Justia Arbitration & Mediation Opinion Summaries

Thomas Vo signed an employment arbitration agreement with Technology Credit Union (TCU) before starting his job in 2020. The agreement required both parties to submit any employment-related disputes to binding arbitration. Vo was later terminated and sued TCU for violations of the Fair Employment and Housing Act (FEHA), including harassment, discrimination, and wrongful termination. TCU moved to compel arbitration, but Vo opposed, arguing the agreement was unconscionable because it did not allow for prehearing third-party discovery.The Santa Clara County Superior Court found the arbitration agreement procedurally unconscionable as a contract of adhesion and substantively unconscionable because it did not permit third-party discovery, relying on Aixtron, Inc. v. Veeco Instruments Inc. The court denied TCU's motion to compel arbitration, leading TCU to appeal the decision.The California Court of Appeal, Sixth Appellate District, reviewed the case de novo. The court found that while the agreement was procedurally unconscionable, it was not substantively unconscionable. The court noted that the JAMS Rules incorporated into the agreement allowed the arbitrator to order additional discovery, including third-party discovery, if necessary. The court emphasized that the agreement should be interpreted to allow adequate discovery to vindicate statutory claims, as clarified in Ramirez v. Charter Communications, Inc.The appellate court reversed the trial court's order and remanded with instructions to grant TCU's motion to compel arbitration and stay the proceedings pending arbitration. The court concluded that the arbitration agreement was enforceable and not unconscionable. View "Vo v. Technology Credit Union" on Justia Law

Kristin Casey, a former employee of D.R. Horton, Inc., filed a lawsuit against the company and one of its employees, Kris Hansen, alleging sexual harassment and other claims. D.R. Horton moved to compel arbitration based on an employment agreement that included an arbitration clause governed by California law. Casey opposed the motion, citing the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), which allows plaintiffs to invalidate arbitration agreements in cases involving sexual harassment. The trial court granted the motion to compel arbitration, reasoning that the EFAA was inapplicable due to the choice-of-law provision in the employment agreement.The Contra Costa County Superior Court initially reviewed the case and granted the motion to compel arbitration, accepting Hansen's joinder. The court concluded that the choice-of-law provision in the employment agreement meant that California law, not the EFAA, applied. Casey then filed a petition for a writ of mandate to challenge this decision.The California Court of Appeal, First Appellate District, Division One, reviewed the case. The court held that the EFAA preempts state law attempts to compel arbitration in cases related to sexual harassment disputes. The court determined that the EFAA applies to the parties' transaction because it sufficiently involved interstate commerce. The court also concluded that the EFAA's rule of unenforceability of arbitration agreements in sexual harassment cases preempts the state law and that parties cannot contract around the EFAA through a choice-of-law provision. Consequently, the court granted Casey's petition and directed the trial court to vacate its order compelling arbitration and to enter a new order denying the motion. View "Casey v. Superior Court" on Justia Law

Justo Malo Sanchez filed a legal malpractice complaint against Consumer Defense Law Group (CDLG), Tony Cara, Peter Nisson, and Nonprofit Alliance of Consumer Advocates (collectively Defendants). Sanchez alleged that the Defendants committed legal malpractice, resulting in the loss of his house. The retainer agreement he signed included an arbitration clause, which he argued was procedurally and substantively unconscionable due to his inability to understand English and his financial inability to afford arbitration fees.The Superior Court of Orange County initially tentatively denied the Defendants' motion to compel arbitration but later granted it. Sanchez then filed a petition for extraordinary relief, arguing that the arbitration agreement was unconscionable and that he could not afford the arbitration fees.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court found substantial procedural unconscionability due to the adhesive nature of the contract, Sanchez's limited English proficiency, and the lack of a Spanish translation or explanation of the arbitration clause. The court also found substantive unconscionability because Sanchez, who was indigent and had been granted a court fee waiver, could not afford the $2,000 arbitration filing fee and additional costs estimated between $25,000 and $30,000.The court concluded that the arbitration agreement was unenforceable due to unconscionability. Additionally, under the precedent set by Roldan v. Callahan & Blaine, the court held that Sanchez could be excused from paying the arbitration fees due to his inability to afford them. The court granted Sanchez's petition, directing the superior court to vacate its order compelling arbitration and to enter an order denying the motion to compel arbitration. View "Sanchez v. Superior Court" on Justia Law

