Justia California Court of Appeals Opinion Summaries

Articles Posted in Arbitration & Mediation
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Four business partners had a dispute that ultimately led to a nine-day arbitration hearing. During the hearing, the arbitrator openly took pain medications. After the arbitrator issued a final ruling, the two losing partners filed a petition in the trial court to vacate the arbitration award. They alleged for the first time, that the arbitrator was “unable to properly perceive the evidence or . . . unable to properly conduct the proceeding.” The trial court denied the petition based on principles of forfeiture: the losing partners failed to demand, at any point during the nine-day hearing, that the arbitrator needed to disqualify himself. The Court of Appeal agreed with the trial court, thus affirming the order denying the petition to vacate the arbitration award. View "Alper v. Rotella" on Justia Law

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The Court of Appeal affirmed the trial court's denial of Uber's motion to compel arbitration in an action brought by plaintiff, alleging a single cause of action for wage violations under the Private Attorneys General Act (PAGA), Lab. Code, 2698 et seq. Plaintiff was an Uber driver under a written agreement stating she was an independent contractor and all disputes would be resolved by arbitration under the Federal Arbitration Act (FAA), and the agreement delegated to the arbitrator decisions on the enforceability or validity of the arbitration provision.The court concluded, as has every other California court presented with this or similar issues, that the threshold question of whether plaintiff is an employee or an independent contractor cannot be delegated to an arbitrator. The court found that this issue has been resolved adversely to Uber in two cases decided during and after briefing in this case: Provost v. YourMechanic, Inc. (2020) 55 Cal.App.5th 982, and Contreras v. Superior Court (2021) 61 Cal.App.5th 461. The court was not persuaded to depart from the analyses in Provost and Contreras and all the authorities they cite. The court rejected Uber's claims to the contrary and affirmed the trial court's order. View "Rosales v. Uber Technologies, Inc." on Justia Law

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The arbitration award at issue here involved claims by a former investment fund manager and his former employers, namely, the investment funds. All parties were sophisticated and engaged in a business - not consumer - dispute. Both law firms were frequent users of the services of the ADR provider, JAMS. The motion to vacate was based on the sole ground that the arbitrator did not disclose the extent of JAMS’s “business relationship” with O’Melveny & Myers (one of the law firms) and the arbitrator’s ownership interest in JAMS (not more than .1 percent of total revenue in a given year). Appellant contended the arbitrator failed to make required disclosures. The sole basis for the appeal was the argument the arbitrator did not disclose information that could cause a reasonable person aware of the facts to entertain a doubt that the arbitrator would be able to be impartial. The trial court granted a motion to confirm an arbitration award and denied a motion to vacate that award. Based on the facts and circumstances shown by this record, and applying the analytical framework the Court of Appeal held that the arbitrator’s and JAMS’s disclosures were sufficient, and the arbitrator was not required to disclose more information about the extent of JAMS’s business with O’Melveny & Myers, or the arbitrator’s own ownership interest in JAMS. "There is no issue of a repeat party or lawyer being favored over a non-repeat party or lawyer; the parties in this business dispute are sophisticated; and the law firms were both frequent users of JAMS to the same extent." View "Speier v. The Advantage Fund, LLC" on Justia Law

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Plaintiffs, consisting of the estate of decedent Edward William Kuntz (decedent), his wife, and his three children, sued, among others, the Kaiser Foundation Hospital and the Permanente Medical Group, Inc. (collectively Kaiser), asserting causes of action sounding in elder abuse, negligent infliction of emotional distress, and wrongful death. Kaiser filed a petition to stay the action and compel arbitration. The trial court granted the petition as to the elder abuse cause of action, staying the other causes of action. Ultimately, the trial court entered judgment in favor of Kaiser. Plaintiffs appealed, arguing: (1) Kaiser failed to satisfy its burden of producing a valid agreement to arbitrate; and (2) Kaiser failed to comply with the mandatory requirements of Health and Safety Code section 1363.1 concerning the disclosure of arbitration requirements. Finding no reversible error, the Court of Appeal affirmed. View "Kuntz v. Kaiser Foundation Hospital" on Justia Law

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Plaintiff, individually and on behalf of a putative class, filed suit against his employers, SSP, alleging violations of various provisions of California’s wage and hour laws. SSP moved to compel arbitration under the collective bargaining agreement (CBA) between it and the labor union representing plaintiff.The Court of Appeal affirmed the trial court's denial of SSP's motion to compel arbitration. The court concluded that the CBA between SSP and the union provides for arbitration of claims arising under the agreement, but it does not waive the right to a judicial forum for claims based on statutes. In this case, the trial court correctly concluded that arbitrability was a question for the court, not the arbitrator, and that plaintiff's claims are not subject to arbitration. View "Wilson-Davis v. SSP America, Inc." on Justia Law

