Justia Arbitration & Mediation Opinion Summaries

Aetna brought a qui tam action to recover damages and fees occasioned by the surgical center's fraudulent billing practices. The trial court denied the surgical center's petition to compel arbitration of the quit tam action. At issue is Aetna's claims of fraudulent insurance billing practices by the surgical center and its healthcare billing services in violation of the Insurance Fraud Protection Act (IFPA).The Court of Appeal affirmed and concluded that the qui tam action is not subject to arbitration because it is brought on behalf of the state which is not a party to the contract between the insurance company and the surgical center. In this case, California is the real party in interest and it cannot be compelled to arbitrate this qui tam IFPA action because it is not a signatory to the contracts. View "California ex rel. Aetna Health of California Inc. v. Pain Management Specialist Medical Group" on Justia Law

The State entered into a Memorandum of Understanding (MOU) with the Union regarding terms and conditions of employment for certain state employees classified as bargaining unit 12. The State subsequently appealed the trial court’s order denying its petition to vacate or correct an arbitration award determining that DWR had violated article 16.7(G) of the MOU by using purged documents to support the adverse disciplinary action taken against the employee.The Court of Appeal concluded that the arbitration award interpreted and enforced article 16.7(G) of the MOU in a manner that constitutes a violation of the constitutional merit principle, because it impedes the ability of state departments to make reasonable and sound employment decisions based on merit. Therefore, the award violated public policy and the trial court erred in denying the petition. The court reversed the trial court's order on the petition and the ensuing judgment, remanding the matter to the trial court with instructions to enter a new order vacating the award. View "Department of Human Resources v. International Union of Operating Engineers" on Justia Law

The Court of Appeal affirmed a judgment confirming an arbitration award in favor of AXQG. The court denied MMG's requests for judicial notice, found MMG's arguments to be meritless, and concluded that the appeal was frivolous.The court concluded that MMG cannot credibly argue that the arbitrator was required to disclose his affiliation with GLAAD because MMG's principal chose to testify about his Catholic faith when that information was irrelevant to the present dispute over his managerial misconduct. The court also concluded that the arbitrator did not fail to hear evidence material to the final award. In this case, there is no basis in the record for MMG's contention that the arbitrator refused to hear testimony from one of its witnesses; MMG's claim that the arbitrator cut off its counsel's cross-examination of a prospective employee fails for lack of support and, in any event, the testimony was immaterial; and the arbitrator did not fail to hear evidence on the authenticity of an exhibit consisting of a chain of emails. Finally, the court concluded that MMG's appeal is objectively and subjectively frivolous, imposing sanctions on MMG and its counsel. View "Malek Media Group LLC v. AXQG Corp." on Justia Law

Appellants appealed the trial court's order denying their petition to compel arbitration of a lawsuit brought by respondent, individually and as successor in interest to her deceased husband, Ramiro Garcia, regarding Ramiro's treatment at appellants' hospitals.The Court of Appeal affirmed, holding that substantial evidence supported the trial court's conclusion that appellants failed to meet their burden to establish the existence of an enforceable arbitration agreement. The court relied on generally applicable law conditioning the validity of an arbitration agreement executed by a purported agent -- like any other contract executed by a purported agent -- on an adequate evidentiary showing that the agreement falls within the scope of authority, if any, conferred by the principal. Furthermore, the court did not apply this law in a fashion disfavoring arbitration contracts, and thus did not violate the Federal Arbitration Act. View "Garcia v. KND Development 52, LLC" on Justia Law

Plaintiff Anna Sandoval-Ryan signed admission documents on behalf of her brother, Jesus Sandoval, following his admission to Sacramento Post-Acute (Post- Acute), a skilled nursing facility owned by Oleander Holdings, LLC (Oleander) and Plum Healthcare Group, LLC (Plum Healthcare). Among the documents plaintiff signed were two agreements to arbitrate claims arising out of the facility’s care for Sandoval. Sandoval’s condition deteriorated while being cared for at the facility, and he was transferred to a hospital where he later died. Plaintiff sued defendants Post-Acute, Oleander, and Plum Healthcare in superior court; she brought claims on her own behalf and on behalf of Sandoval. Defendants moved to compel arbitration of plaintiff’s claims. The trial court denied the motion on the basis the agreements were invalid because they were secured by fraud, undue influence, and duress. Defendants appealed the trial court’s ruling, contending the parties agreed to allow the arbitrator to decide threshold questions of arbitrability, and the trial court erred by deciding the issue instead. Absent clear and unmistakable language delegating threshold arbitrability issues to the arbitrator, the Court of Appeal concluded defendants’ claim lacked merit. View "Sandoval-Ryan v. Oleander Holdings" on Justia Law

The Court of Appeal affirmed the trial court's order denying a petition to compel arbitration and awarding attorney fees to respondent. The court held that the trial court could reasonably determine that there was no agreement to arbitrate where the form of the rental agreement is deceptive. In this case, the arbitration clause is not above the purchaser's signature, where one would expect to find it. Rather, it is after the purchaser's signature, on the back of the agreement, which is filled from top to bottom with closely spaced lines of small type. Furthermore, appellant's sales representatives are not trained to bring attention to the arbitration clause and there is no mention of arbitration in the personal guaranty.The court agreed with respondent that, under the circumstances, Civil Code section 1717 should apply to make the attorney fee clause mutual, and to award fees to the prevailing party in the contract action. Furthermore, the court concluded that Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, does not prohibit the award of attorney fees. Finally, the court rejected appellant's claim under the doctrine of unclean hands. View "Domestic Linen Supply Co., Inc. v. L J T Flowers, Inc." on Justia Law

