Justia Arbitration & Mediation Opinion SummariesArticles Posted in California Courts of Appeal
Subcontracting Concepts (CT), LLC v. De Melo
When De Melo was hired, he signed SCI’s “Owner/Operator Agreement,” five pages long, typed in small font, with 27 clauses. The arbitration clause provides that if the parties are unable to settle a dispute, disputes “within the jurisdictional maximum for small claims will be settled in the small claims court.” All other disputes shall be settled by arbitration in accordance with the Federal Arbitration Act. The clause prohibits consolidating claims in arbitration or arbitrating any claim as a representative member of a class or in a private attorney general capacity. All parties may examine up to three witnesses per party. Each deposition is limited to two hours. Any objections based on privilege and/or confidential information are reserved for arbitration. The arbitrators have authority to award actual monetary damages only. No punitive or equitable relief is authorized. All parties bear their own costs; no attorney’s fees or other costs may be granted. "The arbitrator’s decision shall be final and legally binding and judgment may be entered thereon.” De Melo’s native language is Portuguese; he cannot fully understand documents written in English. No one asked if he wanted the documents translated nor explained the documents. He was not given time to carefully review the documents; no one told him he could have an attorney review them. De Melo filed a claim with the Labor Commissioner, seeking unpaid overtime, meal, and rest period wages, reimbursement of unlawful wage deductions and business expenses, and statutory penalties. (Lab. Code, 203, 226, 2802.) . The court of appeal affirmed the denial of a petition to compel arbitration, finding that the arbitration clause was procedurally and substantively unconscionable and that severance of the substantively unconscionable provisions was not possible because the clause was permeated with unconscionability. View "Subcontracting Concepts (CT), LLC v. De Melo" on Justia Law
Diaz v. Sohnen Enterprises
The Court of Appeal reversed the trial court's denial of Sohnen's motion to compel arbitration of workplace discrimination claims brought by plaintiff, an employee of Sohnen. The court held that the record demonstrated consent to arbitration where plaintiff's continued employment was a manifestation of agreement to the arbitration provisions. The court also held that plaintiff failed to demonstrate that the arbitration agreement was unenforceable where the record contained no evidence of surprise, nor of sharp practices demonstrating substantive unconscionability. Accordingly, the court remanded for further proceedings. View "Diaz v. Sohnen Enterprises" on Justia Law
Bravo v. RADC Enterprises, Inc.
The choice-of-law clause in an arbitration agreement required that all individual claims must be arbitrated. Plaintiff filed suit against RADC on individual employment claims, as well as on representative claims under the Private Attorneys General Act of 2004 (PAGA). The trial court interpreted a choice-of-law clause in the parties' arbitration agreement and held that some, but not all, individual employment claims must be arbitrated. The Court of Appeal affirmed the part of trial court's order severing the agreement provision requiring the parties to arbitrate the PAGA claims; affirmed the order granting RADC's motion as to three individual claims; but reversed the order denying the motion as to the remaining six individual claims. As to the six claims, the court held that RADC rightly concluded that the trial court should have sent all of plaintiff's individual claims to arbitration. View "Bravo v. RADC Enterprises, Inc." on Justia Law
Jackpot Harvesting, Inc. v. Applied Underwriters, Inc.
After its workers’ compensation insurance premiums rapidly increased, Jackpot believed that Applied Underwriters had mishandled its claims and had wrongfully failed to disclose how it calculated premiums. Jackpot filed suit. Applied sought to compel arbitration based on the arbitration agreement contained in a Request to Bind. Jackpot argued that the arbitration agreement was invalid. Applied contended that, under the Federal Arbitration Act, only the arbitrator could decide the threshold question of whether the arbitration agreement was enforceable. The trial court held that the arbitration agreement was invalid. The court of appeal affirmed. In light of Jackson’s specific arguments that the arbitration provision was unenforceable due to fraud, ambiguity, and unconscionability, the trial court was obligated to consider its validity. Allied violated California law in issuing the Request to Bind without first submitting it for regulatory approval. The policy does not provide for arbitration but allows for administrative review by the Insurance Commissioner for certain disputes and otherwise leaves Jackpot’s rights to judicial review intact. The Request to Bind’s arbitration agreement, which compels arbitration in Nebraska for a wide array of disputes, materially changes the policy's dispute-resolution terms and constituted “a collateral agreement that should have been filed and endorsed to the Policy” under Insurance Code section 11658. View "Jackpot Harvesting, Inc. v. Applied Underwriters, Inc." on Justia Law
Zakaryan v. The Men’s Warehouse, Inc.
