Articles Posted in California Court of Appeal

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Farrar was hired by Direct Commerce as its vice-president of business development and negotiated an employment agreement set forth in a six-page offer letter detailing her compensation, additional bonus structure, and stock options. The agreement also included an arbitration provision, set off by the same kind of underlined heading and spacing as the other enumerated paragraphs of the agreement. When Farrar sued Direct, alleging breach of contract, conversion, wrongful termination, breach of the covenant of good faith and fair dealing, and failure to pay wages owed and waiting time penalties, the employer unsuccessfully sought to compel arbitration. The trial court found the arbitration provision procedurally and substantively unconscionable. The court of appeals reversed. While the arbitration provision is one-sided, as it excludes any claims arising from the confidentiality agreement Farrar also signed, that offending exception is readily severable and, on this record, should have been severed. View "Farrar v. Direct Commerce, Inc." on Justia Law

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ECC appealed a final arbitration award of almost $7 million against them and in favor of Manatt. ECC argued that the trial court erred in confirming the interim award because the arbitrator violated mandatory disclosure rules, and that the trial court erred in confirming the final award. The court concluded that ECC did not establish that the arbitrator violated mandatory disclosure rules; ECC forfeited its argument that the 2007 engagement agreement was illegal; ECC did not establish that Manatt procured the final award by fraud or undue means; and ECC did not establish that the arbitrator improperly refused to hear evidence. Accordingly, the court affirmed the judgment. View "ECC Capital v. Manatt, Phelps & Phillips" on Justia Law

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Plaintiff-respondent Roberto Betancourt sued his employer, defendant-appellant Prudential Overall Supply (Prudential). In Betancourt's complaint, he alleged Betancourt and other Prudential employees worked over eight hours per day or more than 40 hours per week, and that Prudential failed to compensate Betancourt and other employees for all the hours they worked, as well as for missed breaks and meal periods. Prudential moved to compel arbitration but the trial court denied Prudential’s motion. Prudential argued on appeal the trial court erred. Finding no error, the Court of Appeal affirmed the judgment. View "Betancourt v. Prudential Overall Supply" on Justia Law

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Stephen Kaplan appeals from a judgment confirming a $30 million arbitration award against him. This matter arose when several investors (plaintiffs1) sued Kaplan and a limited liability company (referred to as Houston LLC2) alleging defendants breached fiduciary duties pertaining to plaintiffs' investment in a self-storage facility located in Texas. Plaintiffs sought compensatory damages and declaratory relief, but did not seek punitive damages. After the court granted defendants' unopposed motion to compel the matter to private arbitration, the arbitration hearing was stayed while Kaplan was criminally prosecuted for his conduct in soliciting and handling investments in self-storage facilities, including the property at issue in plaintiffs' lawsuit. After Kaplan pled guilty to a wire fraud charge in the criminal action but before his sentencing hearing, a telephonic arbitration hearing was scheduled. The arbitrator awarded plaintiffs $30,835,152.57 without specifying the grounds or nature of the award. Kaplan then requested that the arbitrator vacate or modify the award, but the assigned arbitrator recused himself from all further arbitration proceedings and the arbitration administrator declined to reassign the case. Although the award did not specify the nature of the damages, the parties agreed a substantial portion of the award consists of punitive damages. After review, the Court of Appeal concluded the judgment had to be reversed: the arbitrator exceeded his authority by awarding punitive damages without adequate prior notice to Kaplan, in violation of the parties' arbitration agreement and fundamental procedural fairness principles. View "Emerald Aero, LLC v. Kaplan" on Justia Law

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Plaintiff filed a putative class action against Wet Seal, alleging that the company violated the Labor and Business and Professions Codes, Industrial Welfare Commission Wage Order No. 7, and Title 8 of the California Code of Regulations. Plaintiff's claim also included a representative claim under the Private Attorneys General Act (PAGA), Lab. Code, § 2699. On appeal, Wet Seal challenges the denial of its motion to compel arbitration, and the grant of plaintiff's motion to compel discovery responses. The court concluded that Wet Seal's motion to compel arbitration was properly denied where the trial court declared the entire arbitration agreement was void and unenforceable based on its determination that the PAGA waiver was invalid, and applied the arbitration agreement's nonseverability provision. Wet Seal also asserts that the trial court should not have reached the merits of the discovery motion while its motion to compel arbitration was undetermined. The court concluded that there is no requirement for a trial court to issue a tentative ruling, or to announce its final ruling before taking a matter under submission. Because there is no basis to treat the appeal from the nonappealable order as a petition for writ of mandate, the court dismissed this portion of the appeal. The court affirmed in all other respects. View "Montano v. Wet Seal Retail, Inc." on Justia Law

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Defendant-appellant Ross Stores, Inc. (Ross) appealed the denial of its motion to compel arbitration. Plaintiff-respondent Martina Hernandez was employed at a Ross warehouse in Moreno Valley, and filed a single-count representative action under the California Private Attorney General Act (PAGA), alleging Ross had violated numerous Labor Code laws, and sought to recover PAGA civil penalties for the violations. Ross insisted that Hernandez had to first arbitrate her individual disputes showing she was an "aggrieved party" under PAGA and then the PAGA action could proceed in court. The trial court found, that the PAGA claim was a representative action brought on behalf of the state and did not include individual claims. As such, it denied the motion to compel arbitration because there were no individual claims or disputes between Ross and Hernandez that could be separately arbitrated. On appeal, Ross raised the issue of whether under the Federal Arbitration Act (FAA), an employer and employee had the preemptive right to agree to individually arbitrate discreet disputes underlying a PAGA claim while leaving the PAGA claim and PAGA remedies to be collectively litigated under "Iskanian v. CLS Transportation Los Angeles LLC," (59 Cal.4th 348 (2014)). The Court of Appeal upheld the trial court's denial of the motion to compel arbitration. View "Hernandez v. Ross Stores" on Justia Law

