Mediation/Condition Precedent: Fourth District, Division Three, Limits Mediation As A Condition Precedent In A CAR Contract For Fee Recovery
The General Rule In A California Association Of Realtors Purchase And Sale Agreement Requires Participation In Mediation As A Condition For A Prevailing Party To Recover Fees.
The general rule under the standard CAR purchase and sale agreement requires participating in mediation as a condition precedent for fee recovery. The rule was explained by Justice Fybel in Frei v. Davey, back in 2004. Now Justice Fybel has explained a limitation to that rule in Toranji v. Kim, G054111 (4/3 12/15/17) (unpublished). Shared representation alone does not necessarily mean one who shares representation with others who have rejected mediation has also refused to mediate. See today's post in California Attorney's Fees.
Arbitration, PAGA: Court Of Appeal Rejects “Law Of The Case” Argument By Employer, And Follows Supreme Court’s Decision In Iskanian
Employer Ross Stores, Inc. Had Argued That Law Of The Case Required Trial Judge To Order PAGA Claim To Arbitration.
In Ross Stores, Inc. v. Superior Court (Rachel Goss, Real Party), A150039 (1/1 12/11/17) (Banke, Margulies, Dondero) (unpublished), the Court of Appeal addressed circumstances in which it had earlier required the arbitrability of representative PAGA claims, the Supreme Court later embraced the contrary view in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), and the employer Ross Stores, Inc. then tried to convince the trial judge that the earlier ruling of the Court of Appeal had become law of the case, requiring arbitration — notwithstanding Iskanian.
The trial judge did not buy that argument. Neither did the Court of Appeal.
As did the trial court, the Court of Appeal concluded that an exception to the law of the case doctrine applied: the intervening-change-in-the-law exception. And the hands of the trial judge could not be bound by the previous ruling, because the earlier ruling was an unqualified reversal that did not direct the trial court to take any specific action on remand.
Confused? The bottom line is that the Court of Appeal applied Iskanian, holding that the PAGA claim could not be arbitrated, and denying a writ of mandate to compel arbitration.
Arbitration, Delegation, Gateway Issues: SF Sup. Ct. Judge Holds Judge, Not Arbitrator, Decides Whether Contract With Arbitration Clause Is Legal
JAMS Clause Delegating Validity Issue To Arbitrator Was Not Clear and Unmistakable Delegation Of Legality Issue.
Who decides whether an arbitration agreement is part of an enforceable legal services agreement, the judge or the arbitrator? That was the issue addressed by the Hon. Harold E. Kahn in an "Order Denying Defendants' Petition for Order Compelling Arbitration," filed December 12, 2017 in Marble Bridge Funding Group, Inc. v. Buchalter, et al., CGC-17-560501 (SF Sup. Ct.).
The general rule is that the legality of a contract is decided by the court. Loving & Evans v. Blick, 33 Cal.2d 603 (1949). But in Marble Bridge Funding Group, Inc. v. Buchalter, the issue of validity was delegated by JAMs rules to the arbitrator. The court here decided that the delegation of the issue of validity was not a "clear and unmistakable" delegation of the issue of illegality to the arbitrator.
The court further ruled that Buchalter had a conflict of interest making the arbitration language in its service agreement unenforceable.
COMMENT: Obviously, conflict checks and waiver agreements are intended to prevent such a problem from ever arising in the first instance. Perhaps a delegation clause that delegated the issue of illegality to the arbitrator would have also solved the problem, at least, from the standpoint of the party seeking to compel arbitration with language that is "clear and unmistakable".
HAT TIP to Rebecca M. Coll of Quadra & Coll, LLP, who brought Judge Kahn's order to my attention. Ms. Coll represented Marble Bridge Funding Group, Inc.
Arbitration, Agents, Nonsignatories, Equitable Estoppel: U-Haul Can’t Enforce Arbitration Provision Against Nonsignatory Employee Of Employee Renting Truck
Court Of Appeal Rejects Third-Party Beneficiary, Agency, And Judicial Estoppel Arguments Made By U-Haul.
Unable to find "any authority addressing precisely analogous circumstances," the Court of Appeal decides a case of first impression in Jensen v. U-Haul Co. of California, E065887 (4/2 12/11/17) (Codrington, McKinster, Slough). The case involves "an attempt to enforce an arbitration clause in an equipment rental agreement against the nonsignatory employee of the party that rented the equipment."
Virgil Jensen was injured when the truck his employer rented from U-Haul blew a tire. Mr. Jensen sued U-Haul for negligence, and Glenda Jensen sued for loss of consortium. Mr. Jensen had not signed the contract with the arbitration clause with U-Haul, and did not know about the arbitration clause, but his employer had signed the contract. The general rule is: "persons are not normally bound by an agreement entered into by a corporation in which they have an interest or are employees." Suh v. Sup. Ct., 181 Cal.App.4th 1504, 1513 (2010). Could U-Haul shoehorn the case into an exception that would allow U-Haul to compel arbitration against a nonsignatory?
Third-party beneficiary. This exception did not work, because the contract was for the benefit of Mr. Jensen's employer, not for his benefit.
