Arbitration, Class, Waiver, Construction: Third District Holds Plaintiff Only Waived Right To Bring Class Action Lawsuit, Not Class Arbitration
Court Of Appeal Reverses Order Denying Motion To Compel Arbitration Of Class Claim.
In an employment dispute, the trial court denied plaintiff' Garner's ability to pursue class action claims in arbitration, relying on "language in the arbitration agreement stating that Garner waived his right to participate in class action lawsuits." Chris Garner v. Inter-State Oil Company, C088374 (3rd Dist. 7/23/20) (Mauro, Robie, Duarte). Garner appealed.
One clause in the arbitration expressly provided for arbitration of class actions, i.e., "any and all claims arising out of or related to your employment that could be filed ina a court of law, including . . . class action . . . shall be submitted to final and binding arbitration . . ."
Therefore, respondent Inter-State Oil Company argued a second clause — the one relied on by the trial court — resulted in a waiver of the right to arbitrate a class action, because it provided that the employee "waived his right to 'participation in a civil class action lawsuit . . .'"
The Court of Appeal harmonized the two provisions in favor of the employee, pointing out the obvious: "Lawsuits generally refer to court actions." Therefore, the parties had agreed that the employee could arbitrate class actions, and also agreed that the employee could not litigate class action lawsuits in court.
The Court of Appeal concluded that both the employee's individual and class claims required arbitration.
Arbitration, Costs: Cost-Splitting Provision Did Not Prevent Appellant From Recovering Costs During And After Arbitration
Plaintiff's Request For Costs Was Made In Court After Plaintiff Beat Her Section 998 Offer During Arbitration.
Plaintiff/Appellant Helene Storm prevailed in arbitration over an uninsured motorist claim against an insurance company. Afterwards, she petitioned the trial court to confirm the award in her favor, and to award arbitration and post-arbitration costs as a prevailing party under sections 998 and 1293.2, because she did better than her 998 settlement offer in arbitration. The trial court denied her request for costs, because the arbitration agreement did not mention recovery of costs post-arbitration, and provided each side would split costs incurred during arbitration. Storm appealed. Helene Storm v. The Standard Fire Insurance Company, B299277 (2/4 7/2/20) (Willhite, Collins, Currey).
The Court of Appeal reasoned that an agreement to divide costs during the arbitration did not preclude the arbitrator from reallocating costs to the prevailing party on a 998 settlement offer in this case. The facts are important here, because the arbitration agreement only gave the arbitrator the power to rule on damages and liability, and therefore Storm was not required to request costs from the arbitrator. This case can be distinguished from "the decisions . . . dictated by the broad powers given to the arbitrator by language of the arbitration agreements at issue."
As for post-arbitration costs incurred, "[u]nless the arbitrator's award or the parties' arbitration agreement negates the enforceability of section 1293.2, a court must award costs incurred in post-arbitration judicial proceedings to confirm, vacate, or modify an arbitration award."
Storm should be pleased she appealed, because the Court of Appeal reversed the order granting the insurance company's motion to tax costs and striking her memorandum of costs. The matter was remanded with directions to consider whether her claimed costs are recoverable under 998 and 1293.2. And Storm gets to recover costs on appeal.
Arbitration, Nonsignatories: Failure To Initial Waiver Of Jury Is “Of No Legal Consequence” — Under The Circumstances
The Parties Failed To Initial The Jury Waiver, But They Did Sign A "Certification."
"What if neither party to an arbitration agreement places initials next to a jury waiver contained in the agreement, even though the drafter included lines for their initials?" That's the question presented in Martinez v. BaronHR, Inc., et al, B296858 (2/4 7/8/20) (Currey, Willhite, Collins). The Court concludes that it is of no legal consequence "[o]n the facts of this case," leading one to ask: what facts made the difference?
In this employee/employer dispute, the employer and employee failed to initial a jury waiver that was part of an arbitration agreement. Opposing the employer's effort to compel arbitration, the employee argued that those facts pointed to an intention to retain a jury, and thus, not to arbitrate. The trial court denied the employer's motion to compel arbitration.
The Court of Appeal, however, focused on a second part of the employment agreement, the so-called "certification." In the certification, which the parties did sign, the employee certified he had read, understood, and agreed to be legally bound by all the terms of the agreement, and further, "EMPLOYEE HAS NO RIGHT TO PURSUE CLAIMS AGAINST THE COMPANY IN COURT AND BEFORE A JURY, BUT ONLY THROUGH THE ARBITRATION PROCESS."
The employee's signature on the certification of the entire agreement trumped his failure to certify the jury waiver. As a result, the Court of Appeal reversed and remanded.
COMMENT: If this is the state of the law, wouldn't the employer have been better off drafting an agreement that did not require initialing the jury waiver, so long as the certification provision applied to the entire agreement and included the conspicuous capitalized second jury waiver? Legal drafting is notoriously "repetitious and redundant", and here, the result was a legal pothole.
Reviews: Your Blogger Publishes Article About Nuts And Bolts Of Videoconference Dispute Resolution
"Nuts and Bolts of Videoconference Dispute Resolution in the Time of Covid-19."
