Arbitration, Appealability, Jurisdiction: Order Denying Petition To Vacate Award Is Appealable As Order Dismissing Petition — But The Trial Court Properly Dismissed Petition To Vacate “Partial Interim Award” For Lack Of Jurisdiction
"Partial Final Award" Did Not Constitute An Award Immediately Reviewable By Superior Court.
Maplebear, Inc. v. Donna Busick, No. A151677 (1/2 8/21/18) affirms the trial court's order dismissing Maplebear's (Instacart's) petition to vacate an award, which award was dismissed for lack of jurisdiction. Instacart is a same-day grocery delivery service, and the dispute arose when an employee, Busick, filed a class action arbitration demand with JAMS, alleging Instacart violated California law by misclassifying employees as independent contractors.
The arbitrator issued a "partial final award" determining that the parties' arbitration agreement permitted Busick to move for class certification. Instacart petitioned to vacate the award. The trial court denied the petition to vacate, and Instacart appealed the denial of the petition to vacate.
The opinion, which is a great refresher of the procedural steps involved when appealing an arbitrator's order, is interesting for a number of reasons.
First, it treats the order denying the petition to vacate as an order dismissing the petition to vacate. This is important, because the relevant statute allows an aggrieved party to appeal from an order "dismissing a petition to confirm, correct or vacate an award." A denial is not the same as a dismissal — except that by case law, denials may sometimes be treated as dismissals, making them appealable.
Second, the Court concludes that the ruling in Mid-Wilshire Associates v. O'Leary, 7 Cal. App. 4th 1450 (1992), where the Court of Appeal "declined to construe a trial court order 'denying' a petition to vacate as a dismissal" does not survive Law Offices of David S. Karton v. Segreto, 176 Cal.App.4th 1 (2009) and and Cinel v. Christopher, 203 Cal.App.4th 759 (2012).
Third, the Court holds that the trial court properly dismissed Instacart's petition to vacate the "partial final award" because the trial court lacked jurisdiction over a partial award that did not determine "all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy." Cal. Code Civ. Proc., section 1283.4.
Fourth, the Court rejected Instacart's argument that because the parties agreed that the arbitrator had no "power or authority to commit errors of law or legal reasoning", the trial court could immediately review the partial final award allowing Busick to move for class certification.
Mediation Confidentiality: Senate Bill 954 Will Require Attorneys To Inform Clients Of Confidentiality Restrictions In Mediation
Senate Bill Requiring Disclosure Of Confidentiality Restrictions Is A Compromise That Does Not Require Loosening Of Confidentiality Restrictions.
As a consequence of California's Evidence Code provisions, and the California Supreme Court's decision in Cassel v. Superior Court, 51 Cal.4th 113 (2011), mediation confidentiality prevents a party to a mediation from using confidential information obtained in the mediation to sue his or her attorney for alleged professional negligence occurring at the mediation. Senate Bill 954, which is expected to soon become law, will require attorneys, except in the case of a class or representative action, to explain mediation confidentiality restrictions to their clients to a mediation or mediation consultation and to obtain written acknowledgment from the client that he or she has read and understands the confidentiality restrictions.
After seemingly endless debate about whether confidentiality restrictions should be loosened to allow clients to use information obtained in mediation to sue their attorneys for malpractice, Senate Bill 954 can be viewed as a compromise or perhaps a way to finesse the issue. It doesn't change the existing law concerning restrictions on confidential information obtained in mediation. Nor does it expand the client's rights. By requiring the client's written acknowledge that the client has read and understands the restrictions, Senate Bill 954 simply makes the client aware of the restrictions, resulting, hopefully, in informed consent. And if the client is really unhappy with the restrictions on the use of confidential information, the client can (theoretically, perhaps), choose not to mediate.
The Senate Bill includes safe harbor language that will constitute adequate disclosure. Attorneys and mediators might want to take a look at the safe harbor language now, and even begin using it. Evidence Code section 1129(d) would contain the safe harbor language, and that proposed language can be viewed by clicking the link to Senate Bill 954 above.
Arbitration, Celebrities: Trump v. Omarosa Celebrity Wrestling Match, Round 1, Arbitration?
Celebrity Wrestling Match/Cat Fight.
I have received a confidential television script from a disloyal former staff member of the White House. In episode 571 of the long-running reality show, “Raging Dumpster Fires At 1600 Pennsylvania Avenue,” the courtly, urbane and impeccably mannered DJT and the villainous Omarosa Manigault Newman (OMN) grease up for a wrestling match in the ring. But this soon turns into a cat fight, with DJT and OMN trying to scratch out each other’s eyes. DJT calls OMN “a dog” and “crazed low-life” and OMN calls DJT “unhinged” and a “racist”. OMN smacks DJT with a rolled-up copy of Forbes. And as everyone by now knows, DJT, who is a germaphobe, and has a long history of using canine insults, has an intense dislike of dogs, being the first president in a long time, perhaps the first president ever, not to have a White House First Dog. The match seems remarkably even, given DJT’s little paws, and OMN’s sharp nails. Is this truly a made-for TV reality show, or is this a telenovela, complete with betrayal, infidelity, and violent emotion? Alas, those attributes do not help at all to distinguish between the TV reality show and the telenovela. Is this rotten script believable enough to be accepted even by a tasteless TV show with tabloid standards? To ask the question is to answer it: of course.
