Justia Arbitration & Mediation Opinion Summaries

This case arose from a contractual dispute involving a commercial lease. Michael Scheinker, who later passed away and was succeeded by Jennifer O’Leary, leased property to Green America Inc. Walter Jones III signed the lease on behalf of Green America and also signed a guarantee clause, making him personally responsible for obligations under the lease, including attorney fees. After disputes developed, Green America initiated litigation against Scheinker. Scheinker successfully compelled arbitration, where he asserted claims against Green America and Jones. The arbitrator issued an award in Scheinker’s favor, finding Jones liable as guarantor. Scheinker then sought to confirm the arbitration award in the Superior Court of Riverside County.The Superior Court confirmed the arbitration award against Green America but denied the petition as to Jones, citing lack of personal jurisdiction since Jones had not been joined as a party before the matter was sent to arbitration. The court also expressly declined to rule on Jones’s request to vacate the arbitration award. Afterward, Jones moved for attorney’s fees and costs, arguing he was the prevailing party under Civil Code section 1717. The Superior Court denied attorney’s fees, reasoning that no party prevailed on the contract because the merits of enforceability as to Jones had not been resolved. The court did not separately address Jones’s request for costs.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that the Superior Court acted within its discretion in denying Jones’s motion for attorney’s fees, finding that Jones had obtained only an interim victory and the substantive contract issues remained unresolved. However, the appellate court found that Jones was entitled to reasonable court costs under Code of Civil Procedure section 1032, as he was a defendant in whose favor a dismissal was entered. The order was affirmed as to attorney’s fees and remanded for the award of costs to Jones. View "O'Leary v. Jones" on Justia Law

A woman with dementia was admitted to a memory care facility, where her family warned staff about her tendency to wander and need for supervision. Three days after admission, she was found unattended in a courtyard on a 102-degree day, suffering from severe burns and heatstroke, ultimately dying days later. Her family, acting as successors in interest and individually, sued the facility for elder neglect, negligence, fraud, wrongful death, and negligent infliction of emotional distress. Upon admission, her niece had signed an arbitration agreement on her behalf, which the family argued should not bind their individual claims or override their right to a jury trial.The Superior Court of Sacramento County considered the facility’s motion to compel arbitration and stay the proceedings. The court found a valid arbitration agreement existed for the decedent’s survivor claims but ruled that the agreement did not bind the family members' individual claims, as they were not parties to the agreement. The court also declined to compel arbitration of the survivor claims under California Code of Civil Procedure section 1281.2, subdivision (c), citing the risk of conflicting rulings if the family’s claims proceeded in court while survivor claims were arbitrated. The court further held that the agreement’s reference to the Federal Arbitration Act (FAA) did not expressly incorporate the FAA’s procedural provisions to preempt California law.On appeal, the California Court of Appeal, Third Appellate District, affirmed the trial court’s judgment. It held that the arbitration agreement did not clearly and unmistakably delegate threshold issues of arbitrability to the arbitrator, and that the FAA’s procedural provisions were not expressly adopted by the agreement. Therefore, California law applied, and the trial court properly exercised its discretion to deny arbitration to avoid inconsistent rulings. The judgment was affirmed, and costs were awarded to the plaintiffs. View "Wright v. WellQuest Elk Grove" on Justia Law