Nabors Corporate Services, Inc. (Nabors) performed oil well plug and abandonment work for the City of Long Beach (the City) between 2012 and 2014. The City had contracted with Tidelands Oil Production Company (Tidelands) for services on the Gerald Desmond Bridge Replacement Project, and Tidelands subcontracted the work to Nabors. The City and Tidelands had concluded that the work was not subject to prevailing wage laws, and Nabors was not informed otherwise during the bid process. After completing the work, Nabors faced a class action from its employees for unpaid prevailing wages, which led to arbitration awards and federal court judgments against Nabors.The Superior Court of Los Angeles County sustained demurrers by the City and Tidelands, dismissing Nabors’s claims for indemnity under Labor Code sections 1781 and 1784. The court ruled that section 1784 could not be applied retroactively to Tidelands and that the arbitration awards confirmed by the federal court did not qualify as court decisions under section 1781.The California Court of Appeal, Second Appellate District, Division Five, reviewed the case. The court affirmed the dismissal of the section 1784 claim against Tidelands, agreeing that the statute could not be applied retroactively. However, the court reversed the dismissal of the section 1781 claim against the City, holding that the federal court’s confirmation of arbitration awards did qualify as court decisions classifying the work as public work. The case was remanded with instructions to enter a new order overruling the City’s demurrer to the section 1781 cause of action. Nabors was awarded costs on appeal against the City, while Tidelands was awarded costs on appeal against Nabors. View "Nabors Corporate Services, Inc. v. City of Long Beach" on Justia Law

Plaintiff Jenny-Ashley Colon-Perez sued her former employer, Security Industry Specialists, Inc. (SIS), alleging multiple causes of action related to her employment. After SIS moved to compel arbitration, the parties agreed to arbitrate, and the trial court ordered the claims to arbitration and stayed the court action. SIS paid two arbitration fee invoices but failed to pay the third invoice within the 30-day period required by California Code of Civil Procedure section 1281.98. Colon-Perez elected to withdraw from arbitration and moved to vacate the arbitration and stay order. The trial court granted the motion, ruling that SIS had materially breached the arbitration agreement and Colon-Perez was entitled to proceed with her claims in court. SIS then moved to vacate the order under section 473(b), which the trial court denied.The trial court ruled that the Federal Arbitration Act (FAA) did not preempt section 1281.98 and that SIS had materially breached the arbitration agreement by failing to pay the fees on time. The court also found that section 1281.98 did not violate the contracts clause of the United States and California Constitutions. SIS appealed, arguing that the FAA preempted section 1281.98, that section 1281.98 violated the contracts clause, and that it was entitled to relief under section 473(b).The California Court of Appeal, First Appellate District, Division One, affirmed the trial court's orders. The court held that the FAA did not preempt section 1281.98, as the state law could be applied concurrently with federal law. The court also found that section 1281.98 did not violate the contracts clause because it served a significant and legitimate public purpose and was appropriately tailored to achieve that purpose. Additionally, the court ruled that section 473(b) relief was not available for SIS's failure to timely pay arbitration fees, as the statute's strict 30-day deadline was intended to be inflexible. View "Colon-Perez v. Security Industry Specialists" on Justia Law

The plaintiffs, Robert and Stephen Samuelian, co-founded Life Generations Healthcare, LLC (the Company) and later sold a portion of their ownership interest. The Company adopted a new operating agreement that included a noncompetition provision. The Samuelians challenged the enforceability of this provision in arbitration, where the arbitrator found it invalid per se under California Business and Professions Code section 16600, as it arose from the sale of a business interest. The arbitrator also found the corporate opportunities provision invalid and ruled the Company’s forced buyout of the Samuelians was invalid.The Superior Court of Orange County reviewed the arbitrator’s ruling de novo, as the parties had agreed the arbitrator could not commit errors of law. The court confirmed the arbitrator’s award, finding no legal error in applying the per se standard to the noncompetition provision and agreeing with the arbitrator’s findings on the invalidity of the corporate opportunities provision and the lack of fiduciary duties owed by the Samuelians.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court held that the arbitrator erred in applying the per se standard to the noncompetition provision. The court determined that the reasonableness standard should apply to noncompetition agreements arising from the partial sale of a business interest, as such agreements may have procompetitive benefits and are not inherently anticompetitive. The court also found that an operating agreement can impose fiduciary duties on members in a manager-managed company.The Court of Appeal reversed the trial court’s judgment confirming the arbitration award and directed the trial court to deny the Samuelians’ petition to confirm the award and grant the Company’s motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

Sarah Anoke and other employees initiated arbitration proceedings against their employer, X (comprising Twitter, Inc., X Holdings I, Inc., X Holdings Corp., X Corp., and Elon Musk), to resolve employment-related disputes. The arbitration provider issued an invoice for $27,200, which was mistakenly paid by Anoke’s counsel. The arbitration provider marked the invoice as paid and closed, refunded the payment to Anoke’s counsel, and issued a new invoice to X, which X paid within 30 days.Anoke petitioned the Superior Court of the City and County of San Francisco for an order compelling X to pay their arbitration-related attorney fees and costs, arguing that X’s payment was untimely as it was not made within 30 days of the first invoice. The superior court denied the petition, reasoning that since the arbitrator nullified the first invoice after Anoke’s attorney mistakenly paid it and X timely paid the second invoice, X met the statutory deadline.The Court of Appeal of the State of California, First Appellate District, Division Five, reviewed the case. The court held that the statutory deadline for payment of arbitration fees under Code of Civil Procedure section 1281.97 was not violated. The court found that the first invoice was paid by Anoke’s counsel, and the second invoice was paid by X within the 30-day period. The court concluded that the arbitrator acted within its authority by issuing a second invoice after refunding the mistaken payment. The court affirmed the superior court’s order denying Anoke’s motion to compel arbitration with attorney fees and costs. View "Anoke v. Twitter" on Justia Law

