Justia California Court of Appeals Opinion SummariesArticles Posted in Arbitration & Mediation
Prima Donna Development Corp. v. Wells Fargo Bank, N.A.
Prima Donna’s president, opened commercial bank accounts at Wells Fargo; he signed or agreed to be bound by several agreements, including wire transfer agreements. The commercial account agreement contained an arbitration agreement. A Prima employee was the victim of fraud and authorized wire transfers to foreign banks. Before Prima reported the fraud, $638,400 had been transferred and could not be recovered. Prima sued, alleging that Wells Fargo did not employ reasonable commercial standards of fair dealing and failed to follow the agreement's security procedures. The court ordered arbitration, stating “The fact that UCC provisions displace common law provisions and provide the law under which claims are analyzed" is unrelated to what type of fact-finder can apply that law. The arbitrator concluded that Wells Fargo was not liable for the loss. The court of appeal concluded the trial court properly ordered the matter to arbitration and confirmed the award. The court rejected arguments that the arbitration agreement was substantively unconscionable because the arbitrator would not necessarily decide the dispute under California law, because it denied Prima its right to a jury trial, or because of the limited nature of judicial review. The arbitration process allowed for discovery, an arbitrator who voluntarily recused himself after Prima expressed concern about his impartiality, a multi-day hearing, written discovery, evidentiary rulings, and a reasoned, written award that applied relevant California law, View "Prima Donna Development Corp. v. Wells Fargo Bank, N.A." on Justia Law
Bakersfield College v. Cal. Community College Athletic Assn.
Defendant California Community College Athletic Association (Athletic Association) administered intercollegiate athletics for the California community college system. The parties agreed that, as a condition of participating in the intercollegiate football league, plaintiff Bakersfield College (the College) agreed to be bound by the Athletic Association’s bylaws and constitution, including a provision requiring the College to resolve any sanctions and penalty disputes by binding arbitration. Instead of proceeding through binding arbitration to challenge the sanctions and penalty decisions issued by the Athletic Association and codefendant the Southern California Football Association (the Football Association) against the College, the College and coplaintiffs Jeffrey Chudy and the Kern Community College District elected to file civil litigation. Plaintiffs argued they were excused from pursuing binding arbitration because the arbitration provision was unconscionable. The trial court said the “issue [wa]s close,” but ultimately, after severing the one-sided attorney fees subsections, found the arbitration provision was not unconscionable. The trial court, therefore, found plaintiffs’ litigation was barred by the failure to exhaust their administrative remedies. The Court of Appeal agreed with the trial court that this was a close case but concluded the arbitration provision was unconscionable. Accordingly, it reversed. View "Bakersfield College v. Cal. Community College Athletic Assn." on Justia Law
Davis v. TWC Dealer Group, Inc.
TWC operated a Walnut Creek Toyota dealership. The Davises sought employment at TWC, to run its special finance department. The Davises are African-American, and Donald Davis is over the age of 40. The Davises were required to sign agreements providing that the Davises agreed to arbitration. The three agreements are all different. After the Davises became employed, TWC hired a new General Manager, Colon. The Davises claim that Colon “began to systematically undermine [the Davises’s] programs,” an effort “punctuated by shockingly inappropriate ageist and racist comments to and about them.” The Davises eventually resigned, filed complaints with the Department of Fair Employment and Housing, and obtained right to sue letters. The defendants filed an unsuccessful petition to compel arbitration. The court found there was an agreement to arbitrate, but found both procedural and substantive unconscionability. The court of appeal affirmed, noting TWC’s “lack of candor” concerning the agreements. The court noted the “take it or leave it” pressure under which the agreements were signed, the inconsistency between the agreements, how hard it would be for a layman to read the agreements, and the inclusion of broad provisions in violation of public policy. View "Davis v. TWC Dealer Group, Inc." on Justia Law
Gerawan Farming, Inc. v. Agricultural Labor Relations Board
After the Board issued a decision in which it held that the public does not have a constitutional right to attend mandatory mediation and conciliation (MMC) proceedings, Gerawan filed a declaratory relief action seeking a judicial declaration that the Board's decision violates the right of public access protected under the federal and state Constitutions. A Gerawan employee also intervened in the same action. The Court of Appeal held that Gerawan lacked standing to challenge the Board's policy on First Amendment grounds. The court also held that there was no right of access under the federal and state Constitutions to on-the-record MMC proceedings. Accordingly, the court affirmed the judgment. View "Gerawan Farming, Inc. v. Agricultural Labor Relations Board" on Justia Law
Posted in: Arbitration & Mediation
Spracher v. Paul M. Zagaris, Inc.
