without prejudice. The Court finds that the arbitration clause is not unconscionable, that the parties did not agree to authorize class arbitration (following Stolt-Nielsen S.A. v. Animalfeeds International, 559 U.S. 662 (2010)), that individual substantive rights could be litigated in arbitration, and that the NLRB decision D.R. Horton, holding dismissal of class action claims violates substantive federal rights of employees, is not persuasive authority.
The Court also neatly summarizes the fractured state of law concerning application of the “four Gentry factors” to determine whether waiver of a class action is unconscionable:
“[C]ases are split as to whether Gentry remains viable.(Compare e.g., Kinecta, . . . 205 Cal.App.4th at p. 516 [‘Gentry appears to remain the
binding law in California’ despite Concepcion; dicta; italics added; Truly Nolen v. Superior Court, . . . 208 Cal.App.4th 487 [although Concepcion ‘implicitly disapproved’ Gentry, court will not ‘disregard’ decision without ‘specific guidance’ from California Supreme Court] with, e.g., Morvant v. P.F. Chang’s China Bistro, Inc. (N.D.Cal. 2012) 870 F.Supp.2d 831, 840-841 [no distinction between Discover Bank and Gentry and class action waiver must be enforced under Concepcion].) The California Supreme Court is considering this issue in Iskanian v. CLS Transportation of Los
Angeles, LLC (2012) 206 Cal.App.4th 949 (Iskanian), review granted September 19, 2012, S204032.”
And then, like many other Courts, the panel ducks the issue: “But we need not decide this question because even if the case remains good law, plaintiff has not satisfied his burden under Gentry.”
Arbitration/Miscellaneous/MFAA: California State Bar Offers Arbitration Advisories Under Auspices Of The Committee On Mandatory Fee Arbitration
Useful Resource for Mandatory Fee Arbitration
The California State Bar offers a useful collection of “Arbitration Advisories” that I wanted to share with my readers. These advisories come with the following disclaimer:
“Points of view or opinions expressed in this document are those of the Committee on Mandatory Fee Arbitration. They have not been adopted or endorsed by the State Bar’s Board of Trustees and do not constitute the official position or policy of the State Bar of California.”
2012-03
Handling Legal Malpractice Claims and Ethical Issues During Arbitration2012-02
Arbitration Agreements (Supercedes 2004-01)2012-01
Voidability of Fee Agreements (Supercedes 1996-04)2011-02
Statute of Limitations for Fee Arbitrations (Supercedes 1996-02)2011-01
Enforcement of Non-Refundable Retainer Provisions (Supercedes 2001-02)2010-01
Arbitration of Loan Modification Fee Disputes2009-01
The Arbitrator’s Role in Accepting Settlement Agreements As Stipulated Awards2008-02
Authority to Compel Compliance with Third-Party Subpoena2008-01
Timing of Agreements to Binding Fee Arbitration2007-02
Preservation of Client Confidences in Arbitrations Involving Parties Other Than The Client2007-01
Arbitral Immunity2005-02
Resisting Attempts to Subpoena Fee Arbitrators or Fee Arbitration Documents2005-01
Jurisdiction of the Mandatory Fee Arbitration Program to Determine the Existence of an Attorney-Client Relationship2004-01
Arbitration Agreements (Superceded by 2012-02)2003-03
Awarding Program Filing Fees
003-02
The Amendment or Supplementation of Arbitration Awards (Supercedes 2000-01)2003-01
Detecting Attorney Bill Padding2002-01
Imposition of Sanctions by Arbitrators in Conducting Fee Arbitration Matters2001-02
Enforcement of ‘Non-Refundable’ Retainer Provisions (Superceded by 2011-01)2001-01
Impact of the Truth in Lending Act and Retain Installment Sales Act Upon Attorney-Client Fee Disputes2000-01
The Amendment or Supplementation of Arbitration Awards. (Superceded by 2003-02)
11/3/20001998-03
Determination of a ‘Reasonable’ Fee
6/23/19981998-02
Required Accommodations for Fee Arbitration Participants with Disabilities1998-01
Impact of Arbitration Clauses in Fee Agreements Upon Client’s Right to Mandatory Fee Arbitration1997-03
Fee Arbitration Issues Involving Contingency Fees1997-02
Handling a Request for Arbitration When a Party Files for Bankruptcy1997-01