A former employee brought suit against his prior employer, alleging that the employer’s compensation plan for commissions violated several provisions of the California Labor Code. The employee claimed that the employer’s use of a “windfall” provision, which limited commission payments when revenue goals were substantially exceeded, resulted in retroactive reductions to earned commissions. The employer invoked this provision after the employee and others exceeded their sales goals, causing the employee’s final commission payment to be lower than anticipated. The employee resigned and later sought civil penalties under the Private Attorneys General Act (PAGA), as well as damages for alleged unpaid wages and other Labor Code violations.The Superior Court of Alameda County compelled arbitration of the employee’s individual claims but allowed the PAGA claims to proceed in court. During arbitration, the arbitrator found in favor of the employer on all individual claims, concluding that the compensation plan’s “windfall” provision did not violate the Labor Code sections at issue. The arbitrator determined that the commissions in question were not subject to the statutory requirements argued by the employee, and that the plan did not involve unlawful wage recapture or secret underpayment. The trial court confirmed the arbitration award, denied the employee’s motion for summary adjudication on the PAGA claim, and subsequently granted the employer’s motion for judgment on the pleadings, finding that the arbitration resolved the issue of whether the employee was an “aggrieved employee” with standing under PAGA.The California Court of Appeal, First Appellate District, Division Four, affirmed the lower court’s judgment. The court held that the arbitration agreement was not illusory, that the arbitrator’s findings precluded the employee from maintaining PAGA standing, and that the employer’s commission plan did not violate the cited Labor Code provisions. The judgment in favor of the employer was affirmed. View "Sorokunov v. NetApp, Inc." on Justia Law

The plaintiff was employed by the defendant as a collector and customer service representative in California, and upon being hired, electronically signed an arbitration agreement. The agreement broadly required arbitration for disputes relating to employment or termination, and covered claims based on federal, state, or local laws, including the California Labor Code. It also expressly prohibited class or collective adjudication and stated that it “shall be governed by the Federal Arbitration Act and, to the extent permitted by such Act, the laws of the State of California.” In 2023, the plaintiff sued the defendant, asserting both individual and class claims for alleged violations of labor and business statutes.After the complaint was filed in the Superior Court of Los Angeles County, the defendant moved to compel arbitration of the plaintiff’s individual claims and to dismiss the class claims. The defendant submitted evidence that it is a Delaware corporation, previously had offices in Washington, and sourced materials from outside California. The plaintiff opposed, arguing that the Federal Arbitration Act (FAA) did not apply because her employment was exclusively within California and no evidence showed the agreement involved interstate commerce. The trial court found the arbitration agreement valid, held that the FAA applied based on the agreement’s express terms and supporting evidence, and dismissed the class claims per the agreement’s prohibition.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, considered whether the trial court correctly found the FAA governed the arbitration agreement. The appellate court held that the FAA applies because the parties expressly agreed in the contract to be governed by the Act, regardless of whether the underlying transaction actually involved interstate commerce. The court affirmed the order compelling arbitration of the plaintiff’s individual claims and dismissing the class claims. The defendant was awarded costs on appeal. View "Tuufuli v. West Coast Dental Admin. Services" on Justia Law

The parties in this case entered into a settlement agreement in 2005 to resolve a longstanding water rights dispute between their respective parcels, providing that future disputes would be resolved by mediation and, if necessary, binding arbitration before a retired judge with water law expertise in San Diego County. The agreement included provisions for attorney fees for the prevailing party in certain circumstances. In 2016, a new dispute arose over groundwater resources and the parties proceeded to arbitration. During the arbitration, the arbitrator withdrew after Lodge filed demands for disqualification, leaving the dispute unresolved. While the Barbanell entities sought a replacement arbitrator, Lodge initiated a separate lawsuit asserting the same claims as those in arbitration. The Barbanell entities then filed a distinct action, petitioning the Superior Court of San Diego County to appoint a new arbitrator.The Superior Court of San Diego County granted the Barbanell entities’ petition to appoint a new arbitrator and entered judgment in their favor, designating them as prevailing parties entitled to seek attorney fees. Upon subsequent motion, the court found that the settlement agreement entitled the Barbanell entities to recover reasonable attorney fees incurred in obtaining the appointment of a new arbitrator, and awarded them $68,800 in fees. An amended judgment was issued to reflect this award.The Court of Appeal, Fourth Appellate District, Division One, reviewed only the postjudgment award of attorney fees. It affirmed the Superior Court’s decision, holding that the Barbanell entities were prevailing parties in the discrete action to appoint an arbitrator and were entitled to attorney fees under the settlement agreement and Civil Code section 1717. The appellate court clarified that the presence of related claims pending elsewhere did not preclude a fee award for this separate, concluded action. View "Barbanell v. Lodge" on Justia Law

