Justia Arbitration & Mediation Opinion Summaries

In 2017, the plaintiffs leased a Mercedes-Benz B250E from a dealer. In 2020, at the end of the lease, they signed a Retail Installment Sales Contract (RISC) with the dealer to finance the purchase of the vehicle. Both the lease and the RISC contained arbitration agreements.The plaintiffs allege that Mercedes-Benz USA (MBUSA), as the manufacturer or distributor of the vehicle, provided them with two express warranties and a separate implied warranty of merchantability and that the vehicle had undisclosed defects covered by the warranties, They took the vehicle to the dealer, which was authorized by MBUSA for repairs, but despite multiple attempts, the vehicle could not be fixed. The plaintiffs filed suit, alleging violations of the Song-Beverly Consumer Warranty Act. MBUSA moved to compel arbitration, arguing that it had standing to compel arbitration as a third-party beneficiary of both the lease and the RISC, and equitable estoppel. While the trial court rejected MBUSA’s argument that it was a third-party beneficiary of the agreements, it agreed with MBUSA’s equitable estoppel argument. The court of appeal reversed. MBUSA is not a party to the agreements with the vehicle dealer and the claims against MBUSA are not intertwined with those agreements. View "Yeh v. Superior Court of Contra Costa County" on Justia Law

Barrera and Varguez sued Apple, a nationwide restaurant chain, to recover civil penalties under the Private Attorneys General Act of 2004 (PAGA) (Labor Code 2698) for Labor Code violations suffered by them and by other employees. Apple unsuccessfully moved to compel arbitration.The court of appeal reversed in part, first rejecting a claim that Apple waived the right to arbitrate by “litigating this case for over a year” before moving to compel arbitration. Citing the Supreme Court’s 2022 decision, "Viking River Cruises," and the Federal Arbitration Act (9 U.S.C. 1), the court concluded that the parties’ agreements require arbitration of the PAGA claims that seek to recover civil penalties for Labor Code violations committed against the plaintiffs. The PAGA claims seeking civil penalties for Labor Code violations committed against other employees may be pursued by the plaintiffs in the trial court. In defining the scope of arbitrable claims, the Agreements permissibly provide that only individual PAGA claims can be arbitrated. The plaintiffs’ individual claims can be arbitrated—unless the Agreements are unenforceable on some other ground; the plaintiffs did not meet their burden in establishing the Agreements are unconscionable. The court remanded for determination of whether a stay of the non-individual PAGA claims would be appropriate. View "Barrera v. Apple American Group LLC" on Justia Law

Housing Authority of the City of Calexico (the Housing Authority) and AMG & Associates, LLC (collectively, the plaintiffs) appealed a superior court confirming an arbitration award, declining to undertake a review of the award on the merits for errors of fact or law (review on the merits) and declining to grant their petition to partially reverse or vacate the award. They contended the superior court should have undertaken a review on the merits because the parties had agreed to such a review. They further contended that, had the superior court undertaken such a review, it would have concluded that no substantial evidence supported the award and that the award was contrary to law. Additionally, plaintiffs contended that, in denying their motion to partially reverse or vacate the award, the superior court left in place a finding by the arbitrator that not only exceeded the arbitrator’s powers but worked as a forfeiture against the Housing Authority. After review, the Court of Appeal concluded the superior court erred in declining to undertake a review on the merits. "[I]n instances in which the parties have agreed that an arbitration award may be subjected to judicial review, it is the superior court and not the Court of Appeal that has original jurisdiction to undertake that review in the first instance, that the superior court is without power to yield that original jurisdiction to the Court of Appeal, and that the superior court should thus have performed the review." View "Housing Auth City of Calexico v. Multi-Housing Tax Credit Partners" on Justia Law