With remarkable speed, mediators, arbitrators, judges, and attorneys have learned to use videoconferencing as a work tool. Back in March, after we began "sheltering in place" in California, I drafted an article on the "Nuts and Bolts of Videoconference Dispute Resolution in the Time of COVID-19." The article now appears in the current issue of California Litigation, the journal of the litigation section of the California Lawyers Association, Vol. 33, No. 2 (2020). The article addresses the mechanics, best practices, and pros and cons of videoconference dispute resolution. With the permission of the CLA and California Litigation, I am republishing the article here, with the usual disclaimer that I alone am responsible for the contents and opinions expressed in the article.
Arbitration, PAGA, Waiver, Severability: Non-Severability Provision And PAGA Waiver Make Arbitration Provision Unenforceable
The Briefing Focused On A "Blow-Up" Provision, But The Court Focused On An Unenforceable Waiver Of PAGA Claims And Lack Of Severability.
"Six-year-old Gregorio Drozco III does what a lot of people do in a Seattle, Washington, alley when he blows a bubble, preparatory to wadding up his gum and sticking it to a wall next to the Market Theatre that has become a kitschy tourist attraction." Carol M. Highsmith, photographer. Library of Congress.
The employer-employee contract in Kec v Superior Court of Orange County, G058119 (4/3 7/9/20) (Ikola, Thompson, Goethals), contained a waiver of class and other representative actions, broad enough to cover a PAGA claim. The arbitration agreement also provided that the waiver was not modifiable or severable, and that if the representative waiver was found to be invalid, "the Agreement becomes null and void as to the employee(s) who are parties to that particular dispute" — a so-called "'blow-up' provision." The employee plaintiff brought individual, class, and PAGA claims against defendants. Since Iskanian v. CLS Transportation Los Angeles, LLC, an employee's right to bring a PAGA action is unwaivable.
The trial court reasoned it had not been called upon to rule on the enforceability of the representative waiver, and thus the blow-up provision had not been triggered, and in any case, the blow-up provision would only apply to the attempted waiver of the PAGA claim, not to the arbitrability of the plaintiff's claims under the Labor Code. Hence, the trial judge enforced the arbitration provision as too plaintiff's Labor Code claims.
The Court of Appeal reached a different conclusion, without ruling on the validity of the blow-up provision. Instead, the Court held that the representative waiver, which would have included a PAGA action, was void, and the defendants could not selectively enforce the arbitration agreement, which expressly provided for a lack of severability in the event that the representative waiver was found to be invalid. In other words, the invalid PAGA waiver infected the entire arbitration provision.
To reach this conclusion, the Court had to address the defendant employer's argument that the representative waiver was for its benefit, and therefore, the defendant had the right to waive the provision that was for its benefit. Grasping Justice Ikola's reasoning requires wrapping one's head around a double or triple-negative, here, the employer's ineffective waiver of its right to enforce the employee's representative waiver .
A waiver must be knowing an intentional at the time that it is exercised. Here, because the employee brought its claim after Iskanian was decided, the employer's waiver of its right to enforce the employee's waiver of his right to bring a PAGA action was not valid. Post-Iskanian, the employer had no such right to enforce the employee's waiver of a PAGA claim. Maybe the employer would have had such a right to enforce the provision that was for its own benefit, when the law was still uncertain, at the time it entered into the employment contract, but not under the circumstances (which included the post-Iskanian state of the law) at the time the employee sued.
A bit tricky?
Arbitration Awards: Time To Change “Award” And Add Attorneys Fees Did Not Expire, Because Award Was Not Final Award
This Case Is Must Reading For Determining Whether An Arbitrator's Ruling Is An Award.
"As this case highlights, whether an arbitrator's ruling constitutes an 'award' is a significant event." Lonky v. Patel, B295314 consolidated with B297632 (2/2 7/2/20) (Hoffstadt, Lui, Chavez). Indeed. The arbitrator can continue to issue interim rulings before there is an award. But once there is a final award, the clock begins to run on the time the arbitrator has to continue to rule and correct or amend an award. In this case, the Court of Appeal ruled that a Second Interim Ruling did not constitute an Award, and thus the Arbitrator's time to increase compensatory damages and add attorney's fees had not expired.
Very helpfully, the Court explains upfront how a court determines whether a ruling constitutes an award: "We hold that a court does so (1) by asking whether the ruling (a) determines all issues necessary to resolve the entire controversy and (b) leaves unaddressed only those issues incapable of resolution at that time because those issues are potential, conditional or contingent, and (2) answers those questions by looking to the specific procedures adopted in the arbitration at issue."
The case is a model of clarity and genuinely useful for practitioners, because it addresses the nettlesome question of when a ruling complete enough to constitute an award. Here, the arbitration was divided into three phases: 1) liability, amount of compensatory damages, and eligibility for punitive damages; 2) amount of punitive damages and entitlement to attorney fees and costs; and 3) amount of attorney fees and costs. The Court of Appeal ruled that the arbitration ruling in phase two did not constitute an award, because it did not determine the amount of attorney fees, i.e., it did not determine all the issues submitted to arbitration, and the amount was not potential, conditional, or could not otherwise have been determined at the time.