Arbitration, Fees, Jurisdiction: First District, Div. 2 Holds That California Court, Rather Than Tribal Court, Had Jurisdiction To Award Fees For Successful Motion To Compel Arbitration
Tribal Sovereign Immunity Was At Issue.
Lawsuits filed against Indian tribes trigger issues of tribal sovereign immunity and jurisdiction. Such was the case in Findleton v. Coyote Valley Band of Pomo Indians, A150444 (1/2 9/25/18) (Stewart, Kline, Richman). This is the third appeal concerning contractor Findleton's efforts to enforce arbitration clauses against the Coyote Valley Band of Pomo Indians (Tribe). We previously posted on August 2, 2016, about the first appeal, in which the Court held that the Tribe had waived its sovereign immunity for purposes of arbitrating the contract disputes and that the waiver extended to judicial enforcement of the right to arbitrate and any arbitration award. In the second appeal, the Court reversed the trial court's grant of the Tribe's motion for prevailing party attorney fees because the Tribe was not a prevailing party.
Findleton then filed a motion to compel mediation and arbitration and a motion for an award of attorney fees incurred on appeal. The trial court granted the fee motion and the Tribe appealed.
By the time the third appeal rolled around, the key issue of a waiver of tribal sovereign immunity had been (mostly) resolved. However, one issue had not yet been resolved: "whether judicial enforcement of arbitration included a potential motion by Findleton for attorney fees." That's a pretty narrow issue, and as the Court explained in Findleton III, it had already held in Findleton I that "the Tribe's waiver of sovereign immunity encompassed judciaial enforcement of Findleton's contractual right to arbitrate." And, critically, "Judicial enforcement of the right to arbitrate includes awarding fees specifically incurred to enforce that right."
The Court affirmed the order granting attorney fees and costs incurred by Findleton to enforce his right to arbitrate.
Indian court, Federal Building, Golden Gate International Exposition, San Francisco, 1939 Pomo Indian basket, California. Library of Congress.
Arbitration, Employment, FAA: Employee Successfully SLAPPS Employer Who Sued Employee For Breach Of Contract For Failing To Arbitrate His Claims
Court Of Appeal Also Holds That The Federal Arbitration Act (FAA) Does Not Preempt California's Anti-SLAPP Statute.
This dispute began in 2012 when Ruiz filed a putative class action against Moss Bros. Auto Group, Inc. (MBAG) for employment- related claims. By the time we get to the instant appeal, Moss Bros. Toy, Inc. v. Ruiz, E067240 (4/2 9/20/18) (Fields, Codrington, Slough), plenty of water had flowed under the bridge. In a Ruiz I appeal, the Court of Appeal upheld the trial court's denial of MBAG's petition to compel arbitration. In a second case, MBAG contended that actually Moss Bros. Toy, Inc. (MBT) was Ruiz's employer, that MBAG was an intended beneficiary of arbitration agreements, and that MBAG should be entitled to compel arbitration; MBT filed an application to intervene. In Ruiz II, the Court of Appeal affirmed the trial court's order denying MBT''s application to intervene in the second case.
And this brings us to MBT's current lawsuit against Ruiz. This time MBT alleged that Ruiz had breached a contract by filing his lawsuit rather than arbitrating under the agreement with his employer. The trial court granted Ruiz's anti-SLAPP motion, because MBT's entire first amended complaint was based on Ruiz's protected right to petition, and the Court of Appeal affirmed.
The Court of Appeal also rejected MBT's creative argument that the FAA preempted California's anti-SLAPP statute. However, the anti-SLAPP statute does not uniquely burden efforts to arbitrate; it applies to all claims that are based on acts in furtherance of protected rights of petition and free speech.
Finally, the Court of Appeal held that the first amended complaint lacked minimal merit, because MBT failed to authenticate either of two written 2010 arbitration agreements in opposing Ruiz's anti-SLAPP motion.
COMMENT: There is another issue concerning the merits that the Court of Appeal does not discuss. Does a party to an arbitration agreement who decides to sue rather than to arbitrate breach the arbitration agreement? In Sargon Enterprises, Inc. v. Browne George Ross LLP, 15 Cal.App.5th 749 (2017), the Court of Appeal held that the party to the arbitration agreement , who decides to sue instead of arbitrate cannot be sued for breach of contract, because one has a right to file a lawsuit, and because the defendant can respond by petitioning to arbitrate or by filing an answer. See our post of September 29, 2017 on Sargon Enterprises.
Arbitration, Jurisdiction, Waiver: 9th Circuit Holds Party That Vigorously Litigates Following Adverse Ruling On Personal Jurisdiction Does Not Waive Defense Of Lack Of Jurisdiction
Defendant, A United Arab Emirates Bank, Lacked Sufficient Contacts With The US.
The court staff summary of this case states: "The panel reversed the district court's judgment compelling arbitration of claims concerning a contract and remanded for dismissal on the ground that the district court lacked personal jurisdiction over the defendant." InfoSpan, Inc., et al. v. Emirates NBD Bank PJSC, No. 16-55090 (9th Cir. 9/7/18) (N.R. Smith, Berzon, Castel).