Trudy Maxwell, a 93-year-old resident of Atria Park of San Mateo, died after consuming an industrial strength cleaner mistakenly served as a beverage by an Atria employee. Trudy’s eight children, including James Maxwell III, filed a lawsuit against Atria Management Company and related entities, alleging negligence, wrongful death, and elder abuse. James III, holding a durable power of attorney (DPOA), had signed an arbitration agreement with Atria, which the defendants sought to enforce.The San Mateo County Superior Court denied the defendants' motion to compel arbitration, ruling that James III was not authorized to sign the arbitration agreement because he did not have the authority to make health care decisions for Trudy. The court also found that the arbitration agreement did not bind Trudy’s children regarding their wrongful death claims and that California procedural rules, including section 1281.2(c), were not preempted by the Federal Arbitration Act (FAA).The California Court of Appeal, First Appellate District, Division One, reviewed the case. The court reversed the trial court’s order denying arbitration and remanded the case for further proceedings. The appellate court instructed the trial court to reconsider the validity of the arbitration agreement in light of the California Supreme Court’s decision in Harrod v. Country Oaks Partners, LLC, which held that agreeing to an optional arbitration agreement is not a health care decision. The appellate court also affirmed that the wrongful death claims of Trudy’s children are not subject to arbitration, as they are independent and personal claims not bound by the arbitration agreement. The court further held that section 1281.2(c) was not preempted by the FAA, allowing the trial court to stay or deny arbitration to avoid conflicting rulings. View "Maxwell v. Atria Management Co., LLC" on Justia Law

Petitioners Isai Lopez Rivera and Helen Espinosa purchased a new 2020 Ford Super Duty F-250 from Fairway Ford in San Bernardino, financing the purchase through the dealer. They received a 3-year/36,000-mile warranty from Ford Motor Company (FMC) but did not buy an optional service contract. After experiencing mechanical issues with the truck, they sought repairs at Ford of Ventura, an authorized service center. When the repairs failed, they filed a lawsuit under the Song-Beverly Consumer Warranty Act against FMC and Ford of Ventura, but not against the selling dealer, Fairway Ford.The trial court granted FMC's motion to compel arbitration based on an arbitration provision in the sale contract between the petitioners and the non-party dealer. The court found that FMC could enforce the arbitration provision as a third-party beneficiary and that the petitioners were estopped from refusing arbitration. Petitioners moved for reconsideration twice, citing appellate decisions that disapproved of the precedent relied upon by the trial court, but both motions were denied.The California Court of Appeal, Second Appellate District, reviewed the case. The court concluded that FMC and Ford of Ventura are not third-party beneficiaries of the sale contract and that the petitioners are not estopped from objecting to arbitration. The court found that the sale contract did not show an intent to benefit FMC and that the petitioners' claims against FMC and Ford of Ventura were independent of the sale contract. The appellate court granted the petition for a writ of mandate, directing the trial court to vacate its orders compelling arbitration and denying reconsideration, and to enter a new order denying FMC's motion to compel arbitration. View "Rivera v. Superior Court" on Justia Law

Lisa Enmark was under an LPS conservatorship when she moved into a skilled nursing facility. Her father, Scott Enmark, signed two optional arbitration agreements with the facility as her representative. After Lisa died, her parents sued the facility's owners and operators, asserting both successor and individual claims. The defendants petitioned to compel arbitration, but the trial court denied the petition, finding no evidence of Scott’s authority to bind Lisa to arbitration on the successor claims and noting that neither Scott nor Lisa’s mother, Marilyn Warhol, signed the agreements in their individual capacities.The Superior Court of Los Angeles County found that Scott did not have the authority to sign the arbitration agreements on Lisa’s behalf and that Scott and Marilyn did not sign the agreements in their individual capacities. The court denied the petition to compel arbitration, leading the defendants to appeal the decision.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the LPS conservatorship order did not confer actual or ostensible authority on Scott to sign the arbitration agreements on Lisa’s behalf. The court also found that the execution of the arbitration agreements was not a health care decision and that Scott’s authority under the conservatorship did not extend to binding Lisa or her heirs to arbitration. Additionally, the court ruled that Scott and Marilyn’s wrongful death claim was not subject to arbitration as they did not sign the agreements in their individual capacities. The court affirmed the trial court’s order denying the petition to compel arbitration. View "Enmark v. KC Community Care" on Justia Law