Justia Arbitration & Mediation Opinion Summaries

Defendant appealed from an order denying its petition to compel arbitration of Labor Code claims pursued by former employees, who contend that their lawsuit is limited to recovering civil penalties under the Private Attorneys General Act of 2004 (PAGA).The Court of Appeal again interpreted the California Supreme Court's decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, to mean "that PAGA representative claims for civil penalties are not subject to arbitration" under a predispute arbitration agreement. In this case, the PAGA claims alleged in the former employees' complaint are owned by the state and are being pursued by the former employees as the state's agent or proxy. The court explained that the arbitration agreements at issue are not enforceable as to the PAGA claims because the state was not a party to, and did not ratify, any of those agreements. Furthermore, after the former employees became representatives of the state, they did not agree to arbitrate the PAGA claims. Consequently, under the rule of California law recognized in Esparza v KS Industries, L.P. (2017) 13 Cal.App.5th 1228, 1234, and many other decisions of the Court of Appeal, the court concluded that the PAGA claims cannot be forced into arbitration based on agreements made by the former employees before they became authorized representatives of the state. Accordingly, the trial court correctly applied this rule of law.The court also concluded that defendant's argument that arbitration is compelled by the Federal Arbitration Act (FAA) and federal preemption fails for similar reasons. The court concluded that the FAA does not reach the PAGA claims alleged in this case and, therefore, federal law does not preempt the rule of California law stating PAGA claims are subject to arbitration only if the state, or the state’s authorized representative, consents to arbitration. View "Herrera v. Doctors Medical Center of Modesto, Inc." on Justia Law

Code of Civil Procedure section 1288 requires that a petition to vacate an arbitration award must be filed and served no later than 100 days after service of the award. Section 1288.2 imposes the same deadline on a response to a petition to confirm an arbitration award when the response requests that the award be vacated. These deadlines are jurisdictional.The Court of Appeal did not reach the substantive issue because it agreed with LFG that defendant did not timely request that the arbitration award be vacated. The court concluded that neither defendant's petition to vacate the arbitration award nor her request to vacate the award in her response to LFG's petition to confirm were filed within the 100-day limit. Therefore, the trial court lacked jurisdiction to consider defendant's request and the arbitration award must be confirmed. View "Law Finance Group, LLC v. Key" on Justia Law

After completing MoneyGram's Transfer Send Form, Fisher, a 63-year-old veteran with poor eyesight, initiated Moneygram money transfers at California Walmart stores, one for $2,000 to a Georgia recipient, and another for $1,530 to a Baton Rouge recipient. The funds were delivered to the intended recipients. Fisher never turned over the Send Form to read the Terms and Conditions, which included an arbitration requirement. He would have been unable to read the six-point print without a magnifying glass. Fisher sued MoneyGram, claiming that the transfers were induced by a “scammer,” and that MoneyGram knew its system was used by scammers but failed to warn or protect customers; MoneyGram’s service was used frequently in fraudulent transactions because the money was immediately available at a Walmart store or other MoneyGram outlet. Other services (bank transfers) place a temporary hold on funds to discourage fraudulent transactions. Fisher alleged MoneyGram had been the subject of an FTC injunction, requiring it to maintain a program to protect its consumers.Fisher’s class action complaint cited the unfair competition law. The court of appeal affirmed the denial of MoneyGram’s petition to compel arbitration. The provision was unenforceable as procedurally and substantively unconscionable, and not severable. The small font, placement, and “take it or leave it nature” were “indications” of procedural unconscionability. The one-year limitations period, a requirement that any plaintiff pay arbitration costs and fees, and waiver of attorneys’ fees were substantively unconscionable “in the aggregate.” View "Fisher v. MoneyGram International, Inc." on Justia Law

Postmates’ website enables customers to arrange for deliveries from local businesses. Beginning in March 2017, prospective couriers seeking to offer their delivery services were presented with Postmates’ Fleet Agreement when logging on for the first time. The Agreement directs a prospective courier to review a mutual arbitration provision that applies to “any and all claims between the [p]arties,” including claims related to a courier’s classification as an independent contractor, delivery fees received by a courier, and state and local wage and hour laws. It includes a “Representative Action Waiver.” There is an opt-out provision: “Arbitration is not a mandatory condition of [the courier’s] contractual relationship with Postmates. ” Plaintiffs acknowledged the Fleet Agreement. Postmates did not receive opt-out forms for any of them. In December 2017, Plaintiffs filed a putative class and representative action, alleging Labor Code violations. The trial court denied Postmates’s petition to compel arbitration of Private Attorney General Act claims for civil penalties, citing the California Supreme Court’s 2017 “Iskanian” holding that representative action waivers were unenforceable. The court of appeal affirmed, rejecting Postmates’ arguments that Iskanian was abrogated by subsequent U.S. Supreme Court decisions. Iskanian expressly established that the Federal Arbitration Act does not preempt state law on the enforceability of PAGA waivers. View "Winns v. Postmates Inc." on Justia Law

The Court of Appeal exercised its discretion to construe Western Bagel's appeal as a petition for writ of mandate and granted the petition, directing the trial court to enter a new order compelling the parties to arbitrate their dispute via binding arbitration in accordance with the terms of their arbitration agreement.In this case, the trial court found that the Federal Arbitration Act (FAA) governs the parties' arbitration agreement, concluded that the inconsistency between the Spanish and English severability clauses creates an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, resolved this ambiguity against Western Bagel pursuant to the constructive canon of contra proferentem, and ordered the parties to arbitrate their dispute on a nonbinding basis.Upon reaching the merits of Western Bagel's writ petition, the court concluded that the FAA preempted the trial court's use of contra proferentem. Assuming arguendo there is an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, the court employed the FAA's default rule that any ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration as envisioned by the FAA, a fundamental attribute of which is a binding arbitral proceeding. View "Western Bagel Co., Inc. v. Superior Court" on Justia Law

JP-Richardson, LLC (JP) appealed a court a judgment confirming an arbitration award in favor of Pacific Oak SOR Richardson Portfolio JV, LLC F/K/A KBS SOR Richardson Portfolio JV, LLC (Pacific Oak) in a business dispute. Pacific Oak removed JP as the managing member of a joint venture real estate company. JP initiated arbitration, seeking to be reinstated as the managing member. The arbitrator determined Pacific Oak’s decision to remove JP was justified, and JP owed over $1 million (the cost of arbitration). On appeal, JP argued the trial court erred by denying its petition to vacate the award and by granting Pacific Oak’s motion to confirm the award. Concluding JP’s contentions lacked merit, the Court of Appeal affirmed the judgment. View "JP-Richardson v. Pacific Oaks etc." on Justia Law

RECON filed suit against AECOM for damages related to AECOM's alleged failure to properly manage the construction project on which RECON worked as one of AECOM's subcontractors. After AECOM moved to compel arbitration based on an arbitration clause contained in a separate contract (the Prime Agreement) between AECOM and the property owner, Shell, the trial court denied AECOM's motion.The Court of Appeal affirmed and concluded that, in the absence of a clear agreement to submit a dispute to arbitration, the court will not infer a waiver of a party's jury trial rights. The court explained that the subcontractor's incorporation of a voluminous contract containing an arbitration agreement between other parties was insufficient to subject RECON to arbitration of its claims against AECOM. Accordingly, AECOM has failed to establish the existence of an agreement to arbitrate RECON's claims. View "Remedial Construction Services, LP v. Aecom, Inc." on Justia Law

Pillar hired Epiphyte to convert its cryptocurrency into Euros. Epiphyte informed Pillar that it used Payward’s online exchange to convert its clients’ cryptocurrencies. Pillar transferred its cryptocurrency into Epiphyte’s account on Payward’s platform. After Epiphyte converted the currency but before the exchanged funds were transferred to Pillar’s bank account, four million Euros belonging to Pillar were stolen from Epiphyte’s account.Pillar sued Payward, alleging Payward knew or should have known that Epiphyte was using its Payward account on Pillar's behalf, failed to use standard security measures that would have prevented the theft, and falsely advertised that it provided the best security in the business. Payward moved to compel arbitration, claiming that Epiphyte agreed to Payward’s “Terms of Service” when it created an account, as required for all users, that those Terms included an arbitration agreement, and that Pillar was bound by that agreement.The court of appeal affirmed the denial of Payward’s motion. There is no evidence Epiphyte was acting as Pillar’s agent when it agreed to the Terms two years before Pillar hired it or that the agency relationship automatically bound the principal to the agent’s prior acts. There is no evidence Pillar knew the arbitration agreements existed or had a right to rescind them. No ratification occurred. There was no intent to benefit Pillar or similar parties. Pillar’s claims are not inextricably intertwined with the Terms. View "Pillar Project AG v. Payward Ventures, Inc." on Justia Law

Bannister worked in the administrative offices at a skilled nursing facility, for approximately three decades before Marinidence purchased the facility. A year later, Marinidence terminated Bannister. She sued, alleging discrimination, retaliation, and defamation. Marinidence moved to compel arbitration, alleging that, when it took over the facility, Bannister electronically signed an arbitration agreement while completing the paperwork for new Marinidence employees. After Bannister presented evidence that she never saw the agreement during the onboarding process, the trial court denied the motion.The court of appeal affirmed. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent’s signature. Where, as here, the respondent challenges the validity of the signature, the petitioner must “establish by a preponderance of the evidence that the signature was authentic.” The court noted conflicting evidence, including Bannister’s evidence that she was not the only person who could have executed the arbitration agreement and the onboarding process was completed for other employees without their participation. View "Banister v. Marinidence Opco, LLC" on Justia Law

Foremost provided insurance for McIsaac's motorcycle. The uninsured motorist coverage endorsement included an arbitration provision. McIsaac was involved in an accident. The other driver’s insurance policy provided $15,000 of coverage. McIsaac’s policy provided uninsured/underinsured motorist coverage of up to $100,000 per person per accident. McIsaac initiated an uninsured motorist claim. Foremost opened an investigation and sent a settlement offer. McIsaac served Foremost with an arbitration demand. Foremost suggested proceeding with discovery and sent McIsaac interrogatories and a deposition notice.Months later, McIsaac filed suit, alleging breach of contract, unjust enrichment, breach of the covenant of good faith and fair dealing, and bad faith. Foremost filed a petition to compel arbitration. McIsaac argued his dispute was not solely about damages, but whether Foremost breached the contract and acted in bad faith. Foremost argued arbitration was a “condition precedent” to McIsaac’s lawsuit. The trial court denied the petition, stating that arbitration does not apply to claims of bad faith by the insurer.The court of appeal reversed. Under Insurance Code section 11580.2(f), disputes between insureds and insurers over entitlement to recover damages caused by an uninsured or underinsured motorist, or the amount of damages, must be resolved by agreement or arbitration. Foremost made a showing that the parties dispute the amount of damages. View "McIsaac v. Foremost Insurance Co." on Justia Law