Justia California Court of Appeals Opinion Summaries

Saldana resigned from his position at Veeco and went to work for a competitor, Aixtron. Veeco initiated arbitration proceedings against Saldana under an arbitration clause in his employee confidentiality agreement, alleging breach of contract, breach of the duty of loyalty, and conversion, including alleged data theft. Aixtron was not a party to the arbitration. The arbitrator granted Veeco’s application for a pre-hearing discovery subpoena for Aixtron’s business records, including a demand that Aixtron produce any computers that Saldana had used for forensic examination by “an agreed-upon third-party neutral expert.” Over Aixtron’s objections, the arbitrator granted Veeco’s motion to compel. Aixtron sought judicial review; Veeco filed a separate petition to enforce the arbitrator’s discovery order, which the court granted.The court of appeal reversed, after first finding the order appealable. The arbitrator did not have the authority to issue a discovery subpoena to Aixtron in these circumstances under either the Federal Arbitration Act or the California Arbitration Act. Federal precedent indicates that there is no right to pre-hearing discovery under the FAA. There is no such right under Code of Civil Procedure section 1282.61 since the parties to the arbitration did not provide for full discovery rights in their arbitration agreement. View "Aixtron, Inc. v. Veeco Instruments Inc." on Justia Law

The parties’ arbitration agreement purported to waive class actions and any “other representative action” (the representative waiver). There was no dispute that this representative waiver was broad enough to cover a Labor Code Private Attorneys General Act of 2004 (PAGA) claim, and was thus invalid. The arbitration agreement went on to provide that the provision containing the class action and representative waiver was not modifiable nor severable. The arbitration agreement also contained a provision that if the representative waiver was found to be invalid, “the Agreement becomes null and void as to the employee(s) who are parties to that particular dispute,” the so-called "blow-up provision." Plaintiff Nichole Kec brought individual, class, and PAGA claims against defendants R.J. Reynolds Tobacco Company, Reynolds American Inc., and three individual employees at R.J. Reynolds Tobacco Company, alleging in essence, that she and others were misclassified as exempt employees, resulting in various violations of the Labor Code. R.J. Reynolds Tobacco Company and Reynolds American Inc., moved to compel arbitration of plaintiff’s individual claims except the PAGA claim. The court granted the motion. The court reasoned: (1) because defendants had not asked the court to rule on the enforceability of the representative waiver, it had not found the representative waiver invalid, and thus the blow-up provision had not been triggered; and (2) the blow-up provision could apply only to the attempted waiver of the PAGA claim, not to the arbitrability of plaintiff’s claims under the Labor Code. The Court of Appeal concluded defendants could not selectively enforce the arbitration agreement in a manner that defeated its goals. "Had the parties intended to permit defendants to proceed with arbitration notwithstanding an invalid waiver of representative claims, they would have simply made that provision severable, like every other term in the agreement. But that is not what they did. Instead, by specifically making section 5 not severable, the agreement evinces an intent not to allow defendants to selectively enforce the arbitration agreement." The Court issued a writ of mandate ordering the trial court to vacate its order granting arbitration, and to enter a new order denying the motion in its entirety. View "Kec v. Superior Court" on Justia Law

The lack of initials next to a jury waiver contained in an arbitration agreement, even though the drafter included lines for the initials, is of no legal consequence in this case.After plaintiff filed an employment-related suit against BaronHR, BaronHR moved to compel arbitration. The Court of Appeal held that the trial court erred in denying the motion to compel arbitration because the language of the agreement between the parties establishes their mutual assent to submit employment-related disputes to arbitration and to waive the right to a jury trial. Furthermore, plaintiff does not dispute that he signed the agreement and thus he is deemed to have assented to its terms. The court stated that the fact that plaintiff did not also initial the subject paragraph does not provide a basis for concluding the parties did not mutually assent to the arbitration agreement. View "Martinez v. BaronHR, Inc." on Justia Law

