Justia Arbitration & Mediation Opinion Summaries

Three former or current employees of Cross Country Staffing, Inc. (plaintiffs) filed a lawsuit against their employer, alleging various labor law violations. Upon hiring, each plaintiff signed two agreements: an Arbitration Agreement mandating arbitration for all employment-related claims and an Employment Agreement that included provisions favoring the employer, such as non-compete clauses and the right to seek injunctive relief in court without posting a bond.The Superior Court of Los Angeles County denied Cross Country Staffing's motion to compel arbitration, finding that the Arbitration Agreement, when read together with the Employment Agreement, was unconscionable. The court determined that the agreements were procedurally unconscionable due to their adhesive nature and substantively unconscionable because they unfairly favored the employer by allowing it to litigate its likely claims in court while forcing employees to arbitrate their likely claims. The court also noted the non-mutual attorney fees provisions and the employee's mandated concessions regarding injunctive relief.The California Court of Appeal, Second Appellate District, Division Five, affirmed the trial court's decision. The appellate court agreed that the two agreements should be read together under Civil Code section 1642, as they were part of the same transaction and related to the same subject matter. The court found significant substantive unconscionability in the agreements' imbalance of arbitration obligations and the employer's access to court for its claims. The court also upheld the trial court's refusal to sever the unconscionable provisions, concluding that the agreements' unconscionability permeated the entire arbitration framework and that refusing to enforce the Arbitration Agreement served the interests of justice. View "Silva v. Cross Country Healthcare, Inc." on Justia Law

Monroe Operations, LLC, doing business as Newport Healthcare, hired Karla Velarde as a care coordinator and required her to sign an arbitration agreement as a condition of employment. Velarde was later terminated and filed a lawsuit alleging discrimination, retaliation, and violation of whistleblower protections. Newport Healthcare and its director of residential services, Amanda Seymour, filed a motion to compel arbitration, which the trial court denied. The court found that Velarde was pressured to sign the agreement, which she did not want to do, and that the agreement unlawfully prohibited her from seeking judicial review of an arbitration award.The Superior Court of Orange County ruled that the arbitration agreement was procedurally unconscionable because it was presented as an adhesive contract buried among 31 documents that Velarde had to sign quickly while an HR manager waited. Additionally, Newport Healthcare's HR manager made false representations about the nature and terms of the agreement, which contradicted the written terms, rendering the agreement substantively unconscionable. The court denied the motion to compel arbitration based on these findings.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and affirmed the trial court's decision. The appellate court found ample evidence of procedural unconscionability due to the pressure and misrepresentations made by Newport Healthcare. The court also found substantive unconscionability because the agreement did not conform to Velarde's reasonable expectations and placed her in a disadvantageous position. The appellate court concluded that the arbitration agreement was unenforceable and affirmed the order denying the motion to compel arbitration. View "Velarde v. Monroe Operations, LLC" on Justia Law

Respondent George Zeber filed a workers' compensation claim for cumulative injury sustained during his employment with the New York Yankees from 1968 to 1978. The Workers’ Compensation Appeals Board (WCAB) found Zeber had a compensable injury but deferred any award pending further proceedings, including mandatory arbitration of the insurance coverage dispute. Travelers Indemnity Company (Travelers) disputed the applicability of mandatory arbitration, arguing it only applies to injuries occurring on or after January 1, 1994, while Zeber's injury occurred no later than 1978.The Workers’ Compensation Judge (WCJ) found Zeber sustained an injury during his employment but deferred findings on permanent disability and other issues. The WCJ also found the statute of limitations did not bar Zeber’s claim, as he only became aware of his right to file a claim in 2017 or 2018. The WCJ determined the New York Yankees had insurance coverage provided by Travelers and noted that disputes involving the right of contribution must be sent to arbitration. Travelers filed for reconsideration, which the WCAB partially granted, amending the WCJ’s decision to defer the insurance coverage issue to mandatory arbitration.The California Court of Appeal, Fourth Appellate District, reviewed the case. The court concluded that section 5275, subdivision (a)(1) applies only to injuries occurring on or after January 1, 1990. The WCJ had not made a finding on the date of injury for purposes of section 5275. The court annulled the WCAB’s decision and remanded the case for further proceedings, including a determination of the date of injury for the purposes of mandatory arbitration. The court emphasized that the "date of injury" for cumulative injuries should be determined under section 5412, which considers when the employee first suffered disability and knew or should have known it was work-related. View "Travelers Indemnity Co. v. Workers' Compensation Appeals Bd." on Justia Law