Almost two years into active litigation, defendants moved to compel arbitration of this class action brought on behalf of persons who employed the services of PMZ to buy or sell a residence. The court of appeal affirmed the denial of the motion. A motion to compel arbitration is properly denied when the moving party has waived its right to do so, Civ. Proc. Code, 1281.2(a). The California Supreme Court has identified relevant factors: whether the party’s actions are inconsistent with the right to arbitrate; whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; whether a party either requested arbitration close to the trial date or delayed for a long period before seeking a stay; whether a defendant seeking arbitration filed a counterclaim without asking for a stay; whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and whether the delay affected, misled, or prejudiced the opposing party. The trial court properly applied the factors; its determination that defendants’ delay of nearly two years constituted an unreasonably long period of time, and defendants’ explanation for their delay was unavailing, is “copiously supported by the evidence.” View "Spracher v. Paul M. Zagaris, Inc." on Justia Law
J.H. Boyd Enterprises, Inc. v. Boyd
Appellants appealed the denial of their motion to compel arbitration or, in the alternative, motion for judicial review. Appellants' motion stemmed from claims JHBE brought against them for judicial foreclosure and declaratory relief related to a promissory note JHBE entered into with the Boyd Trust, which was secured by a deed of trust. The Court of Appeal affirmed the order denying the motion to compel arbitration. In this case, the parties' dispute is governed by California law, and because the dispute concerns a secured loan and JHBE has not elected to proceed with the arbitration, under paragraph F of the agreement, the dispute cannot be submitted to arbitration. Furthermore, because an order denying judicial reference is not an appealable order, the court granted JHBE's motion to dismiss that portion of the appeal. View "J.H. Boyd Enterprises, Inc. v. Boyd" on Justia Law
Posted in: Arbitration & Mediation
Lopez v. Bartlett Care Center, LLC
Defendant, a 24-hour skilled nursing facility, appealed an order denying its petition to compel arbitration of claims asserting negligent or willful misconduct, elder abuse, and wrongful death filed against it by decedent’s daughter as successor in interest and individually. The trial court found the successor claims were not arbitrable because no arbitration agreement existed between decedent and defendant, given defendant’s failure to prove daughter had authority to sign the agreement on decedent’s behalf. The court further found the arbitration agreement was unenforceable against daughter individually on grounds of unconscionability. Finding no reversible error, the Court of Appeal affirmed the trial court order. View "Lopez v. Bartlett Care Center, LLC" on Justia Law
Franco v. Greystone Ridge Condominium
In March 2018, employees of defendant Greystone Ridge Condominium, including plaintiff Victor Franco, were presented with and asked to sign an agreement requiring that each employee agree to submit to final and binding arbitration “[a]ny and all claims . . . relating to any aspect of . . . employment with Employer (pre-hire through post-termination).” About 10 days later, plaintiff filed a complaint against defendants Greystone, C & A Services, John Stokke, and Maher A.A. Azer asserting employment-related claims. Two days after that, plaintiff signed the arbitration agreement and returned it to Greystone. Defendants filed a motion to compel arbitration of plaintiff’s claims which plaintiff opposed on the ground the arbitration agreement failed to expressly state that claims that had already accrued, including the claims asserted in plaintiff’s complaint, were subject to arbitration. The trial court agreed with plaintiff and denied the motion to compel arbitration. The Court of Appeal reversed, finding the parties’ arbitration agreement was "clear, explicit, and unequivocal" with regard to the claims subject to it, and contained no qualifying language limiting its applicability to claims that had yet to accrue. On the contrary, the agreement’s reference to claims relating to “pre-hire” matters expressed an intent to cover all claims, regardless of when they accrued, that are not otherwise expressly excluded by the arbitration agreement. View "Franco v. Greystone Ridge Condominium" on Justia Law
Clifford v. Quest Software Inc.
In 1995, Daniel Clifford began working for Quest Software Inc. (Quest). In 2012, Dell Inc. acquired Quest to form its software division, Dell Software Inc., which hired Clifford as an employee. In 2015, Clifford participated in Dell’s online “Code of Conduct” training course. According to Quest, when Clifford completed the training, he acknowledged that he read and agreed to the terms of Dell’s Arbitration Agreement and Dispute Resolution Program. In 2017, Clifford filed a complaint against Quest for: (1) failure to pay overtime; (2) failure to provide meal periods; (3) failure to provide rest periods; (4) failure to provide accurate wage statements; (5) failure to reimburse for business expenses; and (6) unfair business practices under Business and Professions Code section 17200. He based his complaint on his allegation Quest misclassified him as an exempt employee. Quest moved to compel arbitration of Clifford’s claims. The trial court found Quest had established the existence of a binding and enforceable arbitration agreement, and it compelled arbitration of Clifford’s first through fifth causes of action. However, it denied the motion on the sixth cause of action, his UCL claim, citing without discussion the California Supreme Court’s decision in Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 303 (2003). The court stayed the prosecution of that cause of action pending the completion of the arbitration. Quest timely appealed. The question posed in this appeal was whether an employee’s claim against his employer for unfair competition under section 172001 was arbitrable. The Court of Appeal reversed that portion of the trial court’s order. "Assuming Cruz remains good law . . . Cruz at most stands for the proposition that UCL claims for 'public' injunctive relief are not arbitrable. Cruz does not bar arbitration of a UCL claim for private injunctive relief or restitution, which is precisely what the UCL claim here seeks. The employee’s UCL claim therefore is subject to arbitration, along with his other causes of action." View "Clifford v. Quest Software Inc." on Justia Law
Mejia v. Merchants Building Maintenance
Defendants Merchants Building Maintenance, LLC and Merchants Building Maintenance Company (the MBM defendants) appeal from an order of the trial court denying their joint motion to compel arbitration. The MBM defendants moved to compel arbitration of a portion of plaintiff Loren Mejia's cause of action brought against them for various violations of the Labor Code under the Private Attorneys General Act of 2004 (PAGA). The MDM defendants moved to compel arbitration of that portion of Mejia's PAGA claim in which she seeks "an amount sufficient to recover underpaid wages." The Court of Appeal reduced the issue presented as whether a court could split a single PAGA claim so as to require a representative employee to arbitrate that aspect of the claim in which the plaintiff sought to recover the portion of the penalty that represented the amount sufficient to recover underpaid wages, where the representative employee has agreed to arbitrate her individual wage claims, while at the same time have a court review that aspect of the employee's claim in which the plaintiff sought to recover the additional $50 or $100 penalties provided for in section 558 of the Labor Code for each violation of the wage requirements. The Court of Appeal concluded that a single PAGA claim seeking to recover section 558 civil penalties could not be "split" between that portion of the claim seeking an "amount sufficient to recover underpaid wages" and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation. The Court affirmed the trial court's order denying the MDM defendants' motion to compel arbitration in this case. View "Mejia v. Merchants Building Maintenance" on Justia Law