Arbitration, Nonsignatories, Automobiles: Third District Affirms Confirmation Of Arbitrator’s Award In Favor Of Nonsignatory
The Court Distinguishes Or Refuses To Follow Similar Cases Involving Nonsignatories.
The Court affirms the confirmation of an arbitrator's award in favor of a nonsignatory auto manufacturer in Dina C. Felisilda et al., v. FCA US LLC, No. C086043 (3rd Dist. 7/24/20) (Hoch, Robie, Murray) (filed 7/24, certified for publication 8/14/20). "The Felisildas' claim against [the manufacturer] directly relates to the condition of the vehicle that they allege to have violated warranties they received as a consequence of the sales contract [with the dealer]. Because the Felisildas expressly agreed to arbitrate claims arising out of the condition of the vehicle — even against third party nonsignatories to the sales contract — they are estopped from refusing to arbitrate their claim against [the manufacturer]."
Arbitration, Nonsignatories: Third Party Beneficiary And Estoppel Arguments Fail To Convince First District Div. 3 That Nonsignatories Can Arbitrate
But Arbitration Is Enforceable Between Employee And His Employer (Except As To PAGA Claims).
Enforcing an arbitration clause can sometimes become a sticky wicket, glue pot, or dog's breakfast when the party seeking enforcement must rely on more than one document. Such was the case for the defendants seeking to compel arbitration in Thomas Jarboe v. Hanlees Auto Group, et al., No. A156411 (4/3 8/14/20) (Siggins, Fujisaki, Jackson).
Plaintiff Jarboe sued individually and on behalf of a putative class Hanlees Auto Group (Hanlees), 12 affiliated dealerships, and three individual defendants for various labor claims. Defendants moved to arbitrate, and the trial court required arbitration as to 11 causes of action against DKD of Davis, denied the motion as to the 12th PAGA cause of action, and denied the motion as to the affiliate and individual defendants. The affiliates and individuals were nonsignatories.
When hired, Jarboe signed two agreements with arbitration provisions. The first, an application, contained an arbitration clause that also referred to other companies/employers. The second, an Employment Agreement, was between DKD of Davis, named as "Company" and Jarboe. It included an integration clause and superseded other agreements. Because the affiliates and individuals were non-signatories, the second agreement superseded the first, and the second agreement defined "Company" as Employer, the Court of Appeal was not convinced that nonsignatory individuals and affiliates could depend on the agreement to arbitrate.
Nor was the evidence sufficient to convince the Court that the affiliates and individuals were expressly intended to be third-party beneficiaries of the integrated and superseding Employment Agreement.
Sometimes nonsignatories can rely on an equitable estoppel theory to compel arbitration when the plaintiff relies on an agreement with an arbitration clause to state claims. But here, the key document, the Employment Agreement between only the Employee and one company, DKD of Davis, was not so clearly factually bound up with the claims, including class action claims, that the plaintiff stated against the individuals and affiliates.
Comment. Defendants may have wanted to require arbitration of any and all claims against any of the affiliates, and the individuals. However, the Application and Employment Agreement should have been drafted very carefully and consistently to do so, and the integration clause and superseding clause created a landmine in this case.
Arbitration, Enforceability: Fourth District, Div. 3 Holds That Temporary Conservators Could Not Be Held To Arbitrate
Nursing Homes And Senior Living Facilities Continue To Generate Enforcement Of Arbitration Cases.
The Court of Appeal affirms denial of a motion to compel arbitration in Diane Holley v. Silverado Senior Living Management, Inc., et al, No. G058576 (4/3 8/7/20) (Moore, Bedsworth, Aronson).
Holley brought a suit individually, and as successor in interest against defendants operating a senior living facility for elder abuse and neglect, negligence, and wrongful death. Defendants sought, unsuccessfully, to compel arbitration, even though Holley, as a temporary conservator, had signed an arbitration agreement on behalf of Elizabeth Holley. Or did she sign it on behalf of Elizabeth?
The Court of Appeal explains that a temporary conservator could not make long-term decisions on behalf of Elizabeth, nor had there been an adjudication of Elizabeth's mental capacity. Nor was there any evidence that Diane Holley intended to be individually bound by the arbitration agreement. So Diane Holley's individual claims, and claims as a successor can be litigated.
Comment: The outcome could have been different if the plaintiff had (a) been a permanent conservator; or (b) Elizabeth Holley had been adjudicated to be mentally incompetent.
Mediation, Foreclosure: 9th Circuit Holds Nevada’s Foreclosure Mediation Rules Provide Exclusive Remedy
Purpose Of Nevada's Foreclosure Mediation Rules Is To Provide Expedited Proceeding For Loan Modifications.
The Court of Appeals holds in Tobler v. Sables (9th Cir. 8/4/20) (Collins, J.), that Nevada's Foreclosure Mediation Rules are the exclusive remedy under Nevada law for challenging a lender's conduct in the foreclosure mediation process. So a lawsuit brought by borrowers against the lender for tortious breaches of the implied covenant of good faith and fair dealing in the mediation process goes nowhere.
Two comments. First, under California state law, lawsuits for tortious breaches in the mediation process tend to be stillborn, because given California's strong rules protecting against the introduction into evidence of communications during mediation, there is no way to introduce evidence of wrongdoing.
Second, why is your blogger posting only now about a case decided on August 4? Blame it on our pandemic and a bit of distraction.
Videoconferencing: The Effective Use of Remote ADR — Tips From The Pros
Remote ADR Is An Effective Way To Resolve Disputes At A Time When COVID-19 Has Shuttered Courts And Delayed Legal Procedures.
The COVID-19 Task Force of the Orange County, California Bar and the ADR Section of the Bar jointly hosted a Zoom webinar on August 14, 2020 about the effective use of remote mediation. The panel discussion included the Hon. David Chaffee (ret.), the Hon. Franz Miller (ret.), and Jill Sperber, mediator/arbitrators who come from three major ADR providers: ADR Services, JAMS, and Judicate West. Our panel moderator was Darrell White, a director of the OC Bar, and a business litigator at Kimura, London & White LLP. As chair of the ADR section, I introduced the topic and our panel. Remote ADR continues to be a hot topic in California, five months after we began “sheltering in place”, and the webinar attracted over 150 participants.
Our panelists explained the obvious need for videoconferencing triggered by the public health crisis:
- Cases requiring a civil trial in Orange County are very unlikely to get to trial before 2021.
- Getting to trial may require a statutory preference (e.g. bumping up against the five year rule) or else stipulating to an expedited one-day jury trial.
- Juror response rates, once estimated at 80%, may now be around 40%.
- Older persons are likely to be more reluctant to serve as jurors.
- Courthouse logistics are inhospitable, with limitations on the number of people who can ride in an elevator, and limitations on seating in courtrooms and jury rooms.
- The case inventory of individual judges has greatly increased. When the COVID-19 crisis subsides, inventories will increase, as cases such as unlawful detainers and foreclosures move forward.
Those new pressures placed on a judicial system already suffering from a lack of resources mean that, for many lawyers and litigants, remote ADR will be the best and only way to resolve disputes.
Here are some takeaways:
While generally preferring face-to-face meetings, the panelists have been able to make effective use of videoconferencing to resolve cases.
- Though not the exclusive platform, Zoom is the preferred platform of the ADR providers, attorneys, and clients.
- For many parties, remote mediation offers the comfort of their surroundings, and costs and time efficiencies, as there is no need for travel (or a parking fee). It is especially helpful for bringing participants to the table from out of state.
- The added comfort, and cost and time saving of remote ADR may, in some cases, make a case harder to settle, because the ease of videoconferencing may mean that parties and attorneys invest less time, money, and effort into the process than would be the case in a face-to-face meeting.
- Physical distance can be helpful in highly emotional cases, and therefore videoconferencing may be well-suited for employment, sexual harassment, and partnership disputes.
- Always have a backup communication plan in case the videoconferencing platform fails.
- Test the platform with attorneys before videoconferencing.
- While videoconferencing can result in a signed settlement agreement, using services such as DocuSign, often the outcome will be agreed-to deal points, followed up with a notice of settlement filed by the attorneys, and the court’s order to show cause why the matter should not be dismissed after a reasonable amount of time to finalize a settlement.
- Mediators can treat videoconference mediations like ordinary mediations, using the videoconference platform to hold joint sessions and effectively caucus in breakout rooms. And parties and attorneys should treat videoconference mediations like ordinary mediations, taking them seriously, and being thoroughly prepared.
Bottom line: remote ADR is a good alternative to face-to-face meetings. Just as CourtCall initially faced resistance but came to be widely accepted, we expect that remote ADR will grow in acceptance.
Arbitration, PAGA, Delegation: Employees Who Entered Into Agreement To Arbitrate Before They Brought PAGA Representative Action Could Not Bind State To Arbitrate
How The Issue Presented Was Framed Made All The Difference.
View of a frame-maker's workshop circa 1900. Wikipedia article "Picture frame."
As putative members of the so-called Guerra class action, Bautista and Garcia signed settlement agreements containing an arbitration clause and waiver of representative actions in 2014. The Guerra action did not include a PAGA claim. In 2018, Bautista and Garcia brought PAGA representative actions against their employer. The trial judge denied the employer's motion to compel arbitration, and it appealed. Bautista v. Fantasy Activewear, Inc., et al, B297070 (2/1 7/24/20) (Chaney, Rothschild, Bendix).
Under Iskanian v. CLS Transportation Los Angeles, LLC ,59 Cal.4th 348 (2014), PAGA claims are representative actions brought by an employee on behalf of the state, akin to qui tam actions. Because the state (here, the Labor and Workforce Development Agency) is the real party in interest, but not a signatory to the arbitration agreement, PAGA claims generally are not arbitrated.
Here, the defendant/appellant employer argued the 2014 settlement agreements incorporated JAMS rules, and the JAMS rules delegated the issue of arbitrability to the arbitrator. In other words, the issue of arbitrability was not for the court to decide.
Disagreeing with the employer's argument, the Court of Appeal affirmed the trial court's order denying the motion to arbitrate. The Court framed the issue: "The question here is not whether a PAGA representative action may ever be arbitrable or who is empowered in any particular circumstance to determine arbitrability, but rather whether an arbitration agreement binds a real party in interest that never agreed to arbitrate." And when Bautista and Garcia entered into settlement agreements with arbitration clauses in 2014, they were not acting as agents of the state, nor was the state a signatory. So Bautista and Garcia could not be bound to arbitrate as proxies of the state when they brought PAGA claims in 2018.
COMMENT: Deciding the issue of arbitrability can be delegated to the arbitrator. The teaching of this case and other California cases is "that arbitration agreements entered into before a plaintiff has been deputized for purposes of a PAGA representative action is [sic] not enforceable for purposes of the PAGA representative action." In other words, the existence of an arbitration agreement precedes even a determination of who decides arbitrability.