Justia Arbitration & Mediation Opinion Summaries

Haamid Khan created an account with Coinbase, Inc., an online platform for buying, selling, and storing digital currencies. Khan alleged that Coinbase charged customers a hidden “Spread Fee” during transactions, which was not clearly disclosed to users. He claimed that the fee was only revealed if a customer clicked a tooltip icon and that the platform’s design misled less sophisticated users by imposing the fee only on those using the default trading option. Khan sought an injunction under California’s unfair competition and false advertising laws to prohibit Coinbase from continuing these practices.Coinbase responded by filing a petition in the City & County of San Francisco Superior Court to compel arbitration, citing a user agreement that included an arbitration clause and a waiver of class and public injunctive relief. The trial court denied Coinbase’s petition, finding that Khan’s claims sought public injunctive relief, which could not be waived or compelled to arbitration under California law, specifically referencing McGill v. Citibank, N.A. The court determined that the relief sought would benefit the public at large, not just Khan or a defined group of users.The California Court of Appeal, First Appellate District, Division Three, reviewed the case de novo. The appellate court affirmed the trial court’s order, holding that Khan’s complaint seeks public injunctive relief under the standards set forth in McGill. The court found that the arbitration agreement’s waiver of public injunctive relief was invalid and unenforceable. It concluded that Khan’s requested injunction would primarily benefit the general public by prohibiting ongoing deceptive practices, and thus, his claims could proceed in court rather than arbitration. The order denying Coinbase’s petition to compel arbitration was affirmed. View "Kahn v. Coinbase, Inc." on Justia Law

A law firm sought to recover over $1.7 million in fees and costs for representing the Los Angeles County Sheriff, Alex Villanueva, and the Sheriff’s Department in litigation initiated by the County of Los Angeles. Due to a conflict of interest, the County’s Board of Supervisors offered Villanueva independent counsel, allowing him to select his attorney but reserving discretion over compensation. Villanueva chose the law firm, which entered into an engagement agreement with him. The County, however, sent its own retainer agreement to the firm, which the firm refused to sign. The firm continued its representation but was never paid. After the firm demanded arbitration under its engagement agreement, the County and related plaintiffs filed suit seeking a declaration that no valid agreement to arbitrate existed and an injunction against the arbitration.The Superior Court of Los Angeles County granted a preliminary injunction, then summary judgment for the County plaintiffs, finding the Sheriff lacked authority to enter into the engagement agreement. The court denied the law firm’s post-judgment motion for leave to file a cross-complaint, citing both untimeliness and bad faith. The firm then filed a separate lawsuit against the County and related defendants, asserting breach of contract and related claims. The trial court sustained the County’s demurrer, dismissing the complaint with prejudice on grounds that the claims were compulsory cross-claims in the earlier action and for failure to allege compliance with the Government Claims Act.The California Court of Appeal, Second Appellate District, Division Eight, affirmed both the judgment in the County’s action and the dismissal of the law firm’s separate lawsuit. The court held that the Sheriff did not have authority to retain counsel on his own; only the Board of Supervisors could contract for legal services. The law firm’s claims were barred as compulsory cross-claims and for failure to comply with the Government Claims Act. View "County of Los Angeles v. Quinn Emanuel Urquhart & Sullivan, LLP" on Justia Law

A company that provides employee management services hired an employee in California in September 2021. At the start of her employment, she completed onboarding documents that did not mention arbitration. About five months later, she was asked to sign additional documents, including an arbitration agreement, a voluntary dispute resolution policy, and a confidentiality and non-disclosure agreement (CND). The arbitration agreement required most employment-related disputes to be resolved through binding arbitration, with certain exceptions for claims related to confidential information. The CND allowed the company to bring certain claims in court and permitted the company to seek injunctive relief without posting a bond or proving actual damages. The employee later filed a lawsuit alleging various employment law violations.The Solano County Superior Court reviewed the company’s motion to compel arbitration. The company argued that the arbitration agreement was enforceable and, if any provision was found unenforceable, it should be severed. The employee opposed, arguing the agreement was unconscionable due to the manner in which it was presented and its one-sided terms. The trial court found the arbitration agreement to be both procedurally and substantively unconscionable, particularly because it forced the employee’s claims into arbitration while allowing the company’s likely claims to proceed in court, and because of a confidentiality provision that restricted informal discovery. The court denied the motion to compel arbitration and declined to sever the offending provisions, finding the agreement permeated by unconscionability.The California Court of Appeal, First Appellate District, Division Three, affirmed the trial court’s order. The appellate court held that the arbitration agreement and the CND, read together, were unconscionable due to lack of mutuality and an overly broad confidentiality provision. The court also found no abuse of discretion in the trial court’s refusal to sever the unconscionable terms and concluded that any error in denying a statement of decision was harmless. View "Gurganus v. IGS Solutions LLC" on Justia Law

