Arbitration, Health Care: Wife’s Employment Under CalPERS Agreement Means Husband Is Bound By Kaiser Arbitration Requirement
Because Enrollment Process Was Handled By CalPERS, Statutory Requirements That Notice Of Arbitration Be Conspicuous in a Health Plan Did Not Apply.
Edward William Kuntz's wife, children, and estate sued Kaiser for Elder Abuse and other claims, and Kaiser move successfully to compel arbitration of the Elder Abuse claim and stay the other claims. This outcome was upheld by the Court of Appeals. Edward William Kuntz et al. v. Kaiser Foundation Hospital, et al., C087967 (3d Dist. 4/12/21) (Murray, Robbie, Krause) (certified for partial publication).
The first two section of the opinion are unpublished and the third section is published.
In the first two sections, the court agrees that the decedent was enrolled in the Kaiser plan, though no enrollment form was produced. Mr. Kuntz was enrolled through his wife's This conclusion was based on Kaiser enrollment record keeping and a declaration, evidence that apparently was not objected to. Furthermore, the court could find no legal requirement that enrollment could only be proven through an enrollment application form.
Mr. Kuntz was enrolled as a member of the Kaiser Health Plan, through his wife’s employment under a California Public Employees’ Retirement System (CalPERS) Group Coverage Agreement between Health Plan and the Board of Administration of CalPERS. The enrollment process was administered by CalPERS.
In the third section, the court addresses whether Health and Safety Code § 1361.1 requirements apply to CalPERS enrollments. Section 1361.1 requires that the enrollment form signed by the subscriber contain a prominently displayed arbitration notice, and such a notice did not exist here. However, the court agreed that Government Code § 22869 applied to CalPERS, which handled the enrollment process, and as a consequence, the materials disseminated by CalPERS were automatically deemed to satisfy the requirements of § 1361.1. Read the case and code sections, lest this be opaque.
Arbitration, Enforceability, Delegation: Ninth Circuit Holds Collective Bargaining Agreement As Drafted Did Not Cover Statutory Claims
Ninth Circuit Agrees With District Court That Labor Dispute Was Not Arbitrable And That Arbitrability Was Properly Decided By The Court.
In Tramon Wilson-Davis v. SSP America, et al., B306781 (2/3 4/9/21) (Edmon, Lavin, Egerton), a dishwasher sued his employer, individually and behalf of a putative class, for wage and hour violations. A collective bargaining agreement with an arbitration provision existed between Wilson-Davis's union and his employer, so the employer moved to compel arbitration. The district court held that the dispute was not arbitrable, and the Ninth Circuit affirmed, in a decision originally filed on 3/11/21 and later certified for publication.
The motion to compel arbitration failed because: "The collective bargaining agreement … provides for arbitration of claims arising under the agreement, but it does not waive the right to a judicial forum for claims based on statutes." Also, the parties did not "clearly and unmistakably" delegate to an arbitrator a determination about whether the matter was arbitrable.
Reviews: Our Blogger’s Review Of New Book About Gov. Jerry Brown Is Republished Here
The Book Is Journalist Jim Newton's Man of Tomorrow: The Relentless Life of Jerry Brown.
For those of you who enjoy reading about California politics and politicians, I've written a review of Jim Newton's new book about former Governor Jerry Brown. The review, which appears in California Litigation, Vol. 34, No. 1 (2021), is republished here with the permission of the California Lawyers Association and its publication, California Litigation. The review is republished with the disclaimer that I alone am responsible for any opinions expressed therein.
Mediation, Attendance, And Settlement: Parties Failing To Attend Probate Court-Ordered Mediation Could Not Complain About Settlement Reached By Participating Parties And Judge Changes His Mind
Justice Tangeman, Who Concurred Before, Now Dissents After Rehearing.
We posted on February 2, 2021 about Breslin v. Breslin, B301382 (2/6 1/26/21) (Gilbert, Yegan, Tangeman), an opinion authored by Justice Gilbert in which Justices Yegan and Tangeman concurred. The case held the party receiving notice of a mediation ordered by the probate court and failing to participate in court-ordered mediation is bound by the result.
Justice Tangeman, who concurred, has now dissented, having changed his position after a rehearing.
Justice Tangeman explains his position: "A charitable gift must be carried into effect if it 'can possibly be made good.' (Estate of Tarrant (1951) 38 Cal.2d 42, 46.) The majority’s newfound requirement that a party participate in mediation before it can inherit ignores this command. It will reduce the number of gifts that 'can possibly be made good' by encouraging parties to send out mediation notices whenever they desire to eliminate gifts to beneficiaries that don’t appear—for whatever reason."
Arbitration, Jurisdiction, Discovery: Ninth Circuit Determines How Amount Requirement In Diversity Jurisdiction Applies To Subpoenas Issued By Arbitrators
The Majority Looks At The Amount-In-Controversy In The Underlying Dispute, And The Concurring Opinions Looks At The Amount Involved In The Discovery Dispute.
