Justia Arbitration & Mediation Opinion Summaries

Defendant Jeffrey Mayhew and Plaintiffs David Starr and Thomas Hunt formed a limited liability company to operate a shopping center. They agreed Mayhew would manage the company and Starr and Hunt would provide startup capital. In exchange, Mayhew was entitled to 50 percent of the company’s profits and Starr and Hunt were entitled to the remaining 50 percent. After the shopping center’s business declined in 2008, Mayhew asked Starr and Hunt for additional capital. They agreed to do so only if Mayhew also contributed capital. Mayhew reported a $100,000 contribution, which caused Starr and Hunt to contribute roughly the same amount. The shopping center was later sold for a substantial profit. Mayhew claimed he was entitled to about 56.3 percent ownership interest in the company based on his additional capital contribution. Starr and Hunt disagreed and submitted the dispute to arbitration along with several other claims for damages. The arbitrator ruled in favor of Starr and Hunt, finding Mayhew only held a 50 percent interest in the company. A superior court later confirmed the award over Mayhew’s petition to vacate and entered judgment against him. On appeal, Mayhew claimed the trial court erred by failing to vacate the award, contending the arbitrator lacked authority to clarify the award, that the award was procured by undue means, and that the arbitrator’s award exceeded her powers. After its review, the Court of Appeal disagreed. Since Mayhew failed to identify any basis for vacating the award, the Court affirmed the judgment. View "Starr v. Mayhew" on Justia Law

The Los Angeles College Faculty Guild (Guild) represents faculty at the nine community colleges in the Los Angeles Community College District (District). The Guild appeals the trial court’s judgment of dismissal of its petition to compel arbitration of grievances relating to the District’s decision to cancel all remedial for-credit English and mathematics courses two levels below transfer level. The Guild contends the court erred in determining it, rather than an arbitrator, should decide the issue of arbitrability and further erred in finding the grievances non-arbitrable. The Guild maintains the grievances involve violations of several provisions of the collective bargaining agreement (CBA) between the parties and so are subject to the arbitration provision of that agreement.   The Second Appellate District affirmed the trial court’s order denying the motion and petition and its subsequent judgment of dismissal. The court explained that the decision to cancel remedial for-credit English and mathematics courses two levels before transfer level is, in essence, a decision about the content of courses and curriculum. Put differently, it is a decision not to offer courses that contain such content. Thus, it is a matter within the discretion of the district, and so not within the scope of representation. It is therefore not an arbitrable issue.   The Guild makes much of the fact that the courses were canceled after they were placed on the tentative schedule for Fall 2019. The Guild, however, does not assert any schedule-related harm from the timing of the decision. Thus, the trial court’s conclusion that there was no arbitrable claim under Article 17(D)(1)(b) was correct. View "L.A. College Faculty Guild etc. v. L.A. Community College Dist." on Justia Law

Plaintiff-appellant Eleni Gavriiloglou brought this action against her former employer and its alleged alter egos. She asserted, among other things: (1) individual claims for damages based on Labor Code violations; and (2) a representative claim for civil penalties for Labor Code violations under the Private Attorneys General Act (PAGA). Gavriiloglou had signed an arbitration agreement, so the trial court compelled her to arbitrate her non-PAGA claims and stayed her PAGA claim while she did. The arbitrator found that the alleged Labor Code violations had not occurred. The trial court then granted judgment on the pleadings against Gavriiloglou on her PAGA claim, ruling that the arbitrator’s findings established that she was not an “aggrieved employee” within the meaning of PAGA, and therefore that she lacked standing to bring a PAGA claim. Gavriiloglou appealed, contending: (1) the trial court erred by denying her petition to vacate the arbitration award; and (2) the trial court erred by ruling that the arbitration award barred her PAGA claim. The Court of Appeal found that the trial court properly denied the motion to vacate the arbitration award. However, the Court also held that the arbitration did not bar the PAGA claim because Gavriiloglou was acting in different capacities and asserting different rights. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Gavriiloglou v. Prime Healthcare Management" on Justia Law

Plaintiff designated his nephew as his health care agent and attorney-in-fact using an advance health care directive and power of attorney for health care decisions form developed by the California Medical Association (the Advance Directive). After the execution of the Advance Directive, Plaintiff was admitted to a skilled nursing facility. Nineteen days later, his nephew executed an admission agreement and a separate arbitration agreement purportedly on Plaintiff’s behalf as his “Legal Representative/Agent”. The sole issue on appeal is whether the nephew was authorized to sign the arbitration agreement on Plaintiff’s behalf.   In answering the relevant question on appeal, the Second Appellate District held that an agent’s authority to make “health care decisions” on a principal’s behalf does not include the authority to execute optional arbitration agreements. Accordingly, the court affirmed the trial court’s order denying the motion to compel arbitration. The court explained that its conclusion that the execution of an arbitration agreement is not a “health care decision” finds support in the regulatory history of the recently enacted federal regulatory scheme prohibiting nursing facilities participating in Medicare or Medicaid programs from requiring a resident (or his representative) to sign an arbitration agreement as a condition of admission. Specifically, in the Centers for Medicare & Medicaid Services’ (i.e., the agency’s) responses to public comments published in the Federal Register. These comments and responses demonstrate that practically speaking, arbitration agreements are not executed as part of the health care decision-making process, but rather are entered into only after the agent chooses a nursing facility based on the limited options available and other factors unrelated to arbitration. View "Logan v. Country Oaks Partners" on Justia Law

Cisco Systems, Inc. hired “John Doe” in September 2015 to work as an engineer. Doe was required to sign an arbitration agreement as a condition of his employment. Under the agreement, Cisco and Doe had to arbitrate “all disputes or claims arising from or relating to” Doe’s employment, including claims of discrimination, retaliation, and harassment. Several years after signing the agreement, Doe filed a complaint with the California Department of Fair Employment and Housing, alleging Cisco discriminated against him because of ancestry or race. He reported that two supervisors denied him opportunities and disparaged him because, under the traditional caste system of India, he was from the lowest caste and they are from the highest. Doe also accused Cisco of retaliating when he complained about being treated unfavorably because of his caste. The Department notified Cisco of Doe’s complaint, investigated it, and decided it had merit. Attempts at informal resolution were unsuccessful. The Department then filed a lawsuit against Cisco and the two supervisors. The Department alleged five causes of action alleging multiple violations of FEHA, and sought a permanent injunction preventing Cisco from committing further violations, and mandatory injunctive relief requiring Cisco to institute policies to prevent employment discrimination. The complaint also requested an order that Cisco compensate Doe for past and future economic losses. Cisco moved to compel arbitration pursuant to the agreement Doe signed. The trial court denied the motion. On appeal, Cisco argued the Department was bound by the terms of Doe’s arbitration agreement. The Court of Appeal affirmed, finding the Department acts independently when it exercises the power to sue for FEHA violations. “As an independent party, the Department cannot be compelled to arbitrate under an agreement it has not entered.” View "Dept. of Fair Employment and Housing v. Cisco Systems, Inc." on Justia Law

Plaintiffs sued Defendants asserting causes of action for professional negligence and breach of fiduciary duty. Defendants moved to compel arbitration pursuant to the Retainer Agreement and the trial court granted the motion. The arbitration hearing proceeded and the arbitrator found that Defendants were liable to Plaintiffs for their failure to protect Plaintiffs’ control over the business or to disclose to Plaintiffs such lack of control. However, the arbitrator found that this conduct did not harm Plaintiffs because they could not show that the contingency fee paid to the firm was caused by Defendants’ failings.Plaintiffs moved the trial court to vacate the Award. They again argued that the Retainer Agreement, including its arbitration clause, was illegal and unenforceable because Defendant was unlicensed to practice law when he performed services for Plaintiffs pursuant to that agreement. The trial court denied the motion and confirmed the arbitration award.The Second Appellate District affirmed the ruling finding that there was no error. The court wrote that Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119 (Birbrower) dictates that the unlicensed attorney’s illegal practice of law pursuant to the retainer agreement does not render the entire retainer agreement illegal. Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30 (Moncharsh) holds that an arbitration provision is severable from an agreement that is not entirely illegal (unless the arbitration provision itself is illegal). There is no claim here of any illegality in the retainer agreement’s arbitration provision. View "Brawerman v. Loeb & Loeb LLP" on Justia Law

