Arbitration, Equitable Estoppel, Agency, Pending Cases: Garcia v. Pexco, LLC Is Now A Published Opinion
As "Joint Employer", Company To Which An Employee Was Assigned Could Take Advantage Of Arbitration Clause In Employee's Contract With Temporary Staffing Agency That Assigned The Employee To The Company.
I am happy to report that Garcia v. Pexco, LLC, G052872 (4/3 5/16/17), an opinion I posted about on April 26, 2017, when it was still unpublished, has now been published.
Why happy? At the time, I wrote about an interesting aspect of the case:
[W]hile the Court relies on existing case law to apply established rules of equitable estoppel and agency in order to require arbitration, the Court does not rely on any cases involving temporary staffing agencies that assign employees to other companies — probably an increasingly common occurrence in our "gig economy" characterized by a lack of permanent employment. Alas, the case is unpublished as of this date.
Well, now the case is published.
Arbitration: Employment, Public Policy, Standard Of Review: Court Of Appeal Rejects Contentions That Arbitrator Exceeded Powers By Issuing Award In Violation Of California Public Policy
The King vs. Medieval Knights . . .
Plaintiff Scott Ehredt, a performer in medieval style games at Medieval Knights, sued claiming that Medieval Knights had misappropriated his likeness in advertising images, notwithstanding a release that he had provided. The matter was arbitrated, and after receiving an adverse award, Mr. Ehredt appealed. Ehredt v. Medieval Knights, LLC, et al., B275833 (2/8 5/15/17) (Grimes, Rubin, Flier) (unpublished).
The Court of Appeal rejected Mr. Ehredt's argument that the arbitrator exceeded his powers and acted in violation of public policy by validating the employer's actions requiring him, as a condition of employment, to sign a release. Nor did the Court of Appeal accept an argument that the parties had contracted to judicial review of the merits of the award by agreeing that the award could be vacated if "the arbitrator acted in manifest disregard of the law or otherwise exceeded the arbitrator's powers . . . " The "manifest disregard standard" is a federal standard that is narrowly construed. The general rule, of course, is that the court does not vacate an award for a mistake of law or fact.
COMMENT: The arbitrator awarded defendants attorney fees in the amount of $280,000 and costs in the amount of $8,650.26. Though one of the arguments in favor of arbitration is its economy and efficiency, even a three-day arbitration can prove to be very expensive, given the amount of work leading up to the hearing. This debacle brought to mind the Black Knight of Monty Python fame. Hence, the video link above.
Arbitration/Administrative: Ruling of Workers’ Compensation Appeals Board Is Annulled Because Rescission Issue Remained “Factually Open And Unresolved”
Arbitrator And Appeals Board Did Not Address Whether Rescission Was A Meritorious Defense To Employee's Claim.
Southern Insurance Company rescinded an insurance policy based on violation of a representation that covered employer's employees did not travel out of state, after an employee injured out of state made a workers' comp claim. The matter was referred to arbitration. The arbitrator concluded that the insurer could not rescind, the Workers' Compensation Appeals Board affirmed, and the insurer appealed. Southern Insurance Company v. Workers' Compensation Appeals Board, et al., B278412 (2/2 5/10/17) (Chavez, Hoffstadt, Goodman) (unpublished).
Held: "The conclusion is unavoidable that the issue whether Southern's rescission was legally effective remains factually open and unresolved." Accordingly, the decision of the appeals board was annulled, and the matter remanded to the board for proceedings consistent with the opinion.
COMMENT: We would have liked to see a discussion of the standard of review and relevant authority in this opinion.
Mediation/Settlement Agreement: Court Enforces “Short Form” Settlement Agreement Over Objections Of Petitioner
The Neighbor Feud Had Gone On Since 2002.
Wandering Elk, Dakota Indian, smokes peacepipe. c1903. Frank Bennett Fiske, photographer. Library of Congress.
The Court of Appeals' reliance on the wisdom of a Croatian proverb offered a strong clue in the first sentence that the Court would enforce peace among feuding neighbors: "Better a bad harvest than a bad neighbor." Beuchel v. Sup. Ct., B268193 (2/2 5/1/17) (Hoffstadt, Ashmann-Gerst, Goodman) (unpublished). Another clue was the Court's eagerness to treat the matter, filed as an appeal, as a writ proceeding. In this unpleasant neighbor dispute, there were allegations of spraying plaintiff with a garden hose, trespass to install barbed wire, and installation of surveillance cameras. The 15 year history of ill-will included a citizen's arrest of plaintiff after defendants allegedly found her in their backyard damaging their fence.
