Arbitration, Deadlines, Prompt Payment, Fees: Plaintiff Successfully Exercises Option To Withdraw From Arbitration Because Defendant Employer Was Tardy Paying Arbitration Fees
Courts Have Been Unforgiving In Interpreting An Unambiguous Statute. See CCP § 1281.98.
"A statute gave Milan Cvejic the option to get out of arbitration if Skyview was tardy in paying its arbitration fees. Skyview was tardy in paying its arbitration fee. Cvejic was entitled to get out." Milan Cvejic v. Skyview Capital, LLC, B318880 (2/8 6/28/23) (Wiley, Grimes, Viramontes).
COMMENTS: (1) A panel of three arbitrators got it wrong. (2) Cvejic was smart and did not sit on his rights. "Within about an hour of the call [whereby the arbitration panel set a new deadline for defendant to pay the fees], Cvejic’s counsel wrote the panel to say Cvejic was withdrawing from the arbitration under section 1281.98."
See previous posts about § 1281.98 dated 8/1/22, 12/11/22, 1/2/23, 3/21/23.
Nonsignatories: Second Dist., Div. 7 Holds Ford Motor Company Cannot Compel Arbitration Under Dealership Contract
Second District, Div. 7 Sides With Second Dist., Div. 8, Rejects Reasoning In Third District Case.
Rejecting equitable estoppel and third-party beneficiary theories, the Court of Appeal holds that Ford Motor Company cannot piggyback on to the arbitration provision in a dealership contract, and thus Ford is unable to compel arbitration with the buyer of its vehicle. The plaintiff's claim for breach of express warranty against Ford was not based on or intertwined with the dealership's contract with the buyer. In fact, the dealership contract provided it offered no express manufacturer's warranties, though the manufacturer, Ford, could do so. Rosanna Montemayor et al. v. Ford Motor Company, B20477 (2/7 6/26/23) (Feuer, Perluss, Escalante).
The opinion is in line with the reasoning in the Ford Motor Warranty Cases, 89 Cal.App.5th 1324 (2023) [see my 5/3/23 post] and at odds with the reasoning in Felisilda v. FCA US LLC , 53 Cal.App.5th 486 (2020) [see my 8/29/2020 post].
Arbitration, Vacatur: California Supreme Court Rules 100-Day Deadline Is Not Jurisdictional And Equitable Tolling/Estoppel Could Apply
Missing The 100-Day Deadline For Seeking Vacatur Of An Arbitration Award Was Not The End Of The Story Here.
It is not possible to improve on the California Supreme Court's summary of the case and its holding:
"Law Finance Group, LLC, prevailed in an arbitration against Sarah Plott Key and filed a petition to confirm the award. Key filed a response seeking vacatur of the award, but she did so outside the 100-day deadline prescribed by Code of Civil Procedure section 1288.2. The primary questions now before us are whether, as the Court of Appeal held, this 100-day deadline is jurisdictional and, if not, whether the deadline is subject to the equitable doctrines of tolling and estoppel. We hold that the section 1288.2 deadline neither is jurisdictional nor otherwise precludes equitable tolling or estoppel. We remand for the Court of Appeal to determine in the first instance whether Key is entitled to equitable relief from the deadline." Law Finance Group, LLC v. Key, S270798 (S.Ct. 6/26/23).
Justice Leondra R. Kruger authored the opinion of the court.
Arbitration, Discovery: A “Hearing” Subpoena That Is Functionally A Discovery Subpoena Is Improper In Arbitration
The Court Of Appeal Chose Substance Over Form.
The subpoena provisions of the California Arbitration Act do not give an arbitrator the power to issue “prehearing discovery subpoenas.” Aixtron, Inc. v. Veeco Instruments, Inc., 52 Cal.App.5th 360 (2020).
Tim McConnell v. Advantest America, Inc., D080532 (4/1 filed 5/4/23 pub. 6/15/23) (Do, Huffman, O'Rourke) involves a variation of the facts in Aixtron leading to the same result. In the McConnell matter, an arbitrator issued a hearing subpoena requiring McConnell and other third-parties to produce electronic communications at a hearing some 12 months before the hearing scheduled on the merits in the arbitration. At the merits hearing, the nonparties would be summoned to appear and testify. Provisions were also made allowing the producing party to directly upload documents for the requesting party, a procedure in which the arbitrator did not need to be directly involved. The arbitrator also made a finding that the third parties who were the target of the hearing subpoena "are likely to have discoverable information." (italics added in the Court of Appeal opinion).
"Under the specific facts of this case" the Court of Appeal agreed with the third parties that the subpoena was improper, reversing the superior court judge who had found the subpoena proper. The workaround of subpoenaing the documents to a "hearing" was not successful, because under the specific facts, the subpoena was a discovery subpoena, whatever the label. "If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck."
COMMENT: The result should have been different if the subpoena had been carefully tailored to preserve evidence, rather than broadly to find discoverable information.
Parties in California can incorporate by reference in to their arbitration agreement the broad discovery provisions of the Code of Civil Procedure: "Section 1283.1 – Provisions of section 1283.05 deemed incorporated into agreement. (a) All of the provisions of Section 1283.05 shall be conclusively deemed to be incorporated into, made a part of, and shall be applicable to, every agreement to arbitrate any dispute, controversy, or issue arising out of or resulting from any injury to, or death of, a person caused by the wrongful act or neglect of another. (b) Only if the parties by their agreement so provide, may the provisions of Section 1283.05 be incorporated into, made a part of, or made applicable to, any other arbitration agreement." However, in cases that do not involve injury to a person or death, one party often wants more discovery than its opponent. And if there is no agreement, the default position of the Code of Civil Procedure is to limit third-party discovery.
PAGA: Fifth District Affirms Denial Of Motion To Compel Arbitration Because Blanket Waiver Of PAGA Claims Is Unenforceable
Agreement Was Not Ambiguous.
The court explained in Duran v. Employbridge Holding Company, F084167 (5th Dist. filed 4/27/23 pub. 5/30/23) (Franson, Hill, Smith) that the provision "claims under PAGA . . . are not arbitrable under this Agreement" is not ambiguous. "It is not objectively reasonable to interpret the phrase 'claims under PAGA' to include some PAGA claims while excluding others. Thus, the carve-out provision excludes all the PAGA claims from the agreement to arbitrate."
While the law in this area remains somewhat in flux, it appears that the rule is that an individual plaintiff's claim may be arbitrated, and under California law, as interpreted by California's courts, the PAGA plaintiff still has standing to pursue representative claims affecting other individuals in court. The standing issue is before the California Supreme Court.
Public Injunctive Relief: First District Div. 1 Holds McGill Rule Remains The Law In California
McGill v. CitiBank Held An Arbitration Agreement Is Invalid And Unenforceable If It Waives A Party's Statutory Right To Seek Public Injunctive Relief.
Ring sells home security and smart home devices. Brandon Jack and others sued Ring, requesting injunctive relief to require Ring to prominently disclose certain things to consumers. Ring moved to compel arbitration, lost its motion, and appealed. Affirmed. Jack v. Ring LLC, A165103, A165386 (1/2 5/25/23) (Miller, Richman, Markman). McGill v. CitiBank, 2 Cal. 5th 945 (2017), is still good California law.
COMMENT: See our sidebar category Arbitration: Public Injunctive Relief, for other posts on the case.