Edgar Osuna sued Spectrum Security Services, Inc., alleging violations of the California Labor Code. He brought five individual and class claims, and a sixth representative claim under the Labor Code Private Attorneys General Act of 2004 (PAGA). The trial court dismissed Osuna’s class claims, sent his individual claims to arbitration, and sustained Spectrum’s demurrer to his PAGA claim without leave to amend. The court concluded that Osuna lacked standing to bring the PAGA claim because he did not suffer a Labor Code violation within the one-year statute of limitations for recovering civil penalties.The trial court’s decision was based on the interpretation that Osuna needed to have suffered a violation within the one-year period before filing his PAGA notice. Osuna appealed, arguing that he is an aggrieved employee with standing to assert a representative PAGA claim because he suffered Labor Code violations during his employment with Spectrum.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case. The court concluded that the trial court erred in its interpretation of the standing requirements under PAGA. The appellate court held that to have standing under PAGA, an employee must have been employed by the alleged violator and suffered at least one Labor Code violation, regardless of whether the violation occurred within the one-year statute of limitations for recovering civil penalties. The court emphasized that the statute of limitations is an affirmative defense and does not affect standing.The appellate court reversed the portion of the trial court’s order sustaining Spectrum’s demurrer to Osuna’s representative PAGA claim and remanded the case for further proceedings consistent with its opinion. View "Osuna v. Spectrum Security Services, Inc." on Justia Law

Mone Yvette Sanders filed a class and representative action against her former employer, Edward D. Jones & Co., L.P., alleging wage and hour claims under the Labor Code and a cause of action under the Private Attorneys General Act of 2004 (PAGA). The trial court granted Edward Jones’s motions to compel arbitration of Sanders’s individual Labor Code and PAGA claims and stayed the representative PAGA cause of action pending arbitration. Sanders initiated arbitration, but Edward Jones failed to pay $54,000 in fees within 30 days as required by Code of Civil Procedure section 1281.98. Sanders then moved to vacate the order compelling arbitration and proceed in court.The trial court initially granted Sanders’s motion, finding section 1281.98 was not preempted by the Federal Arbitration Act (FAA). However, after Edward Jones submitted new authority, the court reconsidered and denied Sanders’s motion, concluding section 1281.98 was preempted by the FAA. Sanders filed a petition for writ of mandate.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the case. The court held that section 1281.98, which allows an employee to withdraw from arbitration if the employer fails to pay fees within 30 days, is not preempted by the FAA. The court found that section 1281.98 furthers the FAA’s goal of expeditious arbitration and does not undermine the FAA’s objectives. The court also determined that the trial court, not the arbitrator, should decide whether there has been a default under section 1281.98.The Court of Appeal granted Sanders’s petition for writ of mandate, directing the trial court to vacate its order denying Sanders’s motion to withdraw from arbitration and allowing her to pursue her claims in court. The trial court was also instructed to consider Sanders’s motion for sanctions under section 1281.99. View "Sanders v. Superior Court" on Justia Law

Stephen Hofer, a licensed attorney and founder of Aerlex Law Group, hired Vicky Boladian as a part-time contract attorney in 2008. In 2013, they formed Aerlex Tax Services, LLC (tax LLC) to provide tax-related services. Hofer held a 55% equity interest, and Boladian held 45%. Their relationship deteriorated in 2017-2018, leading to litigation. In 2020, they settled by executing three agreements, each containing arbitration clauses. In 2023, they dissolved the tax LLC and transferred its assets to Aerlex Tax Services, LLP (tax LLP). Boladian later withdrew, forming her own firm and taking clients and assets.The plaintiffs, including Hofer and the tax LLP, filed a lawsuit against Boladian and her new firm, alleging 13 causes of action and seeking various damages and relief. They did not mention arbitration in their complaint. They sought a temporary restraining order and a preliminary injunction, both of which were denied. They also engaged in extensive discovery and demanded a jury trial. Boladian and her firm filed a cross-complaint, and three days later, the plaintiffs moved to compel arbitration.The Superior Court of Los Angeles County denied the motion to compel arbitration, finding that the plaintiffs had waived their right to arbitration by substantially litigating the case in court for over six months. The court applied the waiver standard from St. Agnes Medical Center v. PacifiCare of California, which was later overruled by the California Supreme Court in Quach v. California Commerce Club, Inc.The California Court of Appeal, Second Appellate District, reviewed the case de novo under the new standard set by Quach. The court concluded that the plaintiffs had waived their right to compel arbitration by engaging in extensive litigation conduct inconsistent with an intent to arbitrate. The order denying the motion to compel arbitration was affirmed. View "Hofer v. Boladian" on Justia Law

Mone Yvette Sanders filed a class and representative action against her former employer, Edward D. Jones & Co., L.P., alleging wage and hour claims under the Labor Code and a cause of action under the Private Attorneys General Act (PAGA). The trial court granted Edward Jones's motions to compel arbitration of Sanders's individual claims and stayed the representative PAGA cause of action. Sanders initiated arbitration, but Edward Jones failed to pay $54,000 in fees within 30 days as required by California Code of Civil Procedure section 1281.98. Sanders then moved to vacate the order compelling arbitration and proceed in court.The trial court denied Sanders's motion, finding section 1281.98 preempted by the Federal Arbitration Act (FAA). Sanders filed a petition for writ of mandate, and the Court of Appeal issued an order to show cause.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the case. The court held that section 1281.98 is not preempted by the FAA, as it furthers the goal of expeditious arbitration. The court also rejected Edward Jones's contention that the arbitration agreement required the arbitrator to decide whether Edward Jones was in default. The court found that section 1281.98 vests the employee with the unilateral right to withdraw from arbitration and proceed in court upon the drafting party's failure to timely pay fees. The court concluded that the trial court erred in denying Sanders's motion to vacate the order compelling arbitration and granted the petition for writ of mandate. The case was remanded for further proceedings consistent with this opinion, including consideration of Sanders's request for monetary sanctions. View "Sanders v. Superior Court" on Justia Law

The Los Angeles College Faculty Guild, AFT Local 1521, sought to reverse the trial court’s denial of its motion to compel arbitration of three grievances against the Los Angeles Community College District. The grievances involved safety-related construction projects at Los Angeles City College, the termination of a faculty member at Pierce College, and the miscalculation of retirement benefits for a faculty member at Los Angeles Trade-Technical College.The Superior Court of Los Angeles County partially granted the motion to compel arbitration for the grievance related to backpay for the retirement benefits issue but denied the motion for the other grievances. The court found that the grievances were beyond the scope of the collective bargaining agreement and were preempted by the Education Code and other statutory requirements.The Court of Appeal of the State of California, Second Appellate District, Division Eight, affirmed the trial court’s decision. The appellate court held that the grievances related to construction projects and employment termination were not arbitrable because they were preempted by the Education Code and the Construction Bonds Act. The court also found that the grievance related to retirement benefits was partially arbitrable only concerning the backpay issue, as the Public Employees’ Retirement Law governed the reporting of service credits to CalPERS, and the arbitrator could not order injunctive relief beyond the scope of the collective bargaining agreement.The appellate court concluded that the Guild failed to demonstrate that the grievances were within the scope of representation as enumerated by the Educational Employment Relations Act and affirmed the trial court’s mixed ruling. View "L.A. College Faculty Guild v. L.A. Community College District" on Justia Law

Billy Ford worked as a full-time security guard for Parkwest Casino Lotus from September 2018 to December 2021. Upon hiring, Ford signed an arbitration agreement that excluded claims for workers' compensation, unemployment compensation, certain administrative complaints, ERISA claims, and "representative claims under [PAGA]." In February 2022, Ford filed a complaint against Parkwest under PAGA, alleging Labor Code violations, including mandatory off-the-clock health screenings and inaccurate wage statements. Parkwest moved to compel arbitration of Ford's individual PAGA claims and to dismiss the representative PAGA claims, citing Viking River Cruises, Inc. v. Moriana.The Superior Court of Sacramento County denied Parkwest's motion to compel arbitration, finding that the arbitration agreement specifically excluded all PAGA claims. Parkwest appealed, arguing that the agreement was ambiguous regarding the exclusion of individual PAGA claims and that such ambiguity should be resolved in favor of arbitration.The Court of Appeal of the State of California, Third Appellate District, reviewed the case. The court concluded that the arbitration agreement unambiguously excluded all PAGA claims, including individual claims. The court reasoned that the language of the agreement and the circumstances under which it was executed indicated that the parties intended to exclude all PAGA claims from arbitration. The court affirmed the trial court's order denying Parkwest's motion to compel arbitration. View "Ford v. The Silver F" on Justia Law

Brian Prahl filed a petition to compel arbitration of an uninsured motorist claim, alleging he was involved in a multiple vehicle accident in March 2016 while insured by Allstate Northbrook Indemnity Company. The insurance proceeds from the at-fault drivers were insufficient to cover his damages, leading him to seek arbitration for his underinsured motorist claim. Allstate agreed to arbitration in May 2018, but the arbitration was delayed and not concluded within the five-year deadline set by Insurance Code section 11580.2, subdivision (i). Prahl argued that Judicial Council Emergency Rule 10 extended this deadline by six months due to the COVID-19 pandemic.The Superior Court of Sacramento County denied Prahl's petition, concluding that the five-year deadline had expired and that Emergency Rule 10 did not apply to extend the deadline for arbitration. Prahl also contended that the court should have granted his petition because Allstate's opposition was not filed timely. However, the court found good cause to consider the late opposition, noting that Prahl had filed a reply on the merits.The California Court of Appeal, Third Appellate District, reviewed the case de novo and affirmed the lower court's decision. The appellate court held that Emergency Rule 10, which extends the time to bring a civil action to trial by six months, did not apply to arbitration proceedings. The court reasoned that the term "civil action" refers to court actions and does not include arbitration, which is an alternative to a civil action. Consequently, Prahl's failure to conclude the arbitration within the statutory five-year period resulted in the loss of his right to compel arbitration. The appellate court also upheld the lower court's decision to consider Allstate's late opposition, finding no undue prejudice to Prahl. View "Prahl v. Allstate Northbrook Indemnity Co." on Justia Law