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In November 2014, plaintiff Julie Flores filed a complaint against defendants Nature's Best Distribution, LLC, Nature's Best, KeHe Distributors, Inc., and KeHe Distributors, LLC, alleging claims for disability discrimination, failure to engage in the interactive process, failure to accommodate disability, retaliation, failure to prevent discrimination or retaliation, and wrongful termination in violation of public policy. The complaint alleged in February or March 2014, plaintiff injured her back but continued to work until May 2014, when her back injury got worse and she was placed on medical leave for "disabling lumbar radiculopathy and spinal stenosis." Plaintiff's medical leave was extended through August 15, 2014. When plaintiff returned to the doctor, however, she was not cleared of all restrictions and was placed on further leave until August 31, 2014, on which date she would be cleared to perform modified duties from September 1 to 19, 2014. Plaintiff did not receive a doctor's note, memorializing the need to further extend her leave, until August 18, 2014, at which time she faxed it to defendants at a fax number, which she previously had used, and received a confirmation that the fax was successfully sent. Defendants denied receiving a fax. Plaintiff attempted to deliver the doctor's note in person, but learned that on August 21, 2014, her employment had been terminated for failing to return from medical leave. Defendants filed a petition to compel arbitration based on evidence that plaintiff signed an agreement for alternative dispute resolution (the Agreement). The trial court denied the petition. Defendants argued on appeal the trial court erroneously concluded defendants failed to prove plaintiff agreed to arbitrate her claims and that the arbitration provision contained in the Agreement was unenforceable because it is unconscionable. The Court of Appeal affirmed, finding defendants failed to prove plaintiff agreed to submit her claims to final and binding arbitration. View "Flores v. Nature's Best Distribution" on Justia Law

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Condon purchased a car. Believing the dealership knowingly failed to disclose prior damage, Condon sued. The contract required arbitration of disputes. An arbitration award would be final, unless “the arbitrator’s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief.” In such case, “that party may request a new arbitration under the rules of the arbitration organization by a three-arbitrator panel. Condon maintained the provision was unconscionable because of the possibility of a second arbitration, which he claimed favored the dealer. The trial court ordered arbitration. The arbitrator, ADR, found for Condon, ordered him reimbursed, and excused Condon from making further payments. The defendants did not oppose Condon’s motion for costs and fees. ADR awarded $180,175.34. Defendants requested ADR to proceed to new arbitration. ADR concluded it lacked authority to resolve the parties’ disagreement over whether new arbitration was proper. Condon returned to court, which confirmed the award and denied defendants’ request for a second arbitration, reasoning that the forum lacked separate “appellate” rules and could not conduct a second arbitration. The court of appeal reversed. ADR did not refuse to conduct a second arbitration because of the lack of appellate rules, but solely because Condon objected. View "Condon v. Daland Nissan, Inc." on Justia Law

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Tanguilig, a Bloomingdale’s employee, filed a representative action on behalf of herself and fellow employees pursuant to the Labor Code Private Attorneys General Act (PAGA) (Lab. Code 2698), alleging several Labor Code violations by the company. The trial court denied a motion by Bloomingdale’s to compel arbitration of Tanguilig’s “individual PAGA claim” and stay or dismiss the remainder of the complaint. The court of appeal affirmed. Under California Supreme Court precedent and consistent with the Federal Arbitration Act (FAA) (9 U.S.C. 1), a PAGA representative claim is nonwaivable by a plaintiff-employee by means a predispute arbitration agreement with an employer. A PAGA claim (whether individual or representative) acts as a proxy for the state, with the state’s acquiescence, and seeks civil penalties largely payable to the state; such a plaintiff cannot be ordered to arbitration without the state’s consent. View "Tanguilig v. Bloomingdale's, Inc." on Justia Law

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Plaintiff Da Loc Nguyen appealed a trial court's order granting the motion of his former employer, defendant Applied Medical Resources Corporation, to compel arbitration based on an arbitration clause contained in his employment application. The court ordered plaintiff to submit his individual claims to arbitration and struck all class and representative claims except for the representative Private Attorney General Act (PAGA) cause of action. Plaintiff argued the order was immediately appealable based on the "death knell doctrine." As to the merits of the appeal, plaintiff argued the court erred in finding the arbitration clause was not unconscionable, severing the cost provision, and dismissing the class claims with prejudice. The Court of Appeals rejected all but the last argument, finding that the trial court erred in dismissing the class claims because whether the arbitration provision contemplated class arbitration was a question for the arbitrator to decide. The Court of Appeals issued a peremptory writ of mandate commanding the trial court to vacate that portion of its order dismissing the class claims to allow the arbitrator to decide whether the arbitration clause permitted arbitration on a class-wide basis. In all other respects, the peremptory writ challenging the order compelling arbitration was denied. View "Nguyen v. Applied Medical Resources Corp." on Justia Law