Plaintiff-respondent Sarah Coughenour worked for defendant-appellant Del Taco, LLC, starting when she was 16 years old. When she was first employed by Del Taco, she signed a “Mutual Agreement to Arbitrate” (Agreement). After Coughenour reached the age of 18, she continued working for Del Taco for four months. Coughenour quit and filed a lawsuit against Del Taco for sexual harassment committed by one of their employees, wage and hour claims brought pursuant to the Labor Code, and other claims under the Fair Housing and Employment Housing Act. Del Taco moved to compel arbitration. The trial court denied the Motion, finding that Coughenour’s filing of the lawsuit was a disaffirmance of the Agreement within the meaning of Family Code section 6710, which allowed a person upon reaching majority age to disaffirm a contract entered into while a minor. Del Taco appealed the denial of its motion, arguing that by working for Del Taco for four months after she reached the age of majority, Coughenour ratified the Agreement, which estopped her power to disaffirm the Agreement. In the alternative, Del Taco argued that Coughenour did not disaffirm the Agreement within a “reasonable time” after reaching the age of 18 as required by Family Code section 6710. The Court of Appeal affirmed denial of Del Taco's motion: [t]he filing of the lawsuit was notice that [Coughenour] disaffirmed the Agreement." The trial court did not abuse its discretion by concluding that Coughenour disaffirmed the Agreement within a reasonable time. View "Coughenour v. Del Taco" on Justia Law

Plaintiff Richard Brown appealed a judgment confirming an arbitration award in favor of defendant TGS Management Company (TGS) in an employment contract dispute. The specific statutory right at issue in the underlying dispute was Brown’s right to work in his chosen field free of contractual restraints on competition. The Legislature expressed that right in the simple but sweeping language of Business and Professions Code section 16600: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void.” Brown worked for TGS for over 10 years. During that time, a substantial portion of Brown’s compensation was a yearly bonus which rewarded Brown’s performance over the previous year with a sizable cash award to be paid over the next two years. In February 2016, TGS terminated Brown’s employment without cause effective March 2016. Over the next month, Brown and TGS attempted to negotiate a confidential separation agreement. TGS prepared a settlement offer in the form of a draft separation and general release agreement (the Draft Separation Agreement), but Brown rejected the offer. TGS terminated Brown as planned, making the termination “without cause” so Brown could keep two bonuses he had earned but not yet received (the deferred bonuses), given the two-year bonus structure in place. In October 2016, Brown filed a complaint against TGS stating claims for declaratory relief, injunctive relief, and reformation of the arbitrator-selection process in the Employment Agreement. The declaratory relief claim sought a declaration Brown could compete with TGS without risking a damages claim for breaching the Employment Agreement or jeopardizing his two deferred bonuses. Brown also sought an injunction against enforcement of the covenant not to compete. Ten days after filing the complaint, Brown filed a petition to compel arbitration. TGS consented, and answered, stating it would not seek to enforce the no-compete clause in Brown's contract, but that he forfeited the two bonuses at issue when he filed a copy of the Draft Separation Agreement, which disclosed the identity of TGS' clients and its bonus formula for computing employee bonuses. The arbitrator granted TGS' motion for summary judgment. On appeal, Brown contended the Court of Appeal had to vacate the judgment because the arbitration award exceeded the arbitrator's powers, “and the award cannot be corrected without affecting the merits of the decision[.]” The Court concluded the arbitrator exceeded his power in issuing an award enforcing provisions of an employment agreement which illegally restricted Brown’s right to work. Consequently, judgment was reversed and the matter remanded for further proceedings. View "Brown v. TGS Management Co., LLC" on Justia Law

The Court of Appeal affirmed the trial court's denial of LaserAway's petition to compel arbitration of an action brought by plaintiff, alleging that she suffered skin injuries as a result of laser hair removal treatment she received from LaserAway.The court held that plaintiff met her burden of showing that the arbitration agreement between her and LaserAway was unconscionable. In this case, the arbitration was procedurally unconscionable because the agreement was adhesive, warranting further review of the agreement's substantive terms. The court also held that the agreement had a high degree of substantive unconscionability, rendering it unenforceable. Furthermore, LaserAway failed to show the arbitration agreement was not unconscionable under Code of Civil Procedure section 1295. View "Swain v. LaserAway Medical Group, Inc." on Justia Law

McCluskey sought damages for the termination of her Airbnb account, alleging intentional infliction of emotional distress. The court granted a motion to stay the action and compel arbitration under the contract between McCluskey and Airbnb. McCluskey filed a claim for arbitration with the American Arbitration Association (AAA), which set deadlines for paying filing fees. McCluskey paid her fee; AAA acknowledged receipt. Airbnb sent the fee by wire transfer. AAA did not acknowledge receipt. In an April 9 email, AAA informed all counsel that it had closed the arbitration due to defendants’ failure to pay their filing fee. Defense counsel contacted AAA, and, on April 19, sent documentation of an April 5 wire transfer and an email explaining the payment had been sent together with another payment. On May 1, AAA emailed all parties that payment had been received and that AAA needed confirmation, by May 6, that they wanted the case reopened. Not having heard from McCluskey, on May 9 AAA sent “a final request for confirmation.” McCluskey again did not respond.On May 10, McCluskey sought to lift the stay, asserting that the defendants’ failure to pay their filing fee by April 5, constituted a default, waiver, or breach of the arbitration agreement. The court denied the motion. The defendants served a section 128.7 sanctions motion. The court of appeal affirmed an award of $22,159.50, as “reasonable” attorney fees for opposing the motion to lift the stay and declining to award fees incurred in bringing the sanctions motion. View "McCluskey v. Henry" on Justia Law