Where, as here, an arbitrator issues a series of rulings during an arbitration proceeding, a court determines which rulings constitutes an "award" by (1) asking whether the ruling (a) determines all issues necessary to resolve the entire controversy and (b) leaves unaddressed only those issues incapable of resolution at that time because those issues are potential, conditional or contingent, and (2) answering those questions by looking to the specific procedures adopted in the arbitration at issue.In this case, the parties trifurcated the arbitration proceedings and the arbitrator's second of three rulings did not determine all issues necessary to the controversy and left unaddressed issues that could have been addressed at that time. Therefore, the Court of Appeal held that the arbitrator acted within her authority in modifying that second ruling prior to issuing her third and final ruling that constituted an "award" and the trial court erred in refusing to confirm that award on the ground that the arbitrator had exceeded her powers in incorporating a modification of the second ruling into the award. The court vacated with instructions to enter a new and different judgment, rejecting the parties' further attorney fees-based challenges and awarding attorney fees on appeal to the prevailing party on appeal. View "Lonky v. Patel" on Justia Law

The Private Attorney General Act (Labor Code 2698) allows an employee, as a proxy for state enforcement agencies, to sue an employer on behalf of herself and other aggrieved employees for Labor Code violations. When the parties have an arbitration agreement, California law blocks the employer from enforcing that agreement with respect to representative PAGA claims for civil penalties; the agreement may be enforceable with respect to other claims, including claims for victim-specific relief (like unpaid wages). Lime rents electric scooters. Olabi entered into an agreement to locate, recharge, and redeploy Lime's scooters. The agreement required the parties to arbitrate “any and all disputes,” including Olabi’s classification as an independent contractor but contained an exception for PAGA representative actions.Olabi sued, alleging Lime intentionally misclassified him and others as independent contractors, resulting in Labor Code violations; he included claims under the Unfair Competition Law and PAGA. Lime petitioned to compel arbitration, arguing Olabi was required to arbitrate independent contractor classification disputes and that the PAGA exception did not cover the unfair competition claim or the PAGA claim to the extent that Olabi sought victim-specific relief. Olabi voluntarily dismissed his unfair competition claim and disavowed any claim for victim-specific relief. The trial court denied Lime’s petition and granted Olabi leave to amend. The court of appeal affirmed. The language of the arbitration agreement broadly excludes PAGA actions View "Olabi v. Neutron Holdings, Inc." on Justia Law

Landlord's 131,000-square-foot San Francisco building has been leased to Saks for a department store since 1991. The initial 25-year lease period is followed by options to renew at “ ‘Fair Market Rent.” If the parties are unable to agree to the rent amount, they are to submit the issue to arbitration. Saks exercised its option to renew the Lease. The parties were unable to agree on rent and selected arbitrator Kleczewski. Kleczewski reviewed the evidence and briefs. Landlords’s rent determination was $13,917,364; Saks’ determination was $6,250,000. Kleczewski’s own fair market rent determination was approximately $10.9 million. Pursuant to the principles of “baseball” arbitration, he ruled the annual rent would be $13,917,364.The trial court vacated the award, finding that the parties carefully defined the scope of the arbitrator’s authority but Kleczewski violated that agreement by visiting New York properties that influenced his decision. The parties participated in a second arbitration hearing before a different arbitrator who found in favor of Saks. The trial court confirmed the award. The court of appeal affirmed. Code of Civil Procedure section 1286.25 provides that courts “shall vacate” awards that are the product of procedural irregularities. The parties were clear from the outset that Kleczewski was not authorized to perform his own due diligence. View "California Union Square L.P. v. Saks & Co. LLC" on Justia Law