The panel in Maine Community Health Options v. Albertsons Companies, Inc., No. 20-35931 (9th Cir. 3/31/21) (Hurwitz, Fletcher; Watford concurring) determines how "the amount-in-controversy requirement in 28 U.S.C. § 1332(a) is satisfied in an action under Section 7 of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 7, seeking enforcement of a third-party subpoena issued by arbitrators." Let's unpack that question.
Section 7 of the FAA authorizes district courts to enforce third-party arbitration subpoenas. However, merely invoking the FAA to enforce discovery does not create federal jurisdiction — one still needs an independent basis for federal jurisdiction. One basis for federal jurisdiction is diversity jurisdiction where the parties are citizens of different states and the amount-in-controversy exceeds $75,000. 28 U.S.C. § 1332(a).
How does one apply these seemingly simple rules to a third-party subpoena issued by arbitrators to obtain requested documents, when the company requesting documents and the company producing documents are citizens of different states? Does one look at the amount at stake in the discovery request, or the amount at stake in the underlying arbitration that generated the third-party subpoena? And does one focus on the benefit to the plaintiff or the detriment to the defendant in a discovery dispute in order to determine amount-in-controversy?
In Maine Community Health Options, an overbilling dispute concerning Maine Community and Navritus Health Solutions, LLC, a pharmacy benefits manager, over Navritus's billings, the underlying dispute between those two companies involved potentially $17 million, clearly far above the amount-in-controversy requirement for diversity jurisdiction. But that's not how the majority opinion analyzed the issue. Instead, the majority focused on the amount involved in the discovery dispute between Maine Community, and Albertsons, which was the third party subpoenaed to produce the documents. In a way, that makes sense, because Maine Community filed its action in federal court to enforce the subpoena against Albertsons, invoking § 7, but the underlying dispute was between Maine Community and Navritus, and that dispute was in arbitration. Hence, the parties to the federal action are only Maine Community and the third party it subpoenaed. And typically, one would look at a complaint in federal court rather than a claim in arbitration to determine amount-in-controversy.
Writing for the majority, Judge Hurwitz explains "we agree with the Second Circuit that the amount-in -controversy in a Section 7 enforcement action can be measured by either the benefit to the plaintiff or the detriment to the defendant that would result from enforcement of the subpoena." In this case, Abertsons claimed the cost to it of production was $1,400, i.e., far below the jurisdictional amount-in-controversy requirement. But in this case, Maine Community provided a good faith allegation that the value of the subpoenaed information to it exceeded $75,000, and Albertsons failed to show "to a legal certainty" that the claim was less than the jurisdictional amount.
Concurring, Judge Watford reached the same outcome by a very different route. He would have looked at the amount-in controversy in the underlying arbitration — $17 million. If the court could have had diversity jurisdiction in the original dispute, then it could have approved third party subpoenas against third parties. So Judge Watford would ask whether the court would have jurisdiction over the underlying dispute. And if it wouldn't have had jurisdiction, then the subpoena wouldn't issue.
COMMENT: Under the majority opinion, one needs here to look at the amount-in-controversy in the action filed in federal court between the parties to the discovery. Under the concurring opinion, one needs to look at the amount-in-controversy in the underlying arbitration. Is it really easier to do one rather than the other?
International Arbitration, Discovery: SCOTUS Grants Review In Servotronics, Inc. v. Rolls-Royce PLC
Can US Federal Courts Allow Discovery For Private International Arbitrations?
As set forth in SCOTUSBlog, this is the issue before the Supreme Court in Servotronics, Inc. v. Rolls-Royce PLC: "Whether the discretion granted to district courts in 28 U.S.C. § 1782(a) to render assistance in gathering evidence for use in 'a foreign or international tribunal' encompasses private commercial arbitral tribunals, as the U.S. Courts of Appeals for the 4th and 6th Circuits have held, or excludes such tribunals without expressing an exclusionary intent, as the U.S. Courts of Appeals for the 2nd, 5th and, in the case below, the 7th Circuit, have held."
The key issue is whether private international arbitration qualifies as "a foreign or international tribunal", in which case discovery could be permitted in U.S. district courts.
John Elwood, posting on March 18, 2021 for SCOTUSBlog, writes: "Servotronics notes that until the provision was revised in 1964, it applied to 'any judicial proceeding pending in any court in a foreign country.' Servotronics contends that the change in wording suggests Congress intended to include quasi-judicial proceedings such as arbitral proceedings. We’ll have a better idea what the Supreme Court thinks on Monday." That was written before the Supreme Court granted cert on March 22, 2021.
On March 22, 2021, Paul Weiss Rifkind Wharton & Garrison LLP posted about Servotronics on Lexology. The post makes the point that, regardless of how the case is decided, issues are likely to remain regarding the interpretation of 1782: "First, even after the Supreme Court rules in Servotronics, we may not know whether an international arbitration seated in the United States qualifies as a 'foreign or international tribunal' under Section 1782. In addition, regardless of the outcome, courts may continue to find that investor-state arbitrations qualify for Section 1782 discovery."