There is waiver and there is waiver. We know that a party may waive the right to arbitrate by vigorously litigating. But the issue in this case was a different kind of waiver. The district court had suggested that, though the Bank fully litigated merits of its personal jurisdiction defense, "it nonetheless waived the issue by vigorously defending the case after the personal jurisdiction issue was decided against it."
The 9th Circuit panel disagreed: "A defendant that timely asserts that the district court lacks personal jurisdiction and litigates the issue to an adverse decision from the district court does not waive the personal jurisdiction defense by vigorously litigating defenses to the merits, including by asserting counterclaims against other parties."
Practice Tip: The panel distinguished cases in which "waiver arose from the defendant's conduct in failing to properly request a ruling on the issue of personal jurisdiction." In other words, it is not vigorous litigation of remaining claims that leads to waiver, it is failure to preserve the personal jurisdiction issue by requesting a ruling. So if one wants to preserve the personal jurisdiction issue, one should assert the defense, request a ruling, and get a ruling.
Celebrities: Arbitrator Denies NFL’s Summary Judgment Motion In Dispute With Colin Kaepernick
Did Owners Collude To Keep Him From Playing Or Did All The Owners Happen To Individually Decide To Keep Him From Playing?
The NYT and other news sources report that arbitrator Stephen B. Burbank denied the NFL's motion for summary judgment in its dispute with Colin Kaepernick. For now, Kaepernick can proceed with his grievance against the NFL. Kaepernick, of course, is now famous as the quarterback who initiated the wave of kneeling during the national anthem to protest police brutality and racial inequality. He became a free agent in March 2017, after which he has faced protracted unemployment. He is represented by famed litigator Mark Geragos.
Arbitration, Fees: Cal Supreme Court Agrees That Law Firm’s Conflict Of Interest Prevents It From Recovering Fees, But
Majority Remands So That Quantum Meruit Recovery Can Be Considered; Dissent Believes Neither Contractual Nor Quantum Meruit Recovery Should Be Awarded.
Dear Readers, as we approach the three-day Labor Day Weekend, which I hope each of you will enjoy, I would like to spare your having to read a California Supreme Court majority slip opinion that is 43 pages long, followed by a dissent that is 30 pages long. However, if you want to read the majority opinion and the dissent too, just click here. Sheppard, Mullin, Richter & Hampton v. J-M Manufacturing Company, Inc., S232946 (Sup. Ct. 8/30/18) (maj: Kruger, Corrigan, Liu, Cuellar, Nares) (dsst: Chin, Cantil Sakauye, C.J.).
The law firm represented J-M Manufacturing Company, Inc. in the defense of a federal qui tam action. It also represented South Tahoe Public Utility District, one of the parties suing J-M. The law firm also obtained conflict waivers from the parties, without, however, disclosing to the parties that it represented their opponents in other matters. A fee dispute arose between J-M and the law firm. The fee dispute was sent to arbitration, and the arbitrator awarded fees on the contract to the law firm. The superior court confirmed the award. However, the Court of Appeal reversed, holding that the law firm was precluded from obtaining contractual fee recovery because of its failure to disclose the existing conflict. I blogged about the Court of Appeal opinion on January 31, 2016.
The Supreme Court majority, as well as the two dissenters, agreed that the Court of Appeal was correct to deny contractual fee recovery based on the undisclosed conflict. However, the majority remanded for consideration of the possibility of equitable recovery in quantum meruit, whereas the dissenters would have held that the disqualification from fee recovery should be total.
Arbitration, Powers, Public Policy, Vacatur: Arbitrator Who Found HOA Failed To Follow Pre-Litigation Requirements In CC&Rs Did Not Exceed His Powers
Arbitrator Did Not Exceed Powers By Abridging An Unwaivable Statutory Right Or Policy.
One of the grounds for a court to vacate an arbitrator's award is that the arbitrator exceeded his or her powers. See Code of Civ. Proc. section 1286.2(a)(4). And arbitrators may exceed their powers by issuing an award that violates a party's unwaivable statutory rights or that contravenes an explicit legislative expression of public policy. Richey v. AutoNation, Inc., 60 Cal.4th 909, 916 (2015).
In Branches Neighborhood Corporation v. CalAtlantic Group, Inc., G055201 (4/3 8/24/18) (Moore, O'Leary, Fybel), the defendant/respondent developer obtained summary judgment in arbitration, because the HOA filed its arbitration demand without first following a requirement in the HOA's CC&Rs requiring it to obtain the vote or written consent of 51% of its members prior to initiating a construction defect claim. The HOA tried to correct the problem by ratifying its decision to arbitrate after the fact, but the arbitrator wasn't having it.
You could say this is a case that depends upon the plain language of the CC&Rs. That, by the way, is what the Court of Appeal said. The Court could not find an unwaivable statutory right to ratify after the fact what the CC&Rs required the HOA to do prior to filing its arbitration claim, nor could the Court find any express public policy that prevented enforcement of the CC&Rs. "[A]ccordingly, the plain language of the CC&Rs controls." Affirmed.