Agency. While there is an agency exception, allowing some nonsignatories to be bound by an arbitration provision, the Court finds that in each case where the nonsignatory was bound to arbitrate, the finding "is based on facts that demonstrate, in one way or another, the signatory's implicit authority to act on behalf of the nonsigntory." The Court did not find the facts warranted a finding here that the employer had implicit authority to bind the employee to arbitrate.
Equitable estoppel. This exception comes into play when the nonsignatory asserts claims that are "dependent upon, or inextricably intertwined with" the underlying contractual obligations of the agreement containing the arbitration clause. However, that was not the case here, because the plaintiffs did not rely on the terms of the rental agreement between the employer and U-Haul to assert their claims.
So the Court of Appeal affirmed the trial court's denial of U-Haul's motion to compel arbitration.
COMMENT: Mr. Jensen was an agent of his employer for some purposes, but that did not mean that the employer had "implicit authority" to bind Mr. Jensen to arbitrate. This is a very fact-specific finding, because it means that the focus must be not on whether an agency relationship exists (e.g., employer/employee), but on whether one party had "implicit authority" based on all the facts and circumstances, to bind another party to arbitrate. There is no bright line here: one must look at the facts and circumstances. The absence of a bright line may promote fairness at the same time that it engenders litigation.
Federal Arbitration Act, Consumers, Arbitration: First Amendment Challenge To Arbitration Clause Fails In Ninth Circuit
Does The Federal Arbitration Act Implicate "State Action"?
"No" is the short answer. However, read on if you want to know about the novel argument made by consumer plaintiffs in Roberts v. AT&T Mobility, No. 16-16915 (9th Cir. 12/11/17) (Tallman, Hawkins, Fletcher).
In Roberts, AT&T moved to compel arbitration against putative class action consumer plaintiffs, based on the ruling in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). At first blush, one might consider the issue of the validity of AT&T's arbitration clause to have been settled by Concepcion, which held that the Federal Arbitration Act (FAA) preempted state law deeming AT&T's arbitration to be unconscionable. However, the plaintiffs in Roberts tried a different tack, challenging AT&T's arbitration clause on the constitutional ground that it violated the First Amendment Petition Clause.
The Petition Clause guarantees that we can petition the government to redress grievances without fear of retribution. Essentially, the plaintiffs argued that judicial and legislative encouragement of arbitration is so strong, through the enactment of the FAA and Supreme Court enforcement of the FAA to compel arbitration, that the government deprived the plaintiffs of the right to petition by depriving them of their ability to have a court adjudicate their claims.
The threshold question in deciding the First Amendment Petition Clause claim is whether state action is even involved. The district court did not find state action, and the Ninth Circuit agreed. The Court of Appeals concluded that AT&T's conduct is not attributable to the state, and, quoting Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 937 (1982), "private parties [do not] face constitutional litigation whenever they seek to rely on some [statute] governing their interactions with the community surrounding them."
Arbitration, Construction of Agreement, International, FAA: Arbitration Agreement Not Signed By Parties Was Unenforceable, Based On Placement Of Comma
This Case Is For Grammar Afficionados; Or, What A Difference A Comma Makes.
Only and exclusive photo of the Vestris as it went down. Fred Hansen, photographer, active 1928. Library of Congress.
Mr. Yang, a seaman, died when the fishing vessel he worked on sank because of inadequate repairs and an incompetent crew. There were two defendants: Majestic Blue Fisheries, LLC, Mr. Yang's employer, and Dongwon Industries Co., Ltd., an affiliated company that provided the repairs and a crew for Majestic's vessel. The district court denied a motion to compel arbitration with Dongwon, and Dongwon appealed. Yang v. Dongwon Industries, 15-16881 (9th Cir. 11/30/17) (Nguyen, Fisher, Paez).
The agreement containing an arbitration clause was signed by Mr. Yang and by Dongwon "on behalf of MAJESTIC BLUE FISHERIES, LLC." Thus, the parties to the agreement were Mr. Yang and Majestic.
The key legal issue turned on the interpretation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention Act), which implements a Convention Treaty, and — drum roll — on the placement of a comma.
The Convention Act requires that a party seeking to compel arbitration must prove the existence and validity of "an agreement in writing withing the meaning of the Convention" Treaty. And the Convention Treaty defines an "agreement in writing" to "include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." Dwell upon the placement of the comma. Ponder what "signed by the parties" modifies.
Under cannons of construction, when a comma is included, "the modifier is generally understood to apply to the entire series." Thus, here, "signed by the parties" modifies both "an arbitral clause in a contract" and "an arbitration agreement." Neither of which was "signed by the parties." Hence, the arbitration provision could not be enforced by Dongwon.
Nor could Dongwon rely on the Federal Arbitration Act to enforce the arbitration provision, "because the FAA expressly exempts from its scope any 'contracts of employment of seamen.'"
And finally, the Court rejected as a "doctrinal sleight of hand" Dongwon's argument that the Convention Act requirements could be circumvented "by importing into our Convention Act analysis precedent permitting a 'litigant who is not a party to an arbitration agreement to invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement.'"
Affirmed.
COMMENT: It is sobering to think that the legal rights of the family of a drowned seaman depended on the placement of a comma.