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Plaintiff worked as a delivery driver for TBS, a “last-mile” delivery company whose primary client was Amazon.com. At the start of his employment, he signed an At-Will Employment, Non-Disclosure, Non-Solicitation, Class-Action Waiver and Arbitration Agreement. Plaintiff filed suit asserting violations of the Labor Code, California’s Unfair Competition Law, and the Private Attorneys General Act, unlawful retaliation, and wrongful termination. The trial court denied TBS’s motion to compel the plaintiff to arbitrate his individual claims and to dismiss his class claims. The court found that the plaintiff was exempt from Federal Arbitration Act (9 U.S.C. 1, FAA) coverage because he was a transportation worker engaged in interstate commerce and that the class action waiver was unenforceable, rendering the arbitration agreement unenforceable.The court of appeal affirmed that the plaintiff is exempt from FAA coverage and that the class action waiver is unenforceable under California law. The court reversed the order denying the motion to compel arbitration of the plaintiff’s individual claims; the trial court improperly found the arbitration agreement unenforceable in its entirety rather than severing the class action waiver provision from the remainder of the employment agreement and considering the validity of the arbitration provision with respect to the individual claims for unlawful retaliation and wrongful termination. View "Betancourt v. Transportation Brokerage Specialists, Inc." on Justia Law

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The Court of Appeal affirmed the trial court's confirmation of an arbitration award against appellants and in favor of respondents in a contract dispute. The arbitrator partially rescinded the contract after finding Appellant Shumway provided legal services without an active license.The court concluded that the trial court was not required to independently review the legality of the 2016 and 2017 agreements at issue; the award does not violate public policy or appellants' statutory rights; the arbitrator did not exceed his powers by finding Shumway engaged in the unlicensed practice of law; the arbitrator did not exceed his powers by ruling that Shumway is personally liable for the award; and the arbitrator did not engage in misconduct. The court declined to impose sanctions against appellants for filing a frivolous appeal and denied without prejudice respondents' request for attorney fees on appeal. View "Bacall v. Shumway" on Justia Law

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The Court of Appeal reversed the trial court's order denying Altamed's motion to compel arbitration of respondent's claims. The court held that the arbitration agreement is valid where respondent knowingly waived her right to a jury trial and the signature of Altamed's CEO was not required on the arbitration agreement. The court also held that any unconscionability in the arbitration agreement does not provide grounds for revocation or non-enforcement. Rather, the provision giving rising to substantive unconscionability is severable. In this case, the second review provision appears entirely severable from the remainder of the agreement and removing it would remove the only instance of substantive unconscionability. Furthermore, the arbitration agreement contains a severability provision. Therefore, the court ordered the provision severed. View "Cisneros Alvarez v. Altamed Health Services Corp." on Justia Law

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A Private Attorneys General Act (PAGA) plaintiff may not be compelled to arbitrate whether he or she is an aggrieved employee. Petitioners filed suit against Zum under PAGA, alleging that Zum misclassified them and others as independent contractors and thus violated multiple provisions of the California Labor Code. The trial court granted Zum's motion to compel arbitration and ordered into arbitration the issue of arbitrability of petitioners' suit.The Court of Appeal reversed the order compelling arbitration, concluding that the delegation of the question of arbitrability to an arbitrator frustrates the purpose of PAGA and is therefore prohibited under California law. The court explained that the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, and several Courts of Appeal are uniform in holding that PAGA claims are not waivable and are not arbitrable. Furthermore, under that case law and in light of the very nature of a PAGA claim, a court – not an arbitrator – must decide all aspects of the claim. The court further explained that the only exception is when the state, as real party in interest, has consented to arbitration. However, the state did not consent here. The court concluded that the "preliminary" question of whether petitioners are "aggrieved employees" under PAGA may not be decided in private party arbitration. View "Contreras v. Superior Court of Los Angeles County" on Justia Law

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The Court of Appeal reversed a judgment confirming an arbitration award removing the managing director of two corporations, owned by Ted and his brother Harry Roussos as cotrustees of two trusts, and appointing the director proposed by Harry. The court concluded that the parties cannot contract away California's statutory protections for parties to an arbitration, including mandatory disqualification of a proposed arbitrator upon a timely demand. The court explained that the arbitrator was still a "proposed neutral arbitrator" for the present arbitration under Code of Civil Procedure sections 1281.9 and 1281.91, and under section 1281.91, subdivision (b)(1), the arbitrator was required to disqualify himself upon Ted's timely service of a notice of disqualification. In this case, as the proposed neutral arbitrator, Judge Shook was legally required to make the disclosures set forth in his disclosure report, and Ted had an absolute right to disqualify him without cause. Because the arbitrator refused to disqualify himself, the trial court was required to vacate the award under section 1286.2, subdivision (a)(6)(B). The court remanded with instructions for the trial court to vacate its order granting the petition to confirm the arbitration award, and to enter a new order vacating the award. View "Roussos v. Roussos" on Justia Law