Mark Kielar challenged a superior court’s decision to grant Hyundai Motor America’s (Hyundai) motion to compel arbitration of his causes of action for violation of the Song-Beverly Consumer Warranty Act, and fraudulent inducement arising from alleged mechanical defects in the condition of his 2012 Hyundai Tucson. The superior court’s ruling followed Court of Appeal's earlier decision in Felisilda v. FCA US LLC, 53 Cal.App.5th 486 (2020) and concluded Hyundai, a nonsignatory manufacturer, could enforce the arbitration provision in the sales contract between Kielar and his local car dealership under the doctrine of equitable estoppel. The Court of Appeal joined recent decisions that have disagreed with Felisilda and concluded the court erred in ordering arbitration. Therefore, it issued a preemptory writ of mandate compelling the superior court to vacate its June 16, 2022 order and enter a new order denying Hyundai’s motion. View "Kielar v. Super. Ct." on Justia Law

Plaintiff worked for Defendant Skyview Capital, LLC. He sued this entity and others in state court after his termination. Skyview moved to compel arbitration. The trial court granted the motion and stayed the proceedings. Skyview had to pay arbitration fees ahead of the hearing. The fees were due June 4, 2021. On July 7, 2021, Plaintiff’s counsel asked the case manager whether Skyview had paid the deposits. On July 8, 2021, the case manager confirmed by email that Skyview had not paid. Plaintiff filed in the trial court a section 1281.98 Election to Withdraw from Arbitration. The court’s February 2022 order granted Plaintiff’s request to withdraw from arbitration, vacated the order staying proceedings, and awarded Plaintiff reasonable expenses under section 1281.99.
The Second Appellate District affirmed, holding that the order allowing Plaintiff to withdraw from arbitration was proper. The court explained that in enacting sections 1281.97 through 1281.99, the Legislature perceived employers’ and companies’ failure to pay arbitration fees was foiling the efficient resolution of cases. This contravened public policy. The Legislature responded by making nonpayment and untimely payment grounds for proceeding in court and getting sanctions. The point was to take this issue away from arbitrators, who may be financially interested in continuing the arbitration and in pleasing regular clients. Therefore, the trial court was right to decide this matter of statutory law. View "Cvejic v. Skyview Capital" on Justia Law

Ford Motor Company (Ford) appealed from an order denying its motion to compel arbitration of Plaintiffs’ causes of action for breach of warranty, violations of the Song-Beverly Consumer Warranty Act (Civ. Code, Section 1790 et seq.; the Song-Beverly Act) and for fraudulent omission arising from alleged defects in a sports utility vehicle Plaintiffs’ purchased from the dealership, AutoNation Ford Valencia (AutoNation). The central question on appeal is whether Ford as the manufacturer of the vehicle, can enforce an arbitration provision in the sales contract between Plaintiffs and AutoNation to which Ford was not a party under the doctrine of equitable estoppel or as a third-party beneficiary of the contract.   The Eighth Circuit affirmed. The court concluded Ford cannot enforce the arbitration provision in the sales contract because Plaintiffs’ claims against Ford are founded on Ford’s express warranty for the vehicle, not any obligation imposed on Ford by the sales contract, and thus, Plaintiffs’ claims are not inextricably intertwined with any obligations under the sales contract. Nor was the sales contract between Plaintiffs and AutoNation intended to benefit Ford. View "Montemayor v. Ford Motor Co." on Justia Law

An arbitrator issued subpoenas to compel two individuals, who were not parties to the arbitration, to appear and produce documents at a hearing specially set “for the limited purpose of receiving documents” from them, or to download the documents to a website controlled by counsel for the party requesting the subpoenas. The subpoenas provided that after the production of documents, the “hearing” would be adjourned to a later date, at which time the subpoenaed nonparties would be summoned to appear and testify. The date for their compliance with the document production was nearly 12 months before the scheduled arbitration hearing on the merits. After the nonparties refused to comply with the subpoenas, the arbitrator compelled compliance. The nonparties petitioned the trial court to vacate the order compelling their compliance with the subpoenas. The trial court denied the petition to vacate the order, concluding the subpoenas were statutorily authorized “hearing” subpoenas under California Arbitration Act section 1282.6, not subpoenas issued for the purposes of discovery. The nonparties argued the judgment should be reversed because the subpoenas were improper discovery subpoenas, despite being labeled “hearing” subpoenas. Under the specific facts of this case, the Court of Appeal agreed with the nonparties. View "McConnell v. Advantest America" on Justia Law

