Mediation, Costs: Fifth District Holds Costs In Mediation May Be Recoverable Cost Item, Even When The Mediation Is Voluntary
In Its Discretion, Court May Determine That A Voluntary Mediation Was Reasonably Necessary To The Conduct Of The Mediation.
"Mediation costs are not listed among the costs that are expressly allowable or expressly not allowable. (Code Civ. Proc., section 1033.5, subds. (a), (b).)" Berkeley Cement, Inc., v. Regents of the University of California, F073455, F073586 (5th Dist. 1/7/9) (Hill, Detjen, Snauffer) (slip. op. at 35). However, in its discretion, a court may determine that a cost item is recoverable if "reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation." Court-ordered mediation, for example, for cases involving less than $50,000, may be the easy case, because if the court orders mediation, then it is reasonably necessary to the conduct of the mediation. And in fact, an earlier case so held. Gibson v. Bobroff, 49 Cal.App.4th 1202 (1996) (cost award for court-ordered mediation could be made under discretionary provision of costs statute, Code of Civ. Proc., section 1033.5, subd. (c)(4)).
What about the harder case, which Gibson did not decide: "whether a party prevailing after a trial which is preceded by unsuccessful voluntary mediation would be entitled to such costs." Id. at 1209.
Berkeley Cement now holds that "mediation fees incurred for mediation that was not ordered by the court are not categorically nonrecoverable as 'not reasonably necessary to the conduct of litigation.'" (slip. op. at 37). In other words, it's up to the court, acting within its discretion, to determine based on the facts and circumstances, whether the voluntary mediation was reasonably necessary to the conduct of the litigation. In Berkeley Cement, the mediation fee award included $7,500 to University, representing 1/2 of the $15,000 mediator's fee, for a mediation canceled by Berkeley Cement on short notice, for which the mediator could not fill the time slot with a replacement, making the fee nonrefundable.
COMMENT: We can see this discretionary rule generating future fee disputes. "Reasonably necessary" based on the facts and circumstances, within the discretion of the court, is not a bright line rule. In the case of a court-ordered mediation, the rule is easier to apply, because the parties, while they can offer input that the court should consider in deciding whether to order the case to mediation, may themselves readily view mediation ordered by the court as reasonably necessary to the conduct of the litigation.
Cost-shifting of the mediation fee raises issues for the mediator. Mediator fees can be expensive, and thus, cost-shifting can add to the risk of the unsuccessful party if the mediation fails, or embolden a party that believes it has the upper hand. While attorney fee disputes often end up driving litigation, attorneys and parties may not be focused on cost-shifting of mediator fees and administrative costs incurred in an unsuccessful mediation. So what should the mediator tell the parties, especially if a party is unrepresented. It is not the mediator's role to offer legal advice, but the mediator can certainly educate a party or counsel if that will be helpful to move the matter toward resolution. Perhaps the best rule for the mediator to follow is to consider the facts and circumstances, and educate a party or counsel about the risk of cost-shifting if that seems reasonably necessary (or useful) for resolving the mediation – similar to the rule the court applied for shifting the cost of the mediation fee in Berkeley Cement.
Arbitration, Delegation, Arbitrability, FAA: Despite Delegation Clause, Court Decides Whether Transportation Worker’s Contract Falls Within FAA’s Ambit
This Is One Of Those Rare Cases In Which A Delegation Clause Is Not Enforced.
Generally, a court will decide arbitrability of a dispute unless that issue is clearly and unmistakably delegated to an arbitrator, as was the case here. But there are exceptions, and New Prime Inc. v. Oliveira (S. Ct. 1/15/19) addresses an important exception. (Gorsuch, author, Ginsburg conc.). The case was the subject of an earlier 10/1/18 post.
The wage dispute involved New Prime Inc., an interstate trucking company, and Dominic Oliveira, who works as one of its drivers, and who, for purposes of this appeal, accepted his status as an independent contractor. Section 1 of the Federal Arbitration Act carves out from its coverage "contracts of employment of . . . workers engaged in foreign or interstate commerce." Everyone agreed that Mr. Oliveira was a worker engaged in interstate commerce. But was he, as an independent contractor, covered by a "contract of employment." Yes, explains Justice Gorsuch, because when the FAA was enacted in 1925, employees and independent contractors were covered by contracts of employment. The meaning of the word "employment" has wandered over time, so now, an employee – employer – employment relationship has a meaning distinct from that of an independent contractor relationship. But as a textualist, Justice Gorsuch, quoting from another case, reminds us: "[I]t's a 'fundamental canon of statutory construction' that words generally should be 'interpreted as taking their ordinary . . . meaning . . . at the time congress enacted the statute.'" Wisconsin Central Ltd. v. United States, 585 U.S. __, __ (2018) (slip op., at 9). And the statute's sequencing is important, so the courts get to decide the threshold question of whether the section 1 exclusion applies to remove the arbitration clause from the ambit of the FAA.
COMMENT: This opinion is an interesting exercise in textualism, and as such, involves solving a statutory word puzzle and delving in to mouldy dictionaries. And that's where Justice Ginsburg comes in with her concurrence, agreeing with the proposition in Wisconsin Central Ltd., but taking care to qualify it to acknowledge that Congress may design legislation to govern changing times and circumstances, and that some statutes should be construed flexibly to effectuate remedial purposes. Not really a problem, however, with this specific case, and in fact, Justice Gorsuch writes, "statutes may sometimes refer to an external source of law and fairly warn readers that they must abide that external source of law, later amendments and modifications included." But here, there is no good reason to depart from the existing meaning of the statute. For a description of the textualism espoused by Justice Scalia, see my recent review of Richard Hasen's The Justice of Contradictions: Antonin Scalia and the Politics of Disruption.
