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.
Arbitration, Nonsignatories, Agents, 3d Party Benes, Equitable Estoppel: 4th District Div. 2 Rejects Harley Davidson Dealer’s Argument That It Can Compel Arbitration Based On Arbitration Clause In Security Agreement
The Security Agreement Included An Arbitration Clause, But The Purchase Agreement Did Not.
It is not unusual for a consumer to execute more than one agreement at the time of purchase, only one of which contains an arbitration clause. Such was the case in Fuentes v. TMCSF, Inc., E066242 (4/2 8/23/18) (Ramirez, Slough, Fields). Fuentes, who bought a Harley-Davidson motorcycle, and Riverside Harley-Davidson (Riverside) were parties to a purchase agreement without an arbitration clause. Fuentes and Eaglemark Savings Bank (Eaglemark) were parties to a simultaneously executed Security Agreement that did contain an arbitration clause. When Fuentes sued Riverside in a putative class action, Riverside petitioned to compel arbitration.
Cases like this present a standard set of questions: are the two agreements to be interpreted as a single agreement? Is the party seeking arbitration (Riverside here) an agent of the party (Eaglemark) to the contract with the arbitration provision? Does the party seeking arbitration have standing as a third-party beneficiary of the contract with the arbitration provision? Is the non-signatory plaintiff equitably estopped from refusing to arbitrate because he asserts claims "inextricably intertwined with" the underlying contractual obligations of the agreement containing the arbitration clause? To which the Court of Appeal answered, no, no, no, and no. AFFIRMED.
We suspect that in the future some drafting changes will be made by Riverside to its sales documents.
![[Jimmy Murphy, winner of 500-mile auto race at Indianapolis, Ind., May 30, 1922, and Ernie Olson, mechanic, seated on Harley-Davidson motorcycle and in sidecar]](http://cdn.loc.gov/service/pnp/cph/3b20000/3b21000/3b21100/3b21115r.jpg)
Above: Jimmy Murphy, winner of 500-mile auto race at Indianapolis, Ind., May 30, 1922, and Ernie Olson, mechanic, seated on Harley-Davidson motorcycle and in sidecar. Library of Congress.
Pending Cases/Federal Arbitration Act: SCOTUS Will Hear Oral Argument In November In Two Cases Involving Interpretation Of The FAA
Henry Schein, Inc. v. Archer & White Sales, and Lamps Plus v. Varela.
On August 20, 2018, Amy Howe reported in SCOTUSblog that the Supreme Court will hear oral argument (Nov. 7) on two cases involving interpretation of the FAA. She reports: "Henry Schein, Inc. . . . asks the justices to decide whether the act allows a court to decline to enforce an arbitration agreement that gives the arbitrator the power to decide questions about arbitrability if the court believes that the arbitrability claim is 'wholly groundless.' . . . . [I]n Lamps Plus the court will consider whether the act bars a state-law interpretation of an arbitration agreement that would allow class arbitration, even when the agreement itself does not mention class arbitration."