Plaintiff was employed from April 2018 to August 2019 by Defendant EmployBridge, LLC, which does business in California as Select Staffing. In March 2018, as part of her employment application, Plaintiff electronically signed an arbitration agreement. The arbitration agreement (1) states it “is governed by the Federal Arbitration Act,” and (2) contains a broad agreement to arbitrate claims. Plaintiff sued EmployBridge Holding Company, a Delaware corporation, solely to recover civil penalties under PAGA for Labor Code violations suffered by her or by other employees. The trial court determined that the agreement to arbitrate specifically excluded PAGA claims. This appeal challenges the denial of a motion to compel arbitration of claims to recover civil penalties.   The Fifth Appellate District affirmed the order denying the motion to compel arbitration. The court concluded that the trial court correctly interpreted the agreement’s carve-out provision stating that “claims under PAGA … are not arbitrable under this Agreement.” This provision is not ambiguous. It is not objectively reasonable to interpret the phrase “claims under PAGA” to include some PAGA claims while excluding others. Thus, the carve-out provision excludes all the PAGA claims from the agreement to arbitrate. View "Duran v. EmployBridge Holding Co." on Justia Law

Ring manufactures and sells home security and smart home devices including video doorbells, security cameras, and alarms. The plaintiffs purchased video doorbell and security camera products from Ring and subsequently filed a class action complaint against Ring asserting claims under the Consumer Legal Remedies Act, false advertising law, and Unfair Competition Law. They sought injunctive relief requiring Ring to prominently disclose to consumers certain information about its products and services.Ring moved to compel arbitration based on an arbitration provision in its terms of service. The plaintiffs did not dispute that they agreed to Ring’s terms of service but argued the arbitration provision violates the California Supreme Court’s 2017 “McGill” holding that a pre-dispute arbitration agreement is invalid and unenforceable under state law insofar as it purports to waive a party’s statutory right to seek public injunctive relief.The court of appeal affirmed the denial of Ring's motion to compel arbitration. The parties did not “clearly and unmistakably" delegate to the arbitrator exclusive authority to decide whether the arbitration provision is valid under McGill. The contract language at issue is commonly understood to preclude public injunctive relief in arbitration. The Federal Arbitration Act, 9 U.S.C. 1, does not preempt McGill’s holding. The contract’s severability clause means the plaintiffs’ claims cannot be arbitrated and may be brought in court. View "Jack v. Ring LLC" on Justia Law

Plaintiff was a resident at a residential skilled nursing facility when she sustained injuries in a fall. She sued the facility, Capistrano Beach Care Center, LLC dba Capistrano Beach Care Center (CBCC), and its operator, Cambridge Healthcare Services, LLC (collectively, Defendants). Defendants petitioned to compel arbitration, claiming Plaintiff was bound by arbitration agreements purportedly signed on her behalf by her adult children. The trial court denied the petition, concluding defendants had failed to prove Plaintiff’s adult children had actual or ostensible authority to execute the arbitration agreements on Plaintiff’s behalf.   The Second Appellate District affirmed. The court explained that CBCC did not meet its initial burden to make a prima facie showing that Plaintiff agreed to arbitrate by submitting arbitration agreements signed by Plaintiff’s adult children. CBCC presented no evidence that the children had actual or ostensible authority to execute the arbitration agreement on Plaintiff’s behalf beyond their own representations in the agreements. The court wrote that a defendant cannot meet its burden to prove the signatory acted as the agent of a plaintiff by relying on representations of the purported agent alone. View "Kinder v. Capistrano Beach Care Center" on Justia Law