Mediation, Attorney’s Fees And Tort Of Another
Tort Of Another Fees Are Consequential Damages, Not Recoverable As A Cost Item.
The December 2018 issue of Orange County Lawyer includes an article by mediator William J. Caplan, entitled "Backdoor Attorneys' Fees Based on the Tort of Another: A Mediator's Perspective." The article is useful for its clarity, for its brevity, and because this can be a confusing area of practice. An understanding of the "tort of another" doctrine, as a basis for recovering attorney's fees, is a useful tool for mediators, because counsel will sometimes advance a claim for attorney's fees based on the doctrine, making it important for a mediator to evaluate whether the doctrine applies in a particular case. In addition, an unexpected claim for attorney's fees in a mediation can give a party leverage.
My colleague Mike Hensley and I have also written an article about the topic, and our blawg California Attorney's Fees includes sidebar topics on fees as damages and tort of another.
Collective Bargaining, Standard Of Review: 9th Circuit Concludes Arbitrator Acted Within His Authority When Reforming Labor Agreement To Cure Mutual Mistake
And Judge Ikuta Dissents.
The Ninth Circuit affirmed the district court's order confirming an arbitration award in favor of a union seeking relief concerning a bonus provision in the parties' collective bargaining power. The employer had argued that the arbitration award was invalid because the arbitrator reformed the Basic Labor Agreement (BLA) between the Union and the employer, despite a "no-add" provision in that agreement. The district affirmed the award, and the employer appealed. ASARCO v. United Steel, et al., No. 16-16363 (9th Cir. 12/4/18) (Gettleman, McNamee; Ikuta, dsst).
The arbitrator found that the BLA was based on a mutual mistake, because the Union was unaware of a link between a change in the pension plan and the opportunity of employees to obtain annual bonuses. The arbitrator reformed the BLA to remedy the mutual mistake. It was undisputed that the parties did not discuss the bonus when negotiating, and neither party indicated that the bonus would be impacted by modifying eligibility for the pension.
The panel concluded "that the arbitrator was acting within his authority when he crafted a remedy to cure the parties' mutual mistake."
In a characteristically vigorous dissent, Judge Ikuta wrote, "[t]he 'no-add' language in the collective bargaining agreement . . . is unmistakably clear. . . . . Because the arbitrator ignored the no-add provision, his award fails to draw its essence from the BLA and is invalid." She concluded, "the BLA deprives the arbitrator of the authority to rewrite the agreement, and also deprives the arbitrator of the authority to reconsider and reject this limitation on his authority."
COMMENT: The majority usefully summarizes the standard of review: the district court's decision confirming an arbitration award is de novo, whereas the review of labor arbitration awards is extremely deferential because the courts do not hear claims of factual or legal error by an arbitrator. However, there are three exceptions to the general rule of deference to an arbitrator's decision: "(1) when the arbitrator's award does not draw its essence from the collective bargaining agreement and the arbitrator is dispensing his brand of industrial justice; (2) when the arbitrator exceeds the boundaries of the issues submitted to him; and (3) when the award is contrary to public policy."
Section 998, Costs: Insurance Company That Is De Facto Party Under Probate Code Is Party To CCP 998 Settlement Offer, And On The Hook For Litigation Costs
Because Insurance Company Controls The Litigation, Court Looks Past "Legal Fiction" That Decedent's Estate Is The Party.
Amanda Meleski was injured when Albert Hotlen ran a red light and collided with her vehicle. But by the time Mr. Hotlen could be served with a summons, he was dead. However, Mr. Hotlen had purchased a $100,000 policy from Allstate. Ms. Meleski offered to settle with Allstate for one dollar less than policy limits, to wit, for $99,999. Allstate rejected the offer, went to trial, and took a hit from the jury for $180,613.86. Ms. Meleski then sought to recover expert witness fees and other litigation costs, in the amount of $66,017.08, pursuant to section 998, having done better at trial than the offer that Allstate rejected. However, the trial court held that her recovery against Allstate was limited by the policy limit of $100,000. She appealed. Meleski v. Estate of Albert Hotlen, C080023 (3rd Dist. 11/29/18) (Blease, Robie, Mauro).
The Court refused to ignore the reality that Allstate controlled the litigation, adding: "Moreover, we find it manifestly unfair that section 998 could be employed by Allstate to recover costs from the plaintiff (which costs it would have no obligation to pay to the estate), but Allstate would have no corresponding responsibility to pay costs merely because it is not the named party."
The Court reversed the order denying an award of costs from Allstate, and modified the award to add $66,017.08 to $100,000 in damages.
Arbitration: Tetrad Of Unpublished Cases Present Issues Concerning Mandatory Fee Arbitration, Res Judicata, Existence Of Agreement, 1281.2, Appealability
Ferguson v. Camarillo Health Care District, B281856 (2/6 11/28/18) (Tangeman, Gilbert, Yegan) (unpublished).
When a an opinion begins, "Calling it an 'unproductive waste of time,' attorney Ralph T. Ferguson did not participate in mandatory arbitration of a fee dispute with his client Camarillo Health Care District (CHCD). The arbitrators ruled in favor of CHCD," you can make a pretty good guess how it will end. And you would be right here.
Attorney Ferguson blew off the Mandatory Fee Arbitration, failed to appeal the judgment on the award or the denial of relief from the judgment. Instead, he collaterally attacked the award in a separate lawsuit, then appealed. No go. The final award, confirmed by the trial court, was res judicata, and Ferguson failed to timely appeal.
It was obvious that the Court of Appeal was not amused by the way the attorney handled his fee dispute with his client. "He declined to give CHCD its legal files," writes Justice Tangeman, "asserting they are privileged, or too heavy to lift, or the subject of a ransomware attack on his computer."
