Justia California Court of Appeals Opinion Summaries

The plaintiffs first worked for Tesla through staffing agencies. When Tesla offered them employment, effective August 2, 2017, most of the plaintiffs electronically signed offer letters, including an arbitration provision, “any and all disputes, claims, or causes of action, in law or equity, arising from or relating to your employment, or the termination of your employment, will be resolved, to the fullest extent permitted by law by final, binding and confidential arbitration.” A complaint under the Fair Employment and Housing Act (FEHA) (Gov. Code 12900) alleged that the plaintiff and other Black workers “suffered severe and pervasive harassment.”The trial court partially granted Tesla's motion to compel arbitration, reasoning that the arbitration clauses required the plaintiffs to arbitrate disputes that arose on or after 8/2/17 while claims based on alleged wrongs before 8/2/17 are not within the scope of the agreements. The trial court denied the motion to the extent that the plaintiffs sought a public injunction. The court of appeal affirmed. The court properly declined to mandate arbitration of the request for a public injunction. Injunctions sought under FEHA may be considered “public injunctions.” The Federal Arbitration Act (9 U.S.C. 1), as interpreted by the Supreme Court in 2022 (Viking River) does not preempt the California rule prohibiting waiver of the right to seek such injunctions. View "Vaughn v. Tesla, Inc." on Justia Law

Doe alleges that she was sexually assaulted by a massage therapist during a massage at a San Rafael Massage Envy retail location. She filed suit against the Arizona-based franchisor that licenses the “Massage Envy” brand name (MEF), and the independently owned San Rafael franchise where the assault allegedly occurred. MEF moved to compel arbitration on the basis of a “Terms of Use Agreement” presented to Doe when she checked in for a massage she had booked at the franchise location. The trial court concluded that there was no agreement to arbitrate between Doe and MEF.The court of appeal affirmed, rejecting MEF’s argument that the “Terms of Use Agreement,” which was available to Doe via a hyperlink on the electronic tablet she was given at the franchise, was a valid and enforceable “clickwrap” agreement of the sort that courts routinely enforce. Doe did not have reasonable notice that she was entering into any agreement with MEF, much less notice of the terms of the agreement. The transaction was nothing like the typical transactions in which clickwrap agreements are used; Doe went to a physical location, where she was already a member, and was handed a tablet to check in for a massage. View "Doe v. Massage Envy Franchising, LLC" on Justia Law

Valley Hospital admitted Ann as a resident to recover from hip surgery. Weeks later, Valley discharged Ann to an assisted living facility, where she died five days later. This suit alleges that Ann, unable due to dementia to communicate her needs, lost 40 pounds and became severely dehydrated at Valley, resulting in acute renal failure and that Valley, billing Medicare until her eligibility expired, "dumped" her at a non-medical facility, "misrepresenting to the family and facility that [Ann] was stable and healthy enough” for the transfer.Valley submitted an arbitration agreement that John had signed on Ann’s behalf. The agreement stated that residents were not required to sign as a condition of admission. The court sent the suit to arbitration. The plaintiffs paid their portion of the arbitration filing fee. Valley did not timely pay the balance. More than 30 days after the deadline, citing Code of Civil Procedure section 1281.98, the plaintiffs moved to vacate the stay of litigation and to withdraw from arbitration. Valley paid its fees that day. The court of appeal affirmed an order permitting the resumption of litigation. The statute provides that a business pursuing arbitration under a pre-dispute arbitration agreement is in material breach of that agreement—thereby waiving its right to arbitrate—if it fails to timely pay its share of arbitration fees; it does not require an arbitrator’s determination of default and it is not limited to only to mandatory pre-dispute agreements. View "Williams v. West Coast Hospitals, Inc." on Justia Law

