Articles Posted in California Courts of Appeal

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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

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After EDI assigned plaintiffs to pack produce for San Miguel Produce, plaintiffs filed suit against San Miguel for labor law violations. The Court of Appeal reversed the trial court's denial of EDI and San Miguel's joint motion to compel arbitration, holding that the arbitration was mandated. The court held that EDI and San Miguel were co-employers with an identity of interests and mutual responsibility for complying with state law governing employers in the produce packing industry, and it was inconsequential that plaintiffs chose not to name EDI as a defendant. In this case, plaintiffs had agreed to arbitrate all disputes arising from their employment and, at all relevant times, EDI was plaintiffs' employer. The court remanded with directions to stay the court proceedings and to order the parties to arbitrate their dispute. View "Vasquez v. San Miguel Produce, Inc." on Justia Law

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The Court of Appeal held that (1) an attorney does not have standing to petition to compel arbitration of his clients' claims; (2) a signatory to an arbitration agreement can compel a nonsignatory parent company of a signatory subsidiary on an agency theory where (a) the parent controlled the subsidiary to such an extent that the subsidiary was a mere agent or instrumentality of the parent and (b) the claims against the parent arose out of the agency relationship; (3) the arbitrator did not exceed his authority by substituting the attorney's clients as the real parties in interest in the arbitration; and (4) the arbitrator did not exceed his authority by denying attorneys' fees to a party that prevailed in the arbitration. Therefore, the court agreed with the reasoning in Safari Associates v. Superior Court (2014) 231 Cal.App.4th 1400, and declined to follow DiMarco v. Chaney (1995) 31 Cal.App.4th 1809 . Accordingly, the court vacated and remanded with directions for the trial court to enter new orders on the petition to compel arbitration and the cross-petitions to vacate and to correct the award. The court also reversed the trial court's order denying attorneys' fees in the postarbitration proceedings. View "Cohen v. TNP 2008 Participating Notes Program, LLC" on Justia Law

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The employer, Luxor Cabs, obtained workers' compensation insurance through AUCRA under an EquityComp program. The EquityComp workers’ compensation insurance program has garnered nationwide attention from administrative agencies and judicial tribunals. In 2016, the California Insurance Commissioner issued an administrative decision concluding that the EquityComp program violated state insurance laws and that the reinsurance participation agreement (RPA) between AUCRA and the insured employer, in that case, was void as a matter of law. In 2018, the Fourth Appellate District came to a similar decision in a case essentially identical to this one involving arbitrability under an RPA. Luxor, unhappy with AUCRA's handling of claims, filed suit. The court of appeal affirmed the denial of AUCRA’s motion to compel arbitration pursuant to the terms of an RPA between an employer, Luxor Cabs, and AUCRA. The trial court properly rejected an argument that the validity of the arbitration clause should, itself, have been referred to arbitration in accordance with the RPA’s “delegation clause.” Both the delegation clause and the arbitration provision in the RPA were void and unenforceable because they each separately constituted an “endorsement” to the Policy which was not properly vetted and approved as required by Insurance Code section 11658. View "Luxor Cabs, Inc. v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

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Plaintiffs Jose Robles, Christopher Rymel, and David Hagins sued defendant Save Mart Supermarkets, Inc., alleging various state law statutory employment claims. After successfully moving to sever, Save Mart moved to compel arbitration as to each plaintiff. The motions were heard together, and the trial court denied the motions by substantively identical orders. Save Mart appealed in each case. The original complaint alleged each plaintiff had been employed as an order selector at Save Mart’s Roseville Distribution Center (Rymel was also a forklift driver). Each alleged an industrial injury and torts stemming from their injuries under the California Fair Employment and Housing Act (FEHA). Hagins also alleged he was retaliated against after he reported a workplace safety hazard, purportedly a whistleblower violation under Labor Code section 1102.5. Save Mart alleged plaintiffs were members of Teamsters Local 150 and were employed by Save Mart under a CBA that covered the pleaded disputes. Save Mart argued that resolving the disputes would require interpretation of the CBA or would be “substantially dependent” on such interpretation, that the claims were “inextricably intertwined” with parts of the CBA, and that judicial resolution of them would infringe on the arbitration process set forth in the CBA. Plaintiffs opposed the motions, arguing the pleaded claims did not fall within the scope of the CBA. The Court of Appeal concurred plaintiffs' claims did not require an interpretation of the CBA, and that their claims fell outside the scope of the CBA: "Save Mart explains that disputes about the employee termination and production norm provisions of the CBA are intended to be resolved through grievances. As an abstract proposition we do not disagree. But ...plaintiffs retain an independent (nonnegotiable) state law right to be free of discipline caused by protected activity, such as whistleblowing (Hagins) or exercising his FEHA rights (all plaintiffs)." View "Rymel v. Save Mart Supermarkets" on Justia Law