COMMENT: Perhaps the moral is that clients are entitled by statute to arbitrate fee disputes, and the attorney who does not treat mandatory fee arbitration seriously does so at the attorney's risk.
Massicotte v. A-One Janitorial LLC, G055604 (4/3 11/26/18) (Aronson, Bedsworth, Moore) (unpublished).
The parties entered into an Asset Purchase Agreement under which "the parties agreed an independent accounting firm would render a conclusive and binding decision concerning any disagreement the parties had over a specific accounting issue." The buyers contended this provision did not constitute an arbitration agreement (a) because it did not include the word "arbitration" and (b) because it allowed the determination of the neutral (an accounting firm) to be challenged "for manifest error", as a result of which an award could not be final and binding.
The Court of Appeal wasn't buying it. The use of the word "arbitration" is not determinative, and case law is clear about this. If it looks like a duck, swims like a duck, and quacks like a duck, it is a duck. (No, the Court didn't write that, I did.) As to the "manifest error" language, an arbitration decision may be reviewed for legal errors if the parties contractually agreed to judicial oversight. Cable Connection, Inc. v. DIRECTV, Inc., 44 Cal. 4th 1334, 1355-1356 (2008).
Doan v. Nhan Hoa Comprehensive Health Care Clinic, Inc., G055323 (4/3 11/26/18) (Bedsworth, Moore, Fybel) (unpublished).
This is one of the many cases in which an employer seeks to enforce an arbitration agreement against a former employee who did not sign the arbitration agreement. Sometimes those cases arise because of problems obtaining electronic signatures, but that was not the case here. And sometimes those cases arise because an employee who did not sign a change to an employment agreement that included an arbitration clause did not sign the new agreement, but continued to work for a long time, but that was not the case here. Here, the employee straight up didn't sign an arbitration provision that had lines for a date and an employee signature. The final paragraph included an acknowledgment that the agreement had been carefully read and understood, and that binding arbitration would apply, but those darn date and signature lines were blank. And Doan, a new hire, only worked at the company from early May till the end of July 2016. The Court of Appeal concluded that substantial evidence supported the decision of the trial court that the evidence did not establish an intent to be bound by an unsigned document.
Porter v. AG Arcadia, LLC, B285461 (2/5 11/26/18) (Jaskol, Baker, Moor) (unpublished).
This lawsuit involved a dispute between a patient's relatives and a nursing home after the aged patient "died of sepsis related to her wound from the pressure sore and urinary infections." The arbitrator, the Hon. Judy Chirlin, ret., found that the defendants acted recklessly and awarded damages for elder abuse and wrongful death. The nursing home appealed. The appeal was dismissed under the "one judgment rule", because there was a pending claim for violation of the Patient's Bill of Rights that had not been decided. Thus, the appeal was taken from a non-appealable order.
COMMENT: Interestingly, the Court of Appeal acknowledges, "we have a sufficient record for writ review and the issues have been fully briefed." Yet the Court concludes that writ review is not appropriate, because it has no information suggesting the Appellants lack of an adequate remedy at law by way of an appeal. The "adequate remedy at law" issue needs to be carefully briefed by appellants seeking writ review. Query whether that was done in this case.
Arbitration: Three Unpublished Employment Opinions Side With Employers’ Positions
Issues Covered Include Class Action, Unconscionability, Powers Of Arbitrator, Enforcement, Non-Signatories, PAGA, Severability, Costs.
Martinez v. Ready Pac Produce, Inc., B279225 (2/3 11/20/18) (Lavin, Egerton, Dhanidina) (Unpublished): Waiver Of Class Action Meant Employee Could Not Participate In Pending Class Action.
The Court of Appeal reverses order denying employer Read Pac's motion to compel arbitration. The superior court had found the arbitration agreement to be unconscionable because it included a provision waiving the right to participate in a class action, including a pending class action. Relying on Concepcion, the Court of Appeal stated, "It is well settled that class action waivers in arbitration agreements are generally enforceable." While the employee lost the right to participate in a pending class action, the employee still had the right to pursue her individual claims in arbitration.
O'Brien v. Sajahtera, Inc., B282037 (2/3 11/20/18) (Lavin, Egerton, Dhanidina) (Unpublished): Arbitrator Did Not Exceed Powers.
The Court of Appeal affirms judgment entered after the superior court denied the plaintiff employee's petition to vacate an arbitration award in favor of defendant.
Plaintiff/appellant argued that the arbitrator had violated unwaivable statutory rights — something that would in fact be a basis for vacating an arbitrator's award. The Court of Appeal, however, disagreed, explaining plaintiff "improperly equates the violation of unwaivable statutory rights — which may support vacatur of an arbitration award — with an unfavorable resolution of a claim relating to unwaivable statutory right — which does not."
Albarran v. Midwest Roofing Co., Inc., B284151 (2/1 11/19/18) (Bendix, Rothschild, Johnson) (Unpublished): Court Reverses And Orders Arbitration, Except For PAGA Claim.
The Court of Appeal rejected trial court's finding that arbitration agreement was unconscionable because it lacked mutuality (a) because it was not signed by defendants; and (b) because it only required employees to arbitrate their claims. Generally an agreement can be enforced when signed by the parties against whom enforcement is sought. As to the claim that the agreement was not mutual, the Court explained that the employee' agreement to arbitrate is read as mutual under existing case law. The Court added two caveats: first, certain of the cost-shifting provisions, which were unconscionable, had to be severed; second, the arbitration agreement did not apply to PAGA claims brought in the state's name.
Happy Thanksgiving To All Our Blawg Readers !
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The Holiday Season is off and running. Circa 1909. Library of Congress.