But let's cut to the chase. Plaintiff tried to wriggle out of a short-form settlement agreement following a mediation, chiefly on the grounds that she only understood the release of claims to apply to defendants' cross-claims, not her own, as to which the trial court had already granted summary judgment against her. After neighbors brought a motion to enforce the settlement agreement, which the trial court granted, plaintiff appealed.
Unsurprisingly, the Court of Appeal denied the plaintiff/petitioner's request, affirming the trial court's grant of the enforcement motion.
COMMENT: Key reasons that the Court was willing to enforce the shorthand form were that it described the settlement "as full and final settlement of the claims raised" in the court case; plaintiff's promise to waive her right to appeal; and a "1542 waiver" that included each parties' waiver of all claims known and unknown.
The Court of Appeal added, "The trial court had ample grounds to find that plaintiff's refusal to sign the short-form agreement was an effort to create controversy where none existed and a thinly veiled attempt to 'cause unnecessary delay' by frivolous means." As a consequence, the Court upheld a trial court order awarding payment of attorney's fees defendants incurred in moving to enforce the short-form agreement.
There is a strong tendency to attribute fault to someone who appears to be acting unreasonably.
Arbitration, Unconscionability, Severability: Trial Court’s Order Denying Petition To Compel Arbitration Is Reversed, Because The Only Unconscionable Provision Was Severable
The Unconscionable Provision Permitted Only The Defendant To Seek Equitable And Injunctive Relief In A Court Of Law.
In Enyong v. Westlake Services, LLC et al., B275952 (2/5 4/24/17) (Kriegler, Baker, Dunning) (unpublished), the Court of Appeal concluded that an arbitration provision contained only one unconscionable term, which was severable. Therefore, it reversed the trial court's order denying the petition to compel arbitration.
The one unconscionable provision permitted only defendant/appellant Westlake to seek equitable and injunctive relief in a court of law. However, this provision could have been severed, enabling the trial court "to enforce an otherwise valid arbitration agreement as favored by the FAA."
Relying on Baltazar v. Forever 21, Inc., 62 Cal.4th 1237 (2016), the Court further concluded "that the agreement is a contract of adhesion, but it does not involve sharp practices, oppression, or an element of surprise" — in other words, the procedural unconscionability prong also could not have been satisfied.
Note: The trial judge was the Hon. Teresa Sanchez-Gordon. On April 17, 2017, the Metropolitan News-Enterprise announced that she will be retiring after 20 years on the bench.
Arbitration, Equitable Estoppel, Agents: Hourly Employee Hired Out By Temporary Staffing Company Is Compelled To Arbitrate With Company To Which He Is Assigned — Though That Company Is A Non-Signatory To Arbitration Agreement
Equitable Estoppel And Agency Theories Required The Employee To Arbitrate With The Non-Signatory Company.
I suspect that that the facts in our next case are far from unique. In Garcia v. Pexco, LLC, G052872 (4/3 4/24/17) (Ikola, Aronson, Thompson) (unpublished), plaintiff Garcia was hired by Real Time, a temporary staffing company, and assigned to work for Pexco, LLC. Garcia brought employment claims against Real Time and Pexco, alleging they were joint employees, agents of one another, and both responsible for the same wrongs. While Garcia had a broad arbitration agreement covering the claims with Real Time, he had no arbitration agreement at all with Pexco.
Of course, defendants moved to compel, and there was no question but that Real Time could require arbitration. The issue in the appeal was whether Pexco, the sole respondent, could compel arbitration. Yes, the Court of Appeal concluded. Garcia was equitably estopped from avoiding arbitration with Pexco, because he had alleged that Pexco and Real Time were joint employers, agents of one another, and had committed the same wrongs.
COMMENT: There are two interesting aspects to the case. The first is that the Court must distinguish between pleadings that result in equitable estoppel, and pleadings that do not result in equitable estoppel. The murky distinction that the Court appears to be making is that pleadings that are "mere boilerplate" will not necessarily result in equitable estoppel and admissions (especially if denied?), but that pleadings that are "not merely boilerplate language" and are actually integral to the claims will lead to equitable estoppel.
The second interesting aspect is that, while the Court relies on existing case law to apply established rules of equitable estoppel and agency in order to require arbitration, the Court does not rely on any cases involving temporary staffing agencies that assign employees to other companies — probably an increasingly common occurrence in our "gig economy" characterized by a lack of permanent employment. Alas, the case is unpublished as of this date.