The San Diego City Attorney brought an enforcement action under the Unfair Competition Law, Business and Professions Code sections 17200, et seq. (UCL), on behalf of the State of California against Maplebear Inc. DBA Instacart (Instacart). In their complaint, the State alleged Instacart unlawfully misclassified its employees as independent contractors in order to deny workers employee protections, harming its alleged employees and the public at large through a loss of significant payroll tax revenue, and giving Instacart an unfair advantage against its competitors. In response to the complaint, Instacart brought a motion to compel arbitration of a portion of the City’s action based on its agreements with the individuals it hires ("Shoppers"). The trial court denied the motion, concluding Instacart failed to meet its burden to show a valid agreement to arbitrate between it and the State. Instacart challenged the trial court’s order, arguing that even though the State was not a party to its Shopper agreements, they were bound by its arbitration provision to the extent they seek injunctive relief and restitution because these remedies were “primarily for the benefit of” the Shoppers. The Court of Appeal rejected this argument and affirmed the trial court’s order. View "California v. Maplebear Inc." on Justia Law

Plaintiff sued her former employer, Wood Ranch USA, Inc. (Wood Ranch) for compensatory and punitive damages on nine different causes of action. Wood Ranch moved to compel arbitration. The trial court granted the motion and stayed the pending court proceedings. Plaintiff filed a motion to vacate the trial court’s prior order compelling arbitration. Invoking sections 1281.97 and 1281.99, Plaintiff argued that Wood Ranch’s late payment of its share of the initiation fees constituted a material breach of the arbitration agreement.   The trial court granted the motion, and the Second Appellate District affirmed the court’s order vacating its earlier order compelling arbitration between the parties in this case. The appeal presents a question of first impression: Are these provisions preempted by the Federal Arbitration Act (FAA)? The court held that they are not because the procedures they prescribe further—rather than frustrate—the objectives of the FAA to honor the parties’ intent to arbitrate and to preserve arbitration as a speedy and effective alternative forum for resolving disputes.   The court explained that Sections 1281.97 and 1281.99 undeniably single out arbitration insofar as they define procedures that apply only to arbitrated disputes. But that they are arbitration-specific is not sufficient to warrant preemption by the FAA. Further, these sections in this case do not interfere with the FAA’s first goal of honoring the parties’ intent. Moreover, applying these sections, in this case, does not interfere with the FAA’s second goal of safeguarding arbitration as an expedited and cost-efficient vehicle for resolving disputes. View "Gallo v. Wood Ranch USA, Inc." on Justia Law

The issue presented for the Court of Appeal's review in this case centered on whether California Code of Civil Procedure Section 1281.4 authorized the trial court to stay a plaintiff’s action on the basis of a pending arbitration to which the plaintiff was not a party. Ann Leenay brought an action against her former employer, Lowe’s Home Centers, LLC (Lowe’s), under the Private Attorneys General Act of 2004 (PAGA). The trial court granted a petition to coordinate her action with a number of other PAGA actions against Lowe’s. Lowe’s then moved to stay the coordinated actions under section 1281.4. Lowe’s based the motion on over 50 arbitration proceedings against it, but Leenay and the other plaintiffs in the coordinated actions were not parties in any of those arbitration proceedings. The trial court granted the motion to stay, and Leenay filed a petition for writ of mandate asking the Court of Appeal to vacate the order. The Court of Appeal concluded the trial court erred by granting the motion to stay. "[S]ection 1281.4 applies only when a court has ordered parties to arbitration, the arbitrable issue arises in the pending court action, and the parties in the arbitration are also parties to the court action. Under those circumstances, the court must stay the action (or enter a stay with respect to the arbitrable issue, if the issue is severable)." Those circumstances did not exist in this case. The Court therefore granted Leenay’s writ petition. View "Leenay v. Super. Ct." on Justia Law

Plaintiff worked as a driver for California Transit. After California Transit terminated his employment, Evenskaas filed this wage and hour class action against California Transit; its owner, and the company that administered California Transit’s payroll, Personnel Staffing Group, LLC (collectively, the California Transit defendants).   Because Plaintiff signed an arbitration agreement, in which he agreed to arbitrate all claims arising from his employment and waived his right to seek class-wide relief, the California Transit defendants filed a motion to compel arbitration. The trial court denied the motion. The California Transit defendants appealed, contending the FAA applies to the arbitration agreement.   The Second Appellate District reversed the order denying Defendants’ motion to compel arbitration is reversed. The court directed the trial court to enter a new order granting the motion and dismissing Plaintiff’s class claims. The court explained that because the paratransit services California Transit hired Plaintiff to provide involve interstate commerce for purposes of the FAA, the FAA applies to the arbitration agreement and preempts the Gentry rule that certain class action waivers in employment arbitration agreements are unenforceable. View "Evenskaas v. California Transit, Inc." on Justia Law