A former hourly, nonexempt employee of a large lumber manufacturer filed a class action in October 2018 alleging wage and hour violations on behalf of eight classes of present and former employees. Many employees had signed arbitration agreements that precluded class actions and required arbitration of employment-related disputes, but neither the named plaintiff nor other named plaintiffs were signatories. Throughout several years of litigation, the employer did not identify signatory employees or produce the signed arbitration agreements, despite being ordered to do so. The employer participated in extensive discovery and litigation regarding all putative class members, including those who had signed the agreements.The Superior Court of Shasta County reviewed the case and, after extensive discovery disputes, granted class certification for eight classes in November 2022. Following class certification, the employer produced over 3,000 signed arbitration agreements and promptly moved to compel arbitration for class members who had signed the agreements. The plaintiffs opposed this, arguing the employer had waived its right to compel arbitration due to its prior litigation conduct, including failure to produce agreements and treating signatory employees as class members throughout discovery. The trial court denied the employer’s motion to compel arbitration, finding waiver under the St. Agnes test, and granted sanctions precluding the employer from presenting evidence of the arbitration agreements or arguing that class members had signed them.Upon appeal, the Court of Appeal of the State of California, Third Appellate District, affirmed the order denying the motion to compel arbitration and dismissed the appeal from the sanctions order. The main holding was that the employer had waived its contractual right to compel arbitration by conduct that was inconsistent with an intent to arbitrate, including withholding the agreements and treating signatory employees as class members, as established by clear and convincing evidence. The court dismissed the appeal regarding sanctions for lack of appellate jurisdiction. View "Sierra Pacific Industries Wage and Hour Cases" on Justia Law

A former employee worked for a retail company and, during his employment, signed an arbitration agreement that included a waiver of class, collective, and Private Attorneys General Act (PAGA) representative actions. This agreement stated that any dispute must be brought in arbitration on an individual basis and not as a representative action. The agreement also included a severability clause, specifying that if any part of the waiver was found invalid, a private attorney general claim would have to be litigated in court.After his employment ended, the employee filed a lawsuit against the company under PAGA, alleging wage-and-hour violations on behalf of himself, other employees, and the State of California. The claims and requested relief were pleaded in the aggregate, and the complaint did not separately seek penalties for violations suffered by the plaintiff alone.The employer moved to compel arbitration, arguing that the Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana allowed for arbitration of the “individual” component of a PAGA claim even if representative claims could not be arbitrated. The Alameda County Superior Court denied the motion, reasoning that there is no such thing as an “individual PAGA claim” under California law.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Four, affirmed the trial court’s decision. The appellate court held that, based on the language of the arbitration agreement, the parties did not agree to arbitrate individual PAGA claims. The court reasoned that as of the time the agreement was drafted, there was no clear distinction in California law between “individual” and “non-individual” PAGA claims. Therefore, the court declined to compel arbitration of the PAGA claim and affirmed the lower court’s order. Costs on appeal were awarded to the employee. View "LaCour v. Marshalls of California" on Justia Law

A former employee brought a single-count action under the Private Attorneys General Act of 2004 (PAGA) against his previous employer, alleging violations of various wage-and-hour provisions of the California Labor Code. The employee had previously signed an arbitration agreement that included waivers of class action, collective action, and representative PAGA claims, with a severability clause stating that any invalidation of the PAGA waiver would require such claims to be litigated in court, not arbitrated. The complaint sought civil penalties on behalf of the employee, other current and former employees, and the State of California, but did not separately seek penalties for violations suffered by the employee personally.The employer moved to compel arbitration, arguing that recent federal and state precedent required arbitration of the "individual component" of the PAGA claim, relying on Viking River Cruises, Inc. v. Moriana and subsequent California cases. The Superior Court of Alameda County denied the motion, reasoning that under California law there was no such thing as an "individual PAGA claim" and, therefore, the claim could not be compelled to arbitration.Reviewing the denial, the Court of Appeal of the State of California, First Appellate District, Division Four, considered the parties’ arguments regarding the interpretation of the arbitration agreement and relevant case law. The court held that, based on the language of the agreement and the intent of the parties at the time it was signed, there was no clear agreement to arbitrate individual PAGA claims if the PAGA waiver was invalidated. The court reasoned that, although recent decisions allow splitting PAGA actions into individual and non-individual claims, the agreement in this case did not provide for such arbitration. Accordingly, the court affirmed the order denying the motion to compel arbitration. View "LaCour v. Marshalls of California" on Justia Law