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Howard alleges that Kaggle’s CEO, Goldbloom, three other members of its board of directors and three limited partnerships (the VC defendants)) abused their corporate power and breached their fiduciary duty to him by wrongfully diluting his interest in Kaggle’s stock, transferring its value to themselves through a self-dealing transaction. The defendants sought to compel arbitration of the claims and to stay proceedings, claiming that Howard had signed four separate agreements in which he consented to arbitrate disputes related to Kaggle. Three of the agreements were signed in 2011, when Howard became employed by Kaggle, and the fourth was a separation agreement executed in 2013, after Howard’s employment ended. The trial court denied the petition, concluding that the arbitration clauses in the four agreements “go to the terms and interpretation of those agreements and matters released by them. Those employment-related agreements preceded by years the issues pled in the complaint, which do not regard Howard’s employment.” The court of appeal affirmed. This dispute is based on obligations owed to minority shareholders in the company, obligations that are independent of Howard’s employment relationship and hence not subject to arbitration even under a broad understanding of the arbitration clause. View "Howard v. Goldbloom" on Justia Law

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Plaintiff appealed a judgment confirming an arbitration award in favor of defendant, whom she sued for medical malpractice. The Court of Appeal affirmed the trial court's judgment, holding that the trial court properly granted the motion to compel arbitration where plaintiff failed to show error in the trial court's implicit finding that the Arbitration Agreement satisfied the requirements of Code of Civil Procedure section 1295, subdivision (b); plaintiff failed to show error in the trial court's implicit finding that plaintiff read and understood the Arbitration Agreements; and plaintiff failed to show error in the trial court's finding that defendant did not waive his right to arbitration. The court also held that the trial court properly confirmed the Arbitration Award where plaintiff's objection to the arbitrator's disclosures was untimely; the arbitrator's ex parte communications with defendant's counsel were insufficient to justify vacating the award; and plaintiff failed to present properly on appeal her additional arguments in support of vacating the award and they lacked merit. Finally, the court held that the trial court properly reconsidered the order vacating the award. View "Cox v. Bonni" on Justia Law

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Ramos, an experienced litigator and patent practitioner with a doctorate in biophysics, was hired as a Winston law firm “Income Partner.” After allegedly being denied recognition for her work, excluded from opportunities for career advancement, evaluated based on the success of her male colleagues, and denied compensation and bonuses to which she was entitled, Ramos sued, asserting discrimination, retaliation, wrongful termination, and anti-fair-pay practices. Winston moved to compel arbitration under the partnership agreement Ramos signed after joining the firm. Ramos argued she was an “employee,” not a partner, so that precedent (Armendariz) applied and that the arbitration provision failed to meet Armendariz's minimum requirements arbitration of unwaivable statutory claims. The trial court found that Ramos was “in a partnership relationship” for purposes of the motion, severed provisions related to venue and cost-sharing, and granted Winston’s motion. The court of appeal reversed. Under the Armendariz analysis, the agreement is unconscionable and the taint of illegality cannot be removed by severing the unlawful provisions without altering the nature of the parties’ agreement. Provisions requiring Ramos to pay half the costs of arbitration, pay her own attorney fees, restricting the ability of the arbitrators to “override” or “substitute its judgment” for that of the partnership, and the confidentiality clause, are unconscionable and significantly inhibit Ramos’s ability to pursue her unwaivable statutory claims. View "Ramos v. Superior Court" on Justia Law

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Levandowski and Ron started working at Google in 2007. Both resigned from Google in 2016. After leaving, they formed Otto, a self-driving technology company which Google considered a competitor of its own self-driving car project. In August 2016, Otto was acquired by Uber. In October 2016, Google initiated arbitration proceedings against Levandowski and Ron for allegedly breaching non-solicitation and non-competition agreements. The arbitration was scheduled to commence in April 2018. Google sought discovery from Uber, a nonparty to the arbitration, related to pre-acquisition due diligence done by Stroz at the request of Uber and Otto’s outside counsel. Over Uber’s objections, the arbitration panel determined the due diligence documents were not protected by either the attorney client privilege or the attorney work product doctrine and ordered them produced. Uber initiated a special proceeding in superior court seeking to vacate the discovery order and prevailed. The court of appeal reversed the superior court’s order. The due diligence-related documents prepared by Stroz were not protected attorney-client communications nor were they entitled to absolute protection from disclosure under the attorney work product doctrine. Although the materials had qualified protection as work product, denial of the materials would unfairly prejudice Google’s preparation of its claims. View "Uber Technologies, Inc. v. Google LLC" on Justia Law

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The Association represents San Francisco Police Department (SFPD) officers. The Commission prescribes and enforces SFPD regulations. The agreement between the two gives the Association the right to notice and an opportunity to meet and confer regarding “any proposed change in general orders or other matters within the scope of representation.” The Commission announced that it planned to revise SFPD’s use of force policy and began meeting with stakeholders. In response to the Association's request that the city confer regarding the proposed policy, the city stated that "the policy is a managerial right outside the scope of bargaining" but agreed to meet once the new policy was approved, “to consider negotiable impacts.” A draft policy was prepared. Disagreement remained regarding provisions that prohibited police use of the carotid restraint and strictly prohibiting officers from shooting at moving vehicles. The Commission adopted the policy. The city met nine times with the Association then declared an impasse. The Association filed a grievance, alleging failure to negotiate in good faith. The city concluded that remaining areas of disagreement were management rights, outside the scope of representation, including the prohibition against shooting at moving vehicles and the ban on carotid restraint. The court of appeal affirmed denial of the Association’s motion to compel arbitration. The parties did not agree to subject the city’s determinations regarding the revised use of force policy to arbitration. View "San Francisco Police Officers' Association. v. San Francisco Police Commission" on Justia Law