Plaintiff-appellant Bernell Beco filed suit against his former employer, defendant Fast Auto Loans, Inc. (Fast Auto) alleging 14 causes of action relating to the termination of his employment. Plaintiff alleged causes of action under with), including claims under the California Fair Employment and Housing Act (FEHA), numerous wage and hour violations under the Labor Code, wrongful termination, unfair competition, and additional tort claims. Fast Auto moved to compel arbitration, arguing that Beco had signed a valid arbitration agreement at the time he was hired. The trial court found the agreement unconscionable to the extent that severance would not cure the defects and declined to enforce it. After its review, the Court of Appeal agreed with the trial court that the agreement was unconscionable, and further rejected Fast Auto’s argument that the arbitrator, not the court, should have decided the issue of unconscionability. Additionally, because the agreement included numerous substantively unconscionable provisions, the appellate court found no abuse of discretion in the trial court’s decision not to sever them. View "Beco v. Fast Auto Loans, Inc." on Justia Law

An arbitrator determined that a borrower and lender were liable to each other for similar amounts, each roughly two and a half million dollars. He then offset the awards against each other, resolving the disputed issue of whether a setoff was proper. A bank, however, had also lent money to the borrower. The bank was not a party to the arbitration, but believed the setoff effectively circumvented the agreement among it, the borrower, and the other lender that the bank’s loan had priority and would be paid back first. Instead of being offset against the other lender’s award, the bank believed, the borrower’s award should have gone toward satisfying the bank’s loan. It thus convinced the trial court to correct the arbitrator’s award by eliminating the setoff. The Court of Appeal held that on the facts presented, the correction affected the merits of the arbitrator’s decision. Accordingly, the correction was improper, and the Court reversed. View "E-Commerce Lighting, Inc. v. E-Commerce Trade LLC" on Justia Law

Defendant, Simplified Labor Staffing Solutions, Inc. (Simplified) appealed an order denying its motion to compel arbitration of Plaintiff’s claims brought under the California Private Attorneys General Act of 2004 (PAGA). Simplified’s motion was based on Plaintiff’s predispute agreement to arbitrate all claims arising from their employment relationship. The trial court understandably denied the motion based on a rule followed by numerous California Courts of Appeal that predispute agreements to arbitrate PAGA claims are unenforceable.   The Second Appellate District reversed and held that this rule cannot survive the U.S. Supreme Court’s recent decision in Viking River Cruises, Inc. v. Moriana (2022) U.S.[142 S.Ct. 1906] (Viking River). The court further held that the scope of the arbitration clause is to be determined by the arbitrator in accordance with the arbitration agreement. Specifically, the parties’ dispute about whether nonindividual PAGA claims are governed by the arbitration agreement, in the same way, individual PAGA claims are, is an issue for the arbitrator to address. View "Lewis v. Simplified Labor Staffing Solutions, Inc." on Justia Law

On engaging services from Pacific Fertility Center, the plaintiffs signed “ ‘Informed Consent and Agreement to Perform Egg Cryopreservation” forms, providing that medical malpractice disputes were subject to arbitration. The plaintiffs signed separate arbitration agreements. Chart, which manufactures Pacific’s cryogenic storage tanks, and Praxair, which sold those tanks to Pacific and assisted with installation, were not signatories to either the informed consent or arbitration agreements.Following the failure of Tank Four, the plaintiffs in 54 coordinated cases filed suit. As to Chart and Praxair, the complaint alleged negligent failure to recall the tank, strict products liability (failure to warn, manufacturing defect, and design defect based on both the consumer expectations test and the risk-utility test), general negligence, and violation of the Unfair Competition Law. After the plaintiffs agreed to arbitrate their claims against Pacific, Chart and Praxair moved to compel arbitration, citing equitable estoppel. The court of appeal affirmed the denial of their motions. The plaintiffs’ claims are not premised on, nor did they arise out of, the plaintiffs’ fertility services agreements with Pacific. The issue of comparative fault and joint liability on certain issues does not inform the equitable estoppel analysis; the joint liability is not based on the same or similar legal theories and/or facts that underlie the obligations under the Pacific contracts. View "Pacific Fertility Cases" on Justia Law