Disclosures To Be Made by Arbitrators to Parties1996-05
Arbitrator’s Role in Settlements at Time of Hearing1996-04
Voidability of Fee Agreements (Superceded by 2012-01)1996-03
Burden of Proof in Fee Arbitrations1996-02
Statute of Limitations for Fee Arbitrations (Superceded by 2011-02)1996-01
Records Retention1995-02
Standards for Attorney Fee Billing Statements1995-01
Disclosure Required of Fee Arbitrators by CCP 12811994-04
Identification of ‘Individual Responsible Attorney’ in Fee Arbitration Awards
1994-03
Avoiding Arbitrator Bias1994-02
Jurisdiction to Arbitrate Court Ordered Fees1994-01
Avoiding Arbitrator and Administrator Bias1993-02
Standard of Review in Fee Disputes Where There Is a Written Fee Agreement1993-01
Awards of Interest by the Arbitrator
Arbitration/Employment: One More Opinion Weighs In That Representative PAGA Claim Cannot Be Compelled To Arbitration
PAGA Claims Are Representative, Not Individual Claims, Fourth District, Division 3 Explains
Here, the arbitration agreement required plaintiff to arbitrate “claims for wages or other compensation due or penalties . . . [and] violation of statute.” But she could not be compelled to litigate her California Private Attorney General Act claim as an individual, as the trial court ordered, because the PAGA claim is by its nature a representative claim. “An employee bringing a PAGA claim ‘does so as the proxy or agent of the state’s labor law enforcement agencies. The act’s declared purpose is to supplement enforcement actions by public agencies, which lack adequate resources to bring all such actions themselves.’” Whalley v. The Wet Seal, Inc., Case No.G047406 (4th Dist. Div. 3 Nov. 15, 2013) (Thompson, J. author 3:0) (unpublished), citing Arias v. Superior Court ,46 Cal.4th 969, 986 (2009).
Here, the employee could not be compelled to arbitrate her representative action as an individual action, and the employer could not be compelled to arbitrate the PAGA claim as a representative action. Result: “We reverse those portions of the order that compel [the employee] to arbitrate her PAGA claim on an individual basis and that bar her representative PAGA claim but we exclude that claim from the arbitration.”
As we have pointed out in other posts (June 5, 2012, July 28, 2013, November 5, 2013) and as the Court points out in Whalley at footnote 4, case law is currently divided on whether an employee can be compelled to arbitrate her PAGA claims on an individual basis. Stay tuned for the California Supreme Court to rule on the pending issue.
Arbitration/Rules: AAA Adopts Optional Appellate Arbitration Rules Effective November 1, 2013
Grounds For Appeal Go Beyond Those Allowed By Existing State And Federal Statutes
Perhaps the greatest risk with arbitration is that errors of fact and law are not grounds for appeal. The American Arbitration Association has now addressed that risk by adopting Optional Appellate Arbitration Rules effective November 1, 2013.
These optional rules expand the grounds for appealing an Underlying Award to include, “(1) an error of law that is material and prejudicial; or (2) determinations of fact that are clearly erroneous.”
Parties seeking to appeal an Underlying Award obtained from the AAA arbitrator must file a Notice of Appeal within 30 days of the date of the Underlying Award, a filing fee, a copy of the applicable arbitration agreement providing for appeal of the Underlying Award, and a copy of the Underlying Award. The AAA provides sample language for an arbitration agreement that anticipates appellate review by an AAA tribunal. Without such an agreement, a party still cannot unilaterally appeal.
The appellate tribunal will have three arbitrators, unless the parties agree to one arbitrator, and will have broad power to rule on the scope of its own jurisdiction.
While providing an added safeguard against errors of fact and law, the optional rules will add a new layer of expense and time, thereby narrowing the gap between arbitration and litigation in court. But choosing the arbitration appellate option may well be worth it, on a case-by-case basis, especially in large-scale commercial arbitration.