Plaintiff was employed by a staffing company and assigned to work at a warehousing and logistics firm, performing duties as a materials handler and forklift operator. He filed a class action and a separate representative action alleging various wage and hour violations, including claims for unpaid minimum wages, waiting time penalties, and civil penalties under the Private Attorneys General Act (PAGA). The two cases were consolidated. The plaintiff and his direct employer had entered into an arbitration agreement, which referenced the American Arbitration Association (AAA) rules but did not explicitly state that the arbitrator would decide issues of arbitrability.The defendants moved in the Superior Court of Los Angeles County to compel arbitration of the plaintiff’s individual claims, dismiss class allegations, and stay judicial proceedings. They argued that the arbitration agreement was governed by the Federal Arbitration Act (FAA) and that the AAA rules incorporated into the agreement delegated arbitrability issues to the arbitrator. The plaintiff opposed, asserting exemption from the FAA as a transportation worker and arguing that certain claims, including those under PAGA and for unpaid wages, were not arbitrable under California law. The trial court found the FAA did not apply, applied California law, and held that the agreement did not clearly and unmistakably delegate arbitrability to the arbitrator. The court compelled arbitration of some claims but allowed others, including minimum wage and PAGA claims, to proceed in court.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s order. The court held that, in the context of a mandatory employment arbitration agreement, mere incorporation of AAA rules without explicit language in the agreement is not clear and unmistakable evidence of intent to delegate arbitrability to the arbitrator. The court also held that claims for waiting time penalties based on minimum wage violations and all PAGA claims were not arbitrable under California law when the FAA does not apply. View "Villalobos v. Maersk, Inc." on Justia Law

The plaintiff, a former employee, brought a lawsuit against his employer alleging multiple claims of discrimination and harassment. The employer successfully moved to compel arbitration pursuant to an agreement between the parties. During the arbitration, the arbitration provider issued an invoice for fees, which the employer attempted to pay electronically on the last day of the statutory 30-day deadline. However, due to a processing delay, the payment was not received by the provider until three days after the deadline.The Superior Court of Los Angeles County found that the employer’s failure to ensure the arbitration fees were received within the 30-day period constituted a material breach of the arbitration agreement under California Code of Civil Procedure section 1281.98. The court vacated its prior order compelling arbitration, returned the case to court, and awarded the plaintiff $1,750 in sanctions for expenses incurred in bringing the motion. The plaintiff then sought over $300,000 in attorney fees and costs under section 1281.98, subdivision (c)(1), which allows recovery of all fees and costs associated with an abandoned arbitration. The trial court granted only a reduced amount, reasoning that the plaintiff was entitled only to fees and costs for work rendered useless by the termination of arbitration.On appeal, the California Court of Appeal, Second Appellate District, Division One, considered the impact of the California Supreme Court’s decision in Hohenshelt v. Superior Court (2025) 18 Cal.5th 310. Hohenshelt held that federal law preempts a strict application of section 1281.98, and that forfeiture of arbitral rights occurs only if the failure to pay fees is willful, grossly negligent, or fraudulent. The appellate court determined that the employer’s late payment was not willful, grossly negligent, or fraudulent, and therefore, the plaintiff was not entitled to attorney fees under section 1281.98, subdivision (c)(1). The order awarding attorney fees and costs was reversed. View "Wilson v. Tap Worldwide, LLC" on Justia Law

An adolescent female, who was continuously enrolled as a dependent under her mother’s Kaiser health care plans from 2005 to 2023, received gender-affirming medical care between the ages of 13 and 17. After experiencing negative outcomes and later detransitioning, she filed a medical malpractice lawsuit against Kaiser Foundation Hospitals, The Permanente Medical Group, and several individual providers. The claims alleged that the care provided was not medically justified, that risks were not adequately disclosed, and that the providers failed to meet the standard of care in both treatment and informed consent.The Superior Court of San Joaquin County reviewed Kaiser’s petition to compel arbitration, which was based on arbitration provisions in the health plan documents. Kaiser argued that the plaintiff, as a dependent, was bound by arbitration agreements incorporated in the evidence of coverage and benefits booklets for both the union-based and self-funded plans. The trial court found that Kaiser failed to establish the existence of a valid agreement to arbitrate, noting that the relevant documents referenced in the enrollment forms were not provided, and there was no evidence of the plaintiff or her mother expressly agreeing to the specific arbitration provisions Kaiser sought to enforce. The court denied the petition to compel arbitration and later denied Kaiser’s motion for reconsideration.On appeal, the California Court of Appeal, Third Appellate District, affirmed the trial court’s order. The appellate court held that Kaiser did not meet its burden to prove, by a preponderance of the evidence, the existence of a valid and binding arbitration agreement covering the controversy. The court emphasized that mere enrollment and general references to arbitration were insufficient; the precise arbitration provision must be clearly incorporated and agreed to. The order denying the petition to compel arbitration was affirmed. View "Brockman v. Kaiser Foundation Hospitals" on Justia Law