Plaintiff was employed by defendant and, as a condition of employment, electronically signed both an offer letter containing an arbitration provision and a separate nondisclosure agreement (NDIAA) on the same day. The offer letter required arbitration for most employment-related disputes, while the NDIAA included terms such as a waiver of bond for injunctive relief and a heightened burden of proof for public domain information. Plaintiff’s employment ended in March 2023, after which she sued defendant in Alameda County Superior Court for disability discrimination, retaliation, and related claims under California’s Fair Employment and Housing Act, as well as wrongful termination. None of her claims involved confidential information or sought injunctive relief.Defendant moved to compel arbitration, asserting the Federal Arbitration Act (FAA) governed and that plaintiff’s claims fell within the arbitration agreement’s scope. The trial court found the arbitration agreement and NDIAA should be read together under California Civil Code section 1642, determined that certain NDIAA provisions were unconscionable, and concluded that unconscionability permeated the arbitration agreement. The court declined to sever the NDIAA’s unconscionable provisions and denied the motion to compel arbitration.On appeal, the California Court of Appeal, First Appellate District, Division Five, disagreed with the trial court’s refusal to sever. The appellate court held that the FAA does not preempt section 1642, and even assuming the NDIAA’s challenged provisions were unconscionable and properly considered alongside the arbitration agreement, those provisions were collateral to the arbitration agreement’s central purpose and did not affect the claims at issue. Applying Ramirez v. Charter Communications, Inc., the appellate court determined that the unconscionable terms should have been severed and the arbitration agreement enforced. Consequently, the order denying arbitration was reversed. View "Wise v. Tesla Motors, Inc." on Justia Law

An employee was hired by a security services company in 2012 and, as a condition of employment, signed an arbitration agreement requiring that any employment-related disputes be resolved through arbitration under the Federal Arbitration Act (FAA). In 2023, the employee was assigned to work at Oracle Park, where he was subjected to hostile and derogatory conduct by supervisors and coworkers based on his perceived sexual orientation, including intrusive questioning, mocking, and reduction of work hours. After formally complaining about this treatment, the employee was terminated. He then filed a lawsuit against his employer and two individuals, asserting multiple claims, including sexual harassment under California’s Fair Employment and Housing Act.The defendants sought to compel arbitration based on the prior agreement, arguing that all claims fell within its scope and that both federal and state law required enforcement. The plaintiff opposed the motion, challenging the agreement’s validity but not specifically referencing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA). The Superior Court of the City and County of San Francisco issued a tentative ruling, later adopted as final, finding that the EFAA rendered the arbitration agreement unenforceable because the plaintiff stated a valid sexual harassment claim. The court further found that the EFAA barred arbitration of the entire case, not just the sexual harassment claim, and that the plaintiff’s conduct showed he elected to pursue his claims in court.On appeal, the California Court of Appeal, First Appellate District, Division Three, affirmed the trial court’s denial of the motion to compel arbitration. The court held that the EFAA applies to cases involving sexual harassment claims and bars enforcement of predispute arbitration agreements for the entire case at the plaintiff’s election, without requiring an explicit invocation of the EFAA. The court also held that the trial court properly considered the EFAA’s applicability and provided due process, even without supplemental briefing. View "Quilala v. Securitas Security Services USA" on Justia Law