Justia Arbitration & Mediation Opinion Summaries

An employee worked as a railcar repairman for a company that performs inspections and repairs on freight cars at a train yard. He was hired with an agreement that required all employment-related disputes to be resolved through arbitration and included a waiver of class and representative actions, except for certain claims that cannot be waived by law. After his employment ended, the employee sued for various wage and hour violations under California law, asserting claims on his own behalf and on behalf of a proposed class of other employees.The Superior Court of Los Angeles County reviewed the case after the employer moved to compel arbitration of the individual claims and to dismiss the class claims. The court ordered further proceedings to clarify whether the arbitration agreement was part of a contract of employment and whether the employee fell within a federal exemption for certain transportation workers. After additional evidence was submitted, the court granted the employer’s motion, compelling arbitration of individual claims and dismissing the class claims, finding the employee was not exempt from arbitration under the Federal Arbitration Act (FAA).On appeal, the California Court of Appeal, Second Appellate District, Division One, affirmed the order dismissing and striking the class claims. The court held that the FAA applied to the arbitration agreement because the employee was neither a “railroad employee” nor a transportation worker directly involved in the interstate transportation of goods under the FAA’s section 1 exemption. The court found that repairing out-of-service railcars did not constitute direct engagement in interstate commerce. The court also held that, because the FAA applied, the waiver of class claims was enforceable under federal law, thus preempting contrary state law. The appeal as to the order compelling arbitration was treated as a petition for writ of mandate and was denied. View "Vela v. Harbor Rail Services of California, Inc." on Justia Law

A senior director was employed by a space exploration company from 2020 until his termination in 2022. Upon hiring, he signed an employee agreement containing a broad arbitration provision requiring most disputes with the company and its affiliates to be resolved by arbitration, with some exceptions. After his termination, the employee filed a lawsuit alleging, among other claims, sexual/gender discrimination, sexual/gender harassment, retaliation, wrongful termination, and intentional infliction of emotional distress. The company moved to compel arbitration under the agreement, while the employee argued that the arbitration provision was both unconscionable and unenforceable under federal law.The Superior Court of Los Angeles County reviewed the motion and found that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) applied, concluding that the employee’s allegations sufficiently stated discrimination based on gender. On this basis, the court denied the company’s motion to compel arbitration, without reaching the issue of whether the arbitration agreement was unconscionable. The company filed a timely appeal from the denial of its motion.The California Court of Appeal, Second Appellate District, reviewed the order de novo. The appellate court concluded that the arbitration agreement was both procedurally and substantively unconscionable. Procedural unconscionability was established because the agreement was a contract of adhesion, presented on a take-it-or-leave-it basis with no real opportunity for negotiation. Substantive unconscionability resulted from the agreement’s overbroad coverage, lack of mutuality, waiver of the right to a jury trial, and waiver of representative actions, including those under the Private Attorneys General Act. The court found that severance was not an appropriate remedy because the unconscionable provisions were pervasive and central to the agreement. The Court of Appeal affirmed the lower court’s order denying the motion to compel arbitration. View "Stoker v. Blue Origin, LLC" on Justia Law

An employee began working at a skilled nursing facility, which was later acquired by a new employer. As part of the onboarding process, the employer required the employee to sign three related agreements to arbitrate most employment disputes, except certain representative actions under the California Private Attorneys General Act (PAGA). After ending his employment, the employee filed a class action lawsuit for various wage-and-hour violations, including a PAGA claim. The agreements also contained class action waivers and a confidentiality agreement.The employer moved to compel arbitration of the employee’s individual claims, including his individual PAGA claim, and to enforce the class action waiver. The Superior Court of Los Angeles County denied the motion, ruling that conflicting and ambiguous terms among the three arbitration agreements and other documents meant there was no enforceable agreement to arbitrate. The court also ruled, in the alternative, that the agreement was unconscionable due to both procedural and substantive defects, including an unenforceable waiver of the right to bring a PAGA action and certain provisions in the confidentiality agreement.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the order denying arbitration. The court held that the agreements, although containing some ambiguities and minor inconsistencies, reflected a clear mutual intent to arbitrate employment-related disputes. The court found the agreements were not so uncertain as to be unenforceable, and any conflicting provisions could be severed. The court further determined that, while the agreements reflected some procedural unconscionability as contracts of adhesion, they did not contain substantively unconscionable terms. The Court of Appeal reversed the trial court’s order and directed that arbitration be compelled. View "Santana v. Studebaker Health Care Center" on Justia Law

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