Leslie Cruz made two purchases from the website operated by subsidiaries of Tapestry, Inc. in early 2024. She later filed a lawsuit in the Superior Court of Los Angeles County, alleging that the companies engaged in unfair competition and false advertising by promoting misleading sales discounts. Cruz claimed that the advertised sale reductions were deceptive because the merchandise was rarely, if ever, sold at the full price listed, and sought restitution and disgorgement of unjust enrichment resulting from these practices.The defendants moved to compel arbitration, relying on an arbitration clause in their website’s Terms of Use. The checkout pages on the website included a line of gray, small-font text below the order submission button stating that by clicking, the user agreed to the Terms of Use and Privacy Policy, with hyperlinks to those documents. The trial court, after reviewing screenshots of the checkout pages, found that the notice of the arbitration agreement was not sufficiently conspicuous. The court emphasized that the notice was less prominent than other visual elements on the page and that the transaction did not create an expectation of an ongoing contractual relationship governed by extensive terms. The court concluded that Cruz had not assented to the arbitration agreement and denied the motion to compel arbitration.The California Court of Appeal, Second Appellate District, Division One, reviewed the trial court’s decision de novo. It held that the defendants failed to provide reasonably sufficient notice to Cruz that clicking the order button would bind her to the Terms of Use, including the arbitration provision. The court found that the design of the checkout pages did not adequately call attention to the notice text, and affirmed the trial court’s order denying the motion to compel arbitration. View "Cruz v. Tapestry" on Justia Law

An attorney, Morris S. Getzels, challenged the constitutional validity of State Bar Rule 2.30, which prevents inactive licensees from acting as private arbitrators and mediators. Getzels argued that this rule violates the Equal Protection Clauses of the federal and California Constitutions by treating inactive licensees differently from others. He claimed that the rule impinges on the fundamental liberty of "freedom of contract" and that there is no rational basis for the rule.The Superior Court of Los Angeles County sustained the State Bar's demurrer without leave to amend, leading to a judgment of dismissal. The court found that rational basis review was the appropriate standard for evaluating Getzels's equal protection claim. It concluded that funding the State Bar’s regulatory functions was a legitimate government purpose and that requiring licensees to pay the active membership fee was related to this purpose. The court determined that the State Bar had sufficiently articulated a rational basis for the disparate treatment of inactive licensees.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. The court held that rational basis review was the correct standard, as the rule did not involve a suspect class or a fundamental right. The court found that the State Bar had a legitimate interest in maintaining a competent bar and ensuring the professional conduct of its licensees. It concluded that Rule 2.30’s distinction between active and inactive licensees was rationally related to this goal, as inactive licensees acting as private arbitrators and mediators could burden the State Bar’s regulatory system. The court affirmed the judgment of dismissal, upholding the constitutionality of Rule 2.30. View "Getzels v. The State Bar of California" on Justia Law

Consumer Advocacy Group, Inc. (CAG) filed two lawsuits under Proposition 65 against Walmart Inc. and Wal-Mart.com USA, LLC (collectively, Walmart), alleging that Walmart failed to warn consumers about products containing chemicals known to cause cancer or reproductive toxicity. Michael Marcus, CAG’s Secretary and Chief Financial Officer, purchased the products online as a corporate agent for CAG. During the purchase process, Marcus agreed to Walmart’s Terms of Use, which included an arbitration clause.In the Alameda County Superior Court, Walmart filed petitions to compel arbitration based on the arbitration agreement Marcus accepted. The trial court denied Walmart’s petitions, concluding that Walmart failed to prove the existence of an agreement to arbitrate Proposition 65 claims, as the arbitration agreement only addressed the rights of the individual consumer and did not preclude an action brought by the state.The California Court of Appeal, First Appellate District, reviewed the case. The court held that a plaintiff cannot be compelled to arbitrate a Proposition 65 claim against a seller of consumer products simply because an agent of the plaintiff previously agreed to arbitrate disputes with the seller when purchasing the products online. The court reasoned that the plaintiff’s agent was not acting on behalf of the state, the real party in interest, when purchasing the products, and thus could not bind the state to arbitration. Consequently, the court affirmed the trial court’s orders denying Walmart’s petitions to compel arbitration, as no agreement to arbitrate the Proposition 65 claims was formed. View "Consumer Advocacy Group, Inc. v. Walmart, Inc." on Justia Law

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