Arbitration, Award: Arbitrator Awards $175M To Monster Energy And Orange Bang
Los Angeles Arbitrator Awards $175M Plus Attorney's Fees Plus Royalty.
Daily Journal Staff Writer Federico Lo Giudice reported the award on April 7, 2022 in an article entitled, "Arbitrator awards $175M to Monster in energy drink dispute." The arbitrator is Bruce A. Isaacs. The law firm representing the successful parties Monster Energy Co. and Orange Bang is Hueston Hennigan LLP. The award also is reported to include an additional $10M in attorney's fees, and a 5% royalty on future drinks sold.
Next step? Presumably Monster Energy and Orange Bang will move to confirm the monster award, and Vital Pharmaceuticals will oppose confirmation, arguing that the award is monstrous.
Arbitration Costs: Court Has Jurisdiction To Lift Stay On Litigation If Party In Arbitration Is Indigent
The Problem To Be Solved Is How To Achieve Equal Access To Justice.
"Does a trial court that granted a defendant’s petition to compel arbitration have jurisdiction to lift the stay of trial court proceedings where a plaintiff demonstrates financial inability to pay the anticipated arbitration costs? If so, may the court require defendant either to pay plaintiff’s share of arbitration costs or to waive the right to arbitration? We answer both questions in the affirmative . . . " Gerald Aronow v. Superior Court of San Francisco (Respondent); Emergent LLP, et al (Real Parties in Interest), No. A162662 (1/4 3/28/22) (Ross, Streeter, Brown).
The problem presented in Aronow occurs when a party to an arbitration cannot afford to pay for the arbitration. In this case, Aronow sued his former attorneys for legal malpractice. They responded by compelling arbitration and staying legal proceedings. Aronow sought to lift the stay, arguing he was in forma pauperis. The trial court, noting that authority was divided over whether it had jurisdiction to remove the stay, did not do so, and certified the question to the Court of Appeal. The arbitration statutes do not address the scope of jurisdiction the trial judge has to terminate a stay on arbitration because of a party's failure to pay.
The Court of Appeal in Aronow takes the position that, in the case of an indigent party, the trial court should give the party seeking arbitration the choice of paying plaintiff's share of costs or waiving the right to arbitration. Otherwise, a person like Aronow who claims to be without financial resources would not have access to justice and would be unable to air his grievances.
We note (as did the opinion), that there are numerous instances in which the courts waive fees for an indigent party. Examples include filing fees, court reporter fees, jury fees, fees for a court ordered reference, and bonds. What is different in the case of private arbitration is that there is no way to compel the private arbitrator to waive fees. So instead, the court in Aronow gives the party seeking arbitration the choice of paying fees or waiving arbitration.
Is this inconsistent with requirements in the California and Federal Arbitration Acts that courts must allow arbitrations to be had according to the terms of the arbitration agreement? Depends on how one interprets "had." If an arbitration is had when a claim to arbitrate is filed, and then it does not proceed in normal fashion because a party cannot pay, the court can conclude that an arbitration has been had.
In Aronow, the court provides some help to the party seeking arbitration, Emergent, for it recognizes that limited discovery into the financial condition of may be appropriate. If limited discovery into financial condition takes place, the court assures Emergent that it will not waive its right to arbitrate. Such discovery should occur early, before arbitration is compelled (well, not in this case). Also, the person claiming inability to pay may be able to establish financial condition with a declaration, exhibits, or a limited evidentiary hearing.
Arbitration, Discovery, Appealability: In An Uninsured Motorist Arbitration, The Only Way To Challenge A Discovery Order Before Judgment Is With A Writ
A Case Of First Impression.
Unless you practice in this area, you may not know that in an uninsured motorist arbitration between the motorist with uninsured motorist coverage and her insurance company, discovery disputes are addressed to the court, not to the arbitrator. State Farm Mutual Automobile Insurance Company v. Cora Robinson, A158467 (1/1 3/14/22) (Humes, Margulies, Banke). "The question of first impression here is whether trial court discovery orders in these proceedings are reviewable on appeal from a judgment confirming the arbitration award. We hold that they are not."
The bases for vacating a judgment are found in California Code of Civ. Proc. § 1286.2 (vacatur). And unhappiness with the trial judge's discovery order is not among the bases. Here, the insured argued that 1286.2(a)(4) provided a reason for vacatur. That section allows vacatur when the arbitrator exceeded the arbitrator's power, and the award cannot be corrected without affecting the merits of the decision. However, the insured's complaint here was not addressed to the arbitrator, but rather to the judge's discovery order. So there was no statutory route for vacating the arbitrator's decision.
The insured alternatively argued that her appeal should be considered as a writ. But that was not possible, once a judgment had already been rendered.
COMMENT: Suppose the arbitrator, rather than the judge, had issued a discovery order, as arbitrators routinely do in other types of proceedings. How easy would it be to attack the arbitrator's order in an appeal of a judgment confirming the award? Not easy. The arbitrator's discovery order would be scrutinized under the same standard as the award, and awards are not set aside just because the arbitrator makes a mistake of law or fact.
Arbitration, Agents: Residential Care Facility Failed To Establish That Father Was Bound By Son’s Signature To Arbitrate
Based On Generally Applied Principles Of Agency, The Care Facility Failed To Establish Son Acted As Father's Agent.
An elder care facility argued that aged father, who died of severe sunstroke while in care of facility, was bound to arbitrate by son's signature on Residency Agreement. The basic problem was that, though it was uncontested that the son signed the Residency Agreement with the arbitration provision, the elder care facility failed to establish that the son was acting as an agent for his father. Agency is ordinarily established by the words and acts of the principal, not the agent. And here, there was no power of attorney, and no evidence that the father, who had mild cognitive problems, had given authority to the son to enter into a binding arbitration agreement. The signature block did not show the capacity in which the son was signing. And the representative of the care facility did not discuss the Residency Agreement with the father. So the trial court's order denying a petition to compel arbitration was affirmed. Rogers v. Roseville SH, LLC, et al., No. C089561 (3d Dist. 3/4/22) (Mauro, Robie, Krause).
Mediation, Confidentiality, Settlement Agreement: CCA 1/2 Agrees Plaintiff Suing Doctor Failed To Perform Settlement Agreement After Mediation
Including Confidentiality Provision In Settlement Of Malpractice Lawsuit Did Not Violate Public Policy, Because Provision Did Not Prevent Reporting To State Medical Board.
In Pappas v. Chang and Chang v. Pappas, Nos. A159792 and A160293 (1/2 3/3/22) (Richman, Miller; Kline, conc.), the Court of Appeal affirms the trial court in separate consolidated appeals. In Pappas v. Chang, the court affirms the trial court's denial of Pappas's efforts to enforce a settlement agreement, agreeing that Pappas failed to perform her part of a bargain by executing a confidentiality agreement in return for payment to her of $100,000. And in Chang v. Pappas, the Court of Appeal affirms the trial court's denial of Chang's request to recover attorneys fees, based on Pappas's denial of two requests for admission.
Helena Pappas sued Dr. Carolyn Chang, a SF plastic surgeon, for malpractice, and settled in mediation for payment to her of $100,000. However, the settlement agreement provide for execution of further settlement documents to include a waiver of Civil Code § 1542, and a confidentiality provision. Chang was to pay $70,000.01, and her carrier was to pay $29,999.99. Attorneys, judges, and mediators will know that $30,000 is a magic number in malpractice actions, because settlements greater than $30K trigger a requirement to report to the California Medical Board. Pappas believed Chang was trying to use confidentiality to prevent her from reporting to the Medical Board, and that would have violated Business and Professions Code §§ 2220.7 and 801.01. Pappas refused to executed a confidentiality provision unless paid an additional $425,000.
The Court of Appeal reasoned that the way the settlement agreement was written, a confidentiality provision would not have prevented reporting to the Medical Board; that the settlement amount was $100,000; and that as worded, the settlement agreement did not hinder legal reporting obligations. Therefore, the settlement agreement agreement was enforceable, and Pappas failed to perform her part, so she could not enforce the settlement agreement. Nor was the confidentiality provision severable, since it was agreed to and material.
Because the requests for admission went to ultimate questions and Pappas denied them in good faith, Chang was properly denied attorney's fees.
Justice Kline concurred, because in the end, the law had not been stymied. But he wrote separately, "because I feel my colleagues have not adequately described Chang’s and her lawyer’s repeated attempts to violate the Business and Professions Code and the whitewashing of those efforts by the trial judge."
BONUS: "Blepharoplasty (Greek: blepharon, "eyelid" + plassein "to form") is the plastic surgery operation for correcting defects, deformities, and disfigurations of the eyelids; and for aesthetically modifying the eye region of the face." (Wikipdedia).
COMMENT: Pappas might have spared some trouble by signing the confidentiality agreement, and receiving the $100,000. Perhaps she felt that she achieved some measure of victory by making her unhappiness with Chang a matter of public record in a published opinion. The concurring opinion gives her some measure of vindication. At the same time, it is now a matter of public record that Pappas may be unhappy about the outcome of her cosmetic surgery.
Miscellaneous: We Just Exceeded 1000 Posts On This Blog
Blogging About California Mediation And Arbitration Since 2012.
I started this blog on California Mediation And Arbitration in 2012. I just noticed that the number of posts recently passed 1000. That's about 100 per year.
Readers may have noticed that the formatting of this blog is similar to that of California Attorneys Fees. That's a blog started by my colleague Mike Hensley and me in 2008. Both blogs share in common that they are "hard law" no-frills blogs, and that we have not included advertising.