It is somewhat refreshing to see that, despite political divisions, SCOTUS can still reach agreement on a case.
The case does address a question I have been curious about: why did Congress exclude "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce"? Justice Gorsuch writes that "[b]y the time it adopted the Arbitration Act in 1925, Congress had already prescribed alternative employment dispute resolution regimes for many transportation workers."
Arbitration, Gateway Issues: SCOTUS Holds That When Parties Agree Arbitrator Will Resolve Arbitrability Question, There Is No “Wholly Groundless” Exception Allowing Question To Be Decided By Court
First SCOTUS Opinion Authored By Justice Kavanaugh Is Unanimous.
"Under the Federal Arbitration Act, parties to a contract may agree that an arbitrator rather than a court will resolve disputes arising out of the contract." The question presented in Henry Schein, Inc., et al. v. Archer and White Sales, Inc., No. 17-1272 (S. Ct. 1/8/19), is whether courts can decide arbitrability if the basis for arbitration is "wholly groundless", and whether such an exception to delegation of the decision to the arbitrator is consistent with the Federal Arbitration Act. In the first opinion authored by Justice Kavanaugh, the Court unanimously holds that a "wholly groundless" exception is inconsistent with the FAA.
COMMENT: The Justices "express no view about whether the contract at issue in this case in fact delegated the arbitrability issue to an arbitrator." So the judgment of the Court of Appeals is vacated and remanded, and the Court of Appeals may address the delegation issue.
In some instances, where the gateway decision of arbitrability is delegated to the arbitrator, the basis for delegation is "wholly groundless", and the arbitrator reaches the wrong conclusion, the arbitrator may exceed the arbitrator's powers, leading to "back-end" judicial review, and a waste of time. But SCOTUS is not going to rewrite the FAA.
Book Reviews: Richard L. Hasen’s “The Justice Of Contradictions: Antonin Scalia and the Politics of Disruption”
Marc's Review Of Richard L. Hasen's The Justice of Contradictions: Antonin Scalia and the Politics of Disruption, Has Been Published in California Litigation.
With the permission of California Litigation, the journal of the litigation section of the California Lawyers Association, Marc's review of Prof. Richard L. Hasen's book, The Justice of Contradictions: Antonin Scalia and the Politics of Disruption, is made available by clicking here.
Arbitration, Employment, Nonsignatories: 2/6 Orders Produce Packers To Arbitrate Claims With Co-Employers
Staffing Agency Signed Arbitration Agreement, Packing Employer Did Not Sign.
Packing fresh prunes at night on Produce Row during busy season, wages two cents per box. Washington, Yakima. Dorothea Lange, photographer. August 1939. Library of Congress.
Plaintiffs/Respondents Vasquez and Zacarias were hired by a staffing agency, Employer's Depot, Inc. (EDI) which assigned them to a produce packing employer (San Miguel Produce, Inc.). Plaintiffs alleged labor violations by San Miguel Produce, with which they did not have an arbitration agreement, and San Miguel Produce cross-claimed against EDI, which did have an arbitration agreement with Plaintiffs. The superior court denied a motion by San Miguel Produce and EDI to compel arbitration (a) because Plaintiffs did not sue EDI; and (b) because Plaintiffs did not have an arbitration agreement with San Miguel Produce. Vasquez et al. v. San Miguel Produce, No. B287696 (2/6 1/3/19) (Perren, Gilbert, Tangeman) (unpublished).
Reversed and remanded: "Appellants are co-employers with an identity of interests and mutual responsibility for complying with state law governing employers in the produce packing industry. It is inconsequential that respondents chose not to name EDI as a defendant. They agreed to arbitrate 'all disputes' arising from their employment."
Arbitration, Collective Bargaining: Third District Affirms Orders Denying Employer’s Motions To Compel Arbitration
And Employees' Claims Were Not Preempted By Labor Management Relations Act, 1947 (LMRA).
In three consolidated appeals, the Court of Appeal affirms orders denying the employer's motions to compel arbitration. Rymel v. Save Mart Supermarkets, Inc., and related cases, C085863, C085865, C085886 (3rd Dist. 12/31/18) (Duarte, Murray, Hoch).
The employees sued defendant Save Mart Supermarkets, Inc., alleging state law statutory employment claims for industrial injuries and torts flowing therefrom, including failure to accommodate, retaliation, and wrongful discharge. After successfully moving to sever, the employer moved to compel arbitration under a collective bargaining agreement (CBA). Its motions failed in the superior court, and it appealed.
The CBA did not bind the employees to arbitrate, because it failed to clearly and unmistakably require the employees to arbitrate the statutory claims in question. The knottier issue was whether the state law claims were preempted — not by the Federal Arbitration Act, but by the LMRA, section 301.
The Court applied a two-step analysis to the preemption issue. First, the causes of action involved rights conferred upon the employees by virtue of state law, not by the CBA. Second, the rights underlying the state law claims were not "substantially dependent on analysis of a CBA." As the Court explains, "Generally, a claim based on a 'nonnegotiable' right will rarely require interpretation of a CBA, which by definition represents the culmination of negotiations between labor and management."
Affirmed.
DRAFTING TIP: Clearly and unmistakably identify in the CBA the statutes and rights that are to be arbitrated.