In November 2007, Marten performed surgery on Doe’s face and neck. In June 2008, Doe sent Marten a letter stating she was considering suing him and demanded that he preserve her documents, files, and photos. In November, Doe’s attorney served Marten with a written demand for arbitration pursuant to a Physician-Patient Arbitration Agreement. In January 2009 Marten’s counsel responded, identifying an arbitrator, without questioning the origin of the agreement or disputing that Marten had signed it. The applicable one-year statute of limitations ran in March 2009. (Code Civ. Proc.340.5) In May 2009, Merten subpoenaed and obtained the records of Dr. Daniel, whom Doe earlier consulted. Located within Daniel’s records was a signed arbitration agreement. Nearly three years later, Marten’s counsel first confronted Doe with the arbitration agreement and refused to continue with the arbitration.Doe sued for medical malpractice and medical battery. The court overruled dismissal motions, finding triable issues as to whether equitable tolling or equitable estoppel disallowed the statute of limitations defense. The court imposed sanctions after hearing evidence that Marten destroyed electronically stored information. After the close of evidence, the trial court dismissed the medical battery claim. On the malpractice claim, the jury awarded over $6.3 million in damages. The court then found the malpractice claim time-barred. The court of appeal reversed in part. The medical malpractice claim was not time-barred because Merten’s conduct actually and reasonably induced Doe to refrain from filing a timely action. View "Doe v. Marten" on Justia Law

Civil Code section 1953 prohibits enforcement of a predispute arbitration provision for disputes arising from or related to the tenancy provisions of a continuing care contract. The Court of Appeal held that the trial court erred when it ordered the parties' dispute to arbitration, because the agreements compelling arbitration arising from or related to the tenancy provisions of the continuing care contracts are void as contrary to public policy. Accordingly, the court reversed and remanded for trial. View "Harris v. University Village Thousand Oaks, CCRC, LLC" on Justia Law

Jarboe was hired by DKD of Davis, doing business as Hanlees Davis Toyota. Shortly after he began working, Jarboe was transferred to Leehan of Davis, doing business as Hanlees Chrysler Dodge Jeep Ram Kia. Following his termination at Leehan, Jarboe brought a wage and hour action against the Hanlees Auto Group, its 12 affiliated dealerships, including DKD and Leehan, and three individuals. The defendants moved to compel arbitration based on an employment agreement between Jarboe and DKD. The trial court granted the motion as to 11 of the 12 causes of action against DKD of Davis but denied the motion as to the other defendants and allowed Jarboe’s claim under the Private Attorneys General Act, Labor Code 2698. to proceed in court against all defendants. The court refused to stay the causes of action allowed to proceed in litigation pending arbitration of Jarboe’s claims against DKD. The court of appeal affirmed, rejecting an argument by Hanlees, its affiliated dealerships, and the individual defendants that they were entitled to enforce the agreement to arbitrate between Jarboe and DKD as third party beneficiaries of Jarboe’s employment agreement or under the doctrine of equitable estoppel. The trial court did not err in failing to stay the litigation under Labor Code section 1281. View "Jarboe v. Hanlees Auto Group" on Justia Law

Noe hired attorney Dorit to evaluate the medical records of Noe’s deceased mother for a potential medical malpractice suit. Noe agreed to pay Dorit a $10,000 non-refundable retainer fee, intended to cover Dorit’s time spent evaluating the claim, plus “the costs of additional medical records and/or expert medical review if indicated.” The agreement stated, “Should there arise any disagreement as to the amount of attorney fees and/or costs, Client agrees to enter into binding arbitration of such issue or dispute before the Bar Association of San Francisco.” Ultimately, Dorit said he did not think a malpractice claim was viable. Noe later asked Dorit to return some or all of the retainer fee. Dorit refused. Noe filed a request for arbitration. An arbitrator awarded Noe nothing and allocated him the entire filing fee. Because neither party requested a trial de novo, the award became binding under the Mandatory Fee Arbitration Act MFAA). Months later, Dorit sued Noe for malicious prosecution based on the initiation of arbitration. Noe filed a special motion to strike under Code of Civil Procedure section 425.16, the anti-SLAPP statute. The court of appeal reversed the denial of his motion. A malicious prosecution claim cannot be based on an MFAA arbitration. View "Dorit v. Noe" on Justia Law