Justia Arbitration & Mediation Opinion Summaries

Vivera Pharmaceuticals, Inc. (Vivera) was developing a medical test kit, but had received “negative publicity” from its litigation with a rival company. Vivera hired Sitrick Group, LLC (Sitrick) to manage a public relations campaign. Vivera did not make any payments and Sitrick filed demands for arbitration with Judicial Arbitration and Mediation Services (JAMS). Judge Swart was selected to serve as an arbitrator in a separate matter between Sitrick and Legacy Development (the Legacy matter). In that matter, Sitrick was employing the same law firm (but a different lawyer) as was representing it in the arbitration with Vivera. Sitrick filed petitions to confirm the arbitration award. Vivera asked the trial court to vacate the arbitrator’s award due to Judge Swart’s inadequate disclosure of the Legacy matter. The trial court issued an order confirming the arbitrator’s award.   The Second Appellate District affirmed. The court explained that the California Arbitration Act (the Act) requires arbitrators to disclose, among other things, matters that the Ethics Standards for Neutral Arbitrators in Contractual Arbitration (Ethics Standards) dictate must be disclosed. At issue here is whether the Ethics Standards require a retained arbitrator in a noncommercial case to disclose in one matter that he has been subsequently hired in a second matter by the same party and the same law firm. