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.
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.