Miscellaneous: Mediating Canine Clashes And Doggy Duals
For Those Who Do Have A Dog In The Fight . . .
I recently saw the following rule posted at the entrance to a dog park. It seemed like a constructive way to address dog and dog owner transgressions:
Oil painting: a rabid dog; by J. T. Nettleship. Wellcome Collection.
Arbitration, Employment, FAA: 9th Circuit Holds Private Arb Agreement Does Not Bind Labor Sec In Enforcement Action Against Parties To Their Own Arbitration Agreement
Liberal Arbitration Policy Of The FAA Doesn't Mean Nonparties Can Be Compelled To Arbitrate.
The question in Walsh v. Arizona Logistics, Inc. and Larry Browne, No. 20-15765 (9th Cir. 18/21/2021) (Hunsaker, Fletcher, Miller) is "whether a private arbitration agreement binds the Secretary of Labor when bringing a Fair Labor Standards Act (FLSA) enforcement action that seeks relief on behalf of one party to the arbitration agreement against the other party to the agreement." The district court answered nope, and the Court of Appeals affirmed.
Walsh is Martin J. Walsh, suing in his capacity as Secretary of Labor, to enforce labor laws against Larry Browne and his companies Arizona Logistics and Parts Authority Arizona, an underlying issue being whether the employees were improperly classified as independent contractors. The workers (that is a neutral term) had arbitration agreements with Browne's companies. Defendants argued that, because the Labor Secretary's enforcement action was brought on behalf of the workers to obtain a monetary benefit for the workers, it was actually covered by the arbitration agreements between the employer and the workers.
The district court and the Ninth Circuit both relied on EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) to conclude that the government entity that brought the enforcement action and controlled the action was not bound by the private parties' arbitration agreements. Though the enforcement action under the FLSA results in financial benefits to individual plaintiffs, it is also for a public purpose, and does not only benefit the private parties.
COMMENT: Note the similarity in reasoning between this case and California's PAGA cases, which hold that a Private Attorney General Act of 2004 action brought by employees to enforce California's labor laws is not subject to arbitration. The reasoning in PAGA cases is that the claim really belongs to the State of California, which is not a party to the arbitration agreement, just as the US Department of Labor is not a party to the arbitration agreement. Yet the US Department of Labor enforcement action is also different than the PAGA claim. The difference is that the FLSA enforcement action is brought by the Department of Labor, whereas the PAGA claim is brought by employees for the benefit of the people of California, as well as the benefit of the employees. Evidently California legislators concluded that it would be more cost efficient, or at least politically prudent, to make use of private attorneys general, rather than appropriate more money to enforce the law.
Arbitration, Vacatur: Arbitrator’s Inappropriate Ex Parte Communications Result In Vacation Of Arbitration Award
Plaintiff/Appellant Did Not Need To Prove That Arbitrator's Ex Parte Communications Led To Adverse Award.
A rather unusual case, this. Joanna G. Grabowski, an in pro per plaintiff/appellant successfully vacated an adverse arbitration award in a malpractice arbitration she brought against Kaiser. Joanna G. Grabowski v. Kaiser Foundation Health Plan, Inc., et al, No. D076968 (4/1 5/10/21) (Guerrero, Benke, Do).
The Court of Appeal agreed that the arbitrator's ex parte communications with Kaiser's attorney were not ethical, and that the nature of the communications was such that a reasonable person could have concluded that the arbitrator was incapable of being impartial. Speaking with Kaiser's attorney ex parte, the arbitrator commiserated that this was a difficult case, and that Grabowski, who represented herself in pro per, couldn't effectively represent herself. "The arbitrator volunteered these comments to Kaiser’s counsel, ex parte, and they shared a hearty laugh about Grabowski’s perceived shortcomings as an advocate." Additionally the arbitrator failed to disclose two Kaiser matters in which the arbitrator was selected to arbitrate.
The disclosure standard is not whether disclosure would have changed the outcome, but whether a person could have reasonably concluded that the arbitrator could not be impartial, based on the ex parte communication and the failure to disclose prior involvement with Kaiser.
COMMENT: One might well ask how Grabowski knew about the ex parte communications, since she wasn't present when Kaiser's attorney spoke to the arbitrator. "Grabowski’s mother was recording the proceedings on her cell phone and had inadvertently left it going while she and Grabowski left the room." If the arbitrator had imagined that everything he said might be recorded, he might have been more careful.
Arbitration, Disclosures: Fourth District, Div. 3 Affirms Legal Principle, “You Snooze, You Lose.”
Oh, The Pain.
The appellant in Brian Alper et al. v. Pasquale Rotella, et al., G058088 (4/3 5/5/21) (Moore, Bedsworth, Aronson), sought to vacate an adverse arbitration award on the grounds that the arbitrator, who was in great pain and took Percocet to ease the pain during the arbitration proceeding, was so impaired that the arbitrator could not properly perceive the evidence and was unable to properly conduct the proceeding. The reason this argument was rejected was that the appellant sat on his rights. Such objections should be made within ten days of when the arbitrator is assigned or expeditiously upon learning of the problem, not after an award is rendered.
The trial court denied the petition to vacate on the grounds of forfeiture. In the words of Justice Moore, who penned the Court of Appeal opinion, "Absent the legal jargon, the term 'forfeiture' essentially means: 'You snooze, you lose.' We agree with the trial court."