If an employee brings a solitary Labor Code Private Attorneys General Act of 2004 (PAGA) claim, a trial court may not split that claim, sending the employee to arbitration (when he has agreed to it) to recover his underpaid wages but retaining jurisdiction to award the additional, statutorily prescribed amounts. The Court of Appeal held that splitting a PAGA claim in this manner was both legally impermissible and inconsistent with labor and arbitration law. The court explained that where, as here, the employee-plaintiff elected to file a solitary PAGA claim, splitting that claim into two effectively rewrites his complaint into one asserting an individual claim for underpaid wages (which is shunted to arbitration) and a PAGA claim (which is not). Accordingly, the court held that the trial court properly denied the motion to compel arbitration in this case and affirmed the judgment. View "Zakaryan v. The Men's Warehouse, Inc." on Justia Law
Salgado v. Carrows Restaurants, Inc.
The Court of Appeal reversed the trial court's order denying Carrows' motion to compel arbitration. The court held that the language of the arbitration agreement was sufficient to apply to the current action. However, the court remanded to determine a factual issue where time was not relative, but relevant. The factual issue was whether Carrows knew that at the time plaintiff signed an arbitration agreement, plaintiff was represented by counsel. In this case, whether the arbitration agreement was unenforceable should be decided by the trial court. View "Salgado v. Carrows Restaurants, Inc." on Justia Law
Nieto v. Fresno Beverage Co.
After plaintiff was terminated from VWB, he filed a class action against the company alleging various wage and hour violations under California labor law. The Court of Appeal affirmed the trial court's denial of VWB's petition to compel arbitration and held that the trial court correctly found that plaintiff's employment came within the Federal Arbitration Act's exemption granted to transportation workers engaged in interstate commerce. The trial court correctly found that plaintiff, employed as a delivery driver for VWB, engaged in interstate commerce through his participation in the continuation of the movement of interstate goods to their destinations. Therefore, plaintiff was exempt from the FAA. The court need not address plaintiff's alternative argument that the arbitration agreement was unenforceable. View "Nieto v. Fresno Beverage Co." on Justia Law
Juen v. Alain Pinel Realtors, Inc.
Plaintiff engaged Pinel to sell his Danville home in 2008. In 2015 he filed a putative class action lawsuit on behalf of California residents who, in 2004-2011, used Pinel to buy or sell a home in California and had utilized TransactionPoint, Fidelity's real estate software program, alleging Pinel had entered into unlawful sublicensing agreements with Fidelity subsidiaries, allowing those entities to contract their settlement services to Pinel clients using TransactionPoint, and the Fidelity defendants paid unlawful sublicensing fees to Pinel for the TransactionPoint-generated business. The defendants cited the arbitration clause in plaintiff’s listing agreement, which contained a notice provision required by Code of Civil Procedure 1298(c) with spaces for the client’s and broker’s initials. Pinel produced a copy of plaintiff's listing agreement. The 1298(c) notice on the copy showed plaintiff’s initials; the space for Pinel’s initials was blank. Pinel submitted a declaration that the original listing agreement was destroyed in accordance with Pinel’s normal document retention policy; that the copy was obtained from the listing agent; that it was Pinel’s policy to allow a client to elect whether to assent to the arbitration provision by initialing paragraph 19B; that Pinel “would as a matter of policy and custom and practice adopt the election of the client and initial Paragraph 19B.” The court of appeal affirmed the denial of Pinel’s motion. Pinel failed to establish that it had initialed the arbitration provision. The language of that provision contemplated mutual agreement and that each would indicate assent by initialing the provision. View "Juen v. Alain Pinel Realtors, Inc." on Justia Law
Ryan v. Real Estate of the Pacific
Real Estate of the Pacific, Inc., doing business as Pacific Sotheby's International Realty (Sotheby's), David Schroedl, and David Schroedl & Associates (DSA) (collectively, Defendants) successfully moved for summary judgment against Daniel Ryan and Patricia Ryan, individually and as trustees of the Ryan Family Trust Dated August 25, 2006 (the Ryans). This matter arose over the sale of the Ryans' house in La Jolla. During an open house hosted by Schroedl, the Ryans' next door neighbor, Hany Girgis, informed Schroedl that he intended to remodel his home, which would permanently obstruct the Property's westerly ocean view. Ney and Luciana Marinho (the Marinhos) purchased the Property for $3.86 million. Defendants received $96,5000 at the close of escrow as their commission for the sale. At no time prior or during escrow, in the real estate disclosures, or in conversation, did Defendants disclose Girgis's extensive remodeling plans or their impact on the westerly ocean view and privacy of the Property. After learning this information, the Marinhos immediately attempted to rescind the real estate sales contract for several reasons, including the magnitude and scope of the Girgis remodel, the proximity of the new structure to the property line, the loss of privacy, the elimination of any possibility of a westerly ocean view, and a potential two-year construction project. The Ryans, based in part on Defendants' advice, refused to rescind the purchase real estate sales contract. The Marinhos then demanded arbitration per the terms of the real estate sales contract and sought rescission of the contract or, in the alternative, damages. The Marinhos alleged Defendants knew about Girgis's construction plans and failed to disclose this information. The Ryans sued Defendants for negligence. The crux of Defendants' argument was that the Ryans could not establish the existence of any cause of action without an expert witness. Because the Ryans did not designate an expert witness, Defendants argued summary judgment was warranted. The superior court agreed, granting Defendants' motion. The Ryans appealed the judgment following Defendants' successful motion, contending they did not need an expert witness to establish the elements of their causes of action against Defendants. The Court of Appeal agreed and reversed the judgment. View "Ryan v. Real Estate of the Pacific" on Justia Law
Posted in: Arbitration & Mediation, California Courts of Appeal, Civil Procedure, Contracts, Real Estate & Property Law
Correia v. NB Baker Electric, Inc.
Plaintiffs Mark Correia and Richard Stow sued their former employer, NB Baker Electric, Inc. (Baker), alleging wage and hour violations and seeking civil penalties under the Private Attorney General Act of 2004 (PAGA). Baker responded by petitioning for arbitration under the parties' arbitration agreement. The agreement provided that arbitration shall be the exclusive forum for any dispute and prohibited employees from bringing a "representative action." The trial court granted the arbitration petition on all causes of action except for the PAGA claim. On the PAGA claim, the court followed the California Supreme Court decision in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), and the California Court of Appeal decision in Tanguilig v. Bloomingdale's, Inc., 5 Cal.App.5th 665 (2016). The trial court stayed the PAGA claim pending the conclusion of the arbitration. Baker contended the court erred because: (1) plaintiffs' response to its arbitration petition was untimely; (2) Iskanian was no longer binding as it was inconsistent with a recent United States Supreme Court decision, Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018); and (3) the parties' arbitration agreement should have been interpreted to mean that if the representative-action waiver was unenforceable, the PAGA claim for statutory penalties remained subject to arbitration. The Court of Appeal determined the trial court acted within its discretion in considering plaintiffs' response to the arbitration petition despite that plaintiffs filed the response after the statutory deadline. Furthermore, Iskanian was still good law: "Although the Epic court reaffirmed the broad preemptive scope of the Federal Arbitration Act (FAA), Epic did not address the specific issues before the Iskanian court involving a claim for civil penalties brought on behalf of the government and the enforceability of an agreement barring a PAGA representative action in any forum." Therefore, the Court concluded the trial court properly ruled the waiver of representative claims in any forum is unenforceable. The Court rejected Baker's contention the court erred in failing to order plaintiffs' PAGA claim to arbitration. "We are aware the federal courts have reached a different conclusion regarding the arbitrability of a PAGA representative claim, but find these decisions unpersuasive because the courts did not fully consider the implications of the qui tam nature of a PAGA claim on the enforceability of an employer-employee arbitration agreement. Moreover, although we provided Baker the specific opportunity to do so, it failed to identify a sound basis for this court to apply the federal decisions on this issue." View "Correia v. NB Baker Electric, Inc." on Justia Law