Where in the world is this post going? Oh yes, Team DJT has filed with the AAA to enforce a non-disclosure agreement (NDA) in arbitration in New York. And if, as Politico reports, the enforcement proceeding has been launched by the Trump for President Campaign, based on OMN's release of her book Unhinged, what impact, if any, will this have on confidentiality during the time in the White House?
We previously had some fun posting about Team DJT’s efforts to enforce an NDA with Stephanie Gregory Clifford (Stormy Daniels) in the privacy of arbitration, where dirty linen is not to be aired in public. I will not begin to opine where the latest fight between DJT and OMN is destined to end. Badly, is my best guess. What does the NDA say? Which one will apply, an NDA for the Apprentice? For the campaign? For the White House? What remedies does the NDA provide, and will they be found to be enforceable? Did OMN have a security clearance requiring pre-publication review of any writing that might contain classified information? Will OMN be able to obtain the legal firepower necessary to carry on a legal battle? Will the anti-matter DJT, Michael Avenatti, now step forward and represent her? Will she be able to successfully stake out a position as a whistleblower? Is there a written rule or statute that prohibits taping a conversation in the Situation Room? Were OMN’s tapes recorded in Florida (where both parties must consent to taping) or in Washington D.C. (where taping can be done unilaterally)? Does one have a reasonable expectation of privacy if taping can be done unilaterally? Are there considerations of public policy and freedom of speech that militate against using a private NDA to ensure confidentiality in the White House? Have other White Houses routinely required staff members to sign NDAs? Will parallel court proceedings be filed, resulting in a public airing of grievances and naked transparency? And even if the matter can be forced into arbitration, will the cat be out of the bag, so to speak, with so-called confidential information no longer confidential?
I plan to consume many bags of popcorn while I sit back and watch the hideous show.
BONUS: For a serious discussion of OMN's free speech rights in this kerfuffle, see Bradley P. Moss's article published August 14, 2018 in Lawfare, entitled "Why the White House Can't Stop Omarosa Manigault-Newman From Talking."
Arbitration: Disclosures, Section 1286.2 (Vacatur): 2/7 DCA Orders Vacatur Of Adverse Award Against Plaintiff/Claimant Because Arbitrator Had Actual Awareness Of And Failed To Disclose Other Pending Arbitrations Involving Defendant/Respondent
Plaintiff Waived Vacatur Right As To Ethics Standard 12(b), But Did Not Waive Rights To Vacate Based On Arbitrator’s Failure To Make Required Disclosures Under Ethics Standard 7(d).
Here is the ending quotation before the “Disposition” paragraph in Honeycutt v. JPMorgan Chase Bank, N.A., Case No. B281982 (2d Dist., Div. 7 Aug. 2, 2018) (certified for publication; Segal, J., author; Perluss, P.J., concurring; and Feuer, J., concurring): “’That all may drink with confidence from their waters, the rivers of justice,’ whether they flow through our public or private systems of dispute resolution, ‘must not only be clean and pure, they must appear so as to all reasonable men and women.’ (U.S. v. State of Ala. (11th Cir. 1987) 828 F.2d 1532, 1552.)” (Slip Op., p. 29.)
Honeycutt concerned an employment arbitration by plaintiff/claimant against her former employer which was a defendant/respondent after employer successfully moved to compel arbitration in the filed lawsuit. In a California arbitration, an arbitrator must make certain statutorily-mandated and ethically-mandated disclosures to the parties, including Ethics Standard 7 [whether the arbitrator is serving as a neutral arbitrator in another prior or pending case involving a party to the current or a lawyer for a party] and Ethics Standard 12 [whether the arbitrator will entertain offers of employment or new professional relationships in any capacity other than as a lawyer, expert witness, or consultant from a party or a lawyer for a party, including offers to serve as a dispute resolution neutral in another case; and, if so, disclose the offer and acceptance in each case within 5 days of same].
The facts were that the arbitrator filled out the AAA disclosures, but there was a missing page where the arbitrator checked he would entertain other offers even though one of the other pages actually sent to the parties did have a handwritten explanation to the missing question that he would entertain offers to serve as a dispute resolution neutral in other cases and would evaluate any potential conflict at that time prior to accepting each offer. However, the arbitrator failed to timely disclose that during the pendency of the Honeycutt arbitration, he had been appointed to serve as an arbitrator in eight other employment cases involving counsel for Chase and two others (one being an employment case) involving Chase—with the parties only receiving four of the eight letters concerning employment cases involving counsel for Chase before the arbitration was completed. Importantly, an arbitrator has a continuing obligation to make required disclosures all along the way. After Honeycutt lost the arbitration, the AAA administrator sent the missing page and all 10 letters about the other cases involving the Honeycutt arbitrator. Honeycutt’s counsel sent AAA a disqualification demand based on the belated disclosures. AAA advised Honeycutt that the arbitrator was not disqualified, with a zero award to Honeycutt and each side ordered to bear administrative fees and arbitrator compensation/expenses “as incurred.” Honeycutt moved to vacate the award (given that arbitrator nondisclosure is a mandatory basis for vacatur under CCP § 1286.2(a)(6)(A)), but the trial judge confirmed it instead, finding sufficient disclosures and no prejudice.
The 2/7 DCA panel reversed and ordered that the award be vacated based on the arbitrator’s failure to make disclosures under Standard 7(d) [other cases involving Chase’s counsel or Chase].
With respect to the failure to make the Standard 12 disclosure, the appellate court found Honeycutt waived her right to vacate on this basis; after all, she failed to object although knowing about the missing page and knowing about the handwritten disclosure such that it was unfair for her to delay raising the issue until after she lost the arbitration.
Different matter, altogether, with respect to the Standard 7(b) nondisclosures. Even though a vacatur requires that the arbitrator has actual awareness of a ground for disqualification, the panel found he had to in light of the fact that he was a participant in the other cases. The appellate court questioned whether an arbitrator, unlike an attorney, can blame a case manager, assistant, or secretary for an arbitrator’s failure to comply with the Ethical Standards, given that the arbitrator has actual awareness of his own intent to entertain offers of employment and then to accept them—which triggered disclosure obligations. Honeycutt did not waive this right to vacate, because it was a right she did not know she had, with her counsel moving to disqualify the arbitrator well within the 15 days required to object after receiving the AAA case manager’s letter finally disclosing everything. So, the rivers of justice in this one swept the arbitration award down the river and out to sea so that an arbitration can take place before an arbitrator making all required disclosures. Honeycutt also was awarded her costs on appeal.
Arbitration: Sanctions: N.D. Cal. District Judge Has Decided To Issue Sanctions Against Fitbit And Its Attorneys For Failure To Pursue Arbitration After Compelling It In Consumer Action
Moral Here Is To Pursue Arbitration If You Elect To Do So.
Mike Hensley, my co-contributor on the calattorneysfees.com website, has done a recent post about N.D. Cal. U.S. District James Donato’s July 24, 2018 order in which he will be imposing yet-to-be-sought sanctions against Fitbit and its defense counsel in a consumer action. District Judge Donato decided that the defense conduct in compelling arbitration and then announcing a decision not to pursue it justified “inherent by the court” sanctions to control bad-faith litigation conduct. Mike’s full post tells it all, including the district court’s colorful passage indicating why many people, including judges, are skeptical about arbitration agreements.
Arbitration: Burden Of Proof, FAA: Ninth Circuit Determines That USC Employment Arbitration Clause Did Not Encompass Plaintiff Employees’ Claims On Behalf Of ERISA Plans
However, Ninth Circuit Panel Did Indicate In A Footnote That It Might Have Been Wrong To Say Certain ERISA Claims Inarbitrable As A Matter Of Law.
In Munro v. University of Southern California (USC), No. 17-55550 (9th Cir. July 24, 2018) (published) (Thomas, Chief Judge, author; Friedland, Circuit Judge; and Zilly, W.D. Wash. District Judge by designation) confronted a situation where USC required current and former employees to sign standard employment contracts with arbitration clauses. However, the language only covered them in individual capacities such that the controversy here was whether these arbitration clauses covered employees bringing collective claims for breach of fiduciary duty against USC for the administration of certain ERISA plans. The district judge denied USC’s motion to compel arbitration after concluding that it did not encompass the ERISA plan challenges brought by the employees.
The Ninth Circuit agreed in a 3-0 panel opinion.
The summit issue under the Federal Arbitration Act (FAA) was whether the employment contract’s arbitration clause encompassed the dispute at issue. Employees won on that issue.
Earlier, in U.S. ex rel. Welsh v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791 (9th Cir. 2017), decided under a similar employment contract that an arbitration clause did not cover qui tam claims brought by an employee on behalf of the U.S. government under the False Claims Act (FCA). The Ninth Circuit, in Munro, found that Welch’s reasoning did apply, because qui tam suits under the FCA—where a plaintiff sues for injury to the government—was akin to ERISA fiduciary breach suits—where a plaintiff sues for injury to the ERISA Plan. Beyond that, neither a plaintiff in an FCA suit nor a plaintiff in a similar ERISA suit can alone settle the suit. So, the USC arbitration clause was not broad enough to encompass “representative” claims of the nature alleged under ERISA.
However, not everything was lost from the defense perspective. In a footnote, the Ninth Circuit panel did hint quite strongly that its earlier holding in Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1987) might have been wrongly decided. Amaro found that ERISA 409(a) claims are inarbitrable, but the Ninth Circuit panel suggested this conclusion might have been wrong as a matter of law based on intervening binding authority—but did not have to reach the issue based on its narrower holding.
BLAWG OBSERVATION—I noticed that Eugene Scalia was on the losing side of the arbitration issue. Given his deceased father’s (former SCOTUS Justice Antonin Scalia's) views favoring arbitration and his pronouncements in Concepcion/other cases, his father might be rolling in his grave based on the result in this case, circumspect as it might be.