Following the commencement of arbitration proceedings between appellant Juanita’s Foods and Respondent, Juanita’s Foods failed to pay its share of arbitration fees within 30 days after such fees were due. Based on that late payment, the trial court concluded that Juanita’s Foods was in material breach of the parties’ arbitration agreement and allowed Appellant to proceed with his claims against Juanita’s Foods in court.   Juanita’s Foods argues that the trial court should have considered factors in addition to its late payment—for example, whether the late payment delayed arbitration proceedings or prejudiced Appellant—to determine the existence of a material breach of the arbitration agreement.   The Second Appellate District affirmed, concluding that the trial court correctly declined to consider these additional factors. The court explained that Code of Civil Procedure sections 1281.97 and 1281.98 provide that if a company or business that drafts an arbitration agreement does not pay its share of required arbitration fees or costs within 30 days after they are due, the company or business is in “material breach” of the arbitration agreement. In the case of such a material breach, an employee or consumer can, among other things, withdraw his or her claim from arbitration and proceed in court. Accordingly, the court affirmed the order granting Appellant’s motion to vacate the order compelling arbitration as to Juanita’s Foods. View "De Leon v. Juanita's Foods" on Justia Law

Petitioner was an equity partner in Dentons U.S. LLP, a law firm with offices throughout the United States. A dispute arose between them over a multimillion-dollar contingency fee from a client whom Petitioner brought to the firm. The partnership agreement contains a clause providing for arbitration of all disputes in Chicago or New York. The partnership agreement also contains a clause delegating all questions of arbitrability to the arbitrator. Dentons terminated Petitioner for cause, asserting a breach of fiduciary duty, and initiated an arbitration in New York.Petitioner sued Dentons for wrongful termination and other causes of action in Los Angeles Superior Court. Petitioner obtained a temporary restraining order and then a preliminary injunction, enjoining the New York arbitration until the court could decide whether there was a clear and unmistakable delegation clause.Dentons filed a motion under Code of Civil Procedure section 1281.4, seeking a mandatory stay of the case based on its motion to compel arbitration that was then pending in a New York court, which the New York court later granted.Petitioner sought a writ of mandate, which the court previously denied. The Supreme Court granted review and transferred the case back to the Second Appellate District, directing the court to issue an order to show cause. The court did so, and again denies the petition. The court agreed with the trial court that the parties delegated questions of arbitrability to the arbitrator. The arbitrability issues in this case include whether petitioner is an employee who may invoke Labor Code section 925 and require the merits of the dispute to be resolved in California instead of New York. View "Zhang v. Super. Ct." on Justia Law

Taska was hired by TRR in 2017 but was terminated in 2018, allegedly based on her protest against the CEO’s discriminatory comments and her reports of workplace-related legal violations. After arbitration, Taska stated her intent to file a petition for attorney fees and costs under Government Code 12965(b), “upon a liability finding.” TRR also sought fees and costs, arguing Taska’s lawsuit should be deemed meritless, based on her “fabricated evidence.” TRR did not ask for any specific amount or offer supporting evidence. The arbitrator determined that Taska failed to prove her claims and was not entitled to fees or costs; TRR was not entitled to fees and costs because Taska’s claims were not frivolous. TRR later sought fees and costs, explaining that facts established by the arbitrator were not available at the time of the previous briefing. The arbitrator issued a new “Final Award,” awarding TRR $53,705.43. A Corrected Final Award increased the amount to $73,756.43, based on a calculation error.The trial court confirmed the liability determination but held that the arbitrator exceeded her authority by amending the original Award. The court of appeal affirmed. Once the 30-day period for correction (section 1284) runs, the award is final and the arbitrator’s jurisdiction ends apart from specific statutory exceptions, The court rejected TRR’s “placeholder” argument that the Award was not “final” because the issue of fees and costs was not ripe until the arbitrator determined the question of liability. View "Taska v. The RealReal, Inc." on Justia Law