Arbitration, Disclosures: Fourth Dist. Div. 3 Distinguishes Monster Energy Case And Concludes Arbitrator’s And JAMS’ Disclosures Were Sufficient
Disclosure Of Extent Of JAMS's "Business Relationship" With O'Melveny & Myers And Arbitrator's Ownership Interest In JAMS Were At Issue.
A former investment fund manager sued the investment funds and successfully compelled arbitration. Steven M. Speier v. The Advantage Fund, LLC, et al. G059216 (4/3 4/19/21) (Fybel, Bedsworth, Goethals). JAMS and the arbitrator made boilerplate CYA disclosures (as in Monster Energy Co. v. City Beverages, LLC), stating the neutral had an economic interest in the overall financial success of JAMS, and that the parties should assume one or more of the JAMS neutrals had arbitrated or mediated other dispute resolution proceedings with the parties, counsel, or insurers. The arbitrator further disclosed she had served as an arbitrator in other matters involving a party, lawyer for a party, or law firm for a party to the current arbitration. JAMS provided reports showing matters involving the arbitrator and Speier, Speier's arbitration counsel, and the Funds' arbitration counsel, O'Melveny & Myers. Unhappy with the outcome of the arbitration, Speier moved to vacate the award.
The Court of Appeal affirmed the judgment, concluding that a reasonable person aware of the facts would not entertain a doubt that the arbitrator could be impartial. Justice Fybel had to distinguish Monster Energy, as well as an opinion he earlier authored in Advantage Medical Services, LLC v. Hoffman.
Monster Energy. First, Monster Energy is a federal case that did not rely on California statute, Ethical Standards, or case law. Second, unlike the Monster Energy case, Speier, the party complaining about disclosures, not the Fund, had moved to arbitrate. And the repeat player in Monster Energy had been the party that wrote JAMS into its arbitration provisions, whereas in Speier, the repeat player was a law firm. Third, O'Melveny & Myers and Alston & Bird, the big law firms that appeared at the arbitration, had each had 245 matters with JAMS, which rather leveled the playing field.
Your blogger posted about Monster Energy on 10/23/19, and wrote an article about it for the Daily Journal, "9th Circuit arbitrator disclosure ruling: In search of a solution to a problem it's unable to solve."
Advantage Medical Services, LLC v. Hoffman. Speier relied on this case to argue that, even if the arbitrator was not aware of her ownership interest in JAMS or JAMS' business history with O'Melveny & Myers, she wasn't excused from disclosing it. Advantage was a case in which the arbitrator allowed plaintiff's request to permit its insurance representative to attend the arbitration, without requiring the plaintiff to disclose to the defendants or the arbitrator the identity of the representative or the insurer. However, the arbitrator and his law firm's relationship with the insurer was such that Justice Fybel explained that the arbitrator had a duty to inquire and to disclose, because a person with knowledge of the relationships could reasonably doubt the impartiality of the arbitrator. But Speier was a different case, because even if a party knew about the arbitrator's small financial interest or O'Melveny & Myers' many matters, under the circumstances here, it would not have made any difference.
COMMENT: This case demonstrates how fact-specific disclosure issues can be. This case also demonstrates that Monster Energy need not be persuasive in state court whenever its facts can be readily distinguished. Finally, Justice Fybel, who authored the Speier and the Advantage opinions, is a co-author of the Cal. Jud. Conduct Handbook. Justice Fybel is thoroughly cognizant of the important of disqualification and disclosure issues to the integrity of decisions and the decision-making process.
Arbitration, Waiver, Employment, Civil Rights: Ninth Circuit Allows Statutory Claims, Including Civil Rights And Employment Discrimination, To Be Arbitrated
Zoller v. GCA Advisors Lays Out Rules For Determining Whether Statutory Claims Can Be Arbitrated.
Zoller v. GCA Advisors, No. 20-15595 (9th Cir. 4/14/21) (Wallace, Smith, Restani), reverses the district court's denial of defendants' motion to compel arbitration of statutory employment discrimination and civil rights claims.
Shannon Zoller, a corporate attorney turned investment banker, sued her former employer for contract claims, gender discrimination, denial of equal pay, and conspiracy to violate her civil rights. An agreement to arbitrate existed. The parties agreed to arbitrate some of the claims, but she refused to arbitrate her statutory claims. The district court agreed on the ground she did not knowingly waiver her right to pursue the statutory claims in court.
Judge Wallace, writing for the court, explains that if the parties agree to arbitrate, statutory claims will be arbitrated, unless a party can prove a congressional intent to prelude a waiver of judicial remedies. This put a burden of proof on Zoller and she could not carry that burden.
There is a proviso. Arbitration of Title VII claims for employment discrimination requires at least showing a knowing agreement to arbitrate employment disputes. Here, that was demonstrated by a number of documents that referred to employment and arbitration. Assuming, without deciding, that the "knowing waiver requirement remains good law", the appeal "is resolved on the arbitration agreement's clear language encompassing employment disputes and evidence that Zoller knowingly waived her right to a judicial forum to resolve her statutory claims."
COMMENTS: This is an impactful case, since it makes it clear that statutory claims, including civil rights and employment claims, may be subject to arbitration, and that a carefully drafted agreement will result in a knowing waiver of the employee's right to a judicial forum. In his 2017 book, Closing the Courthouse Door: How Your Constitutional Rights Became Unenforceable, Erwin Chemerinsky discussed how arbitration has made it more difficult to get into court to vindicate rights. Zoller is an example of that trend. All her claims will now be sent to arbitration — though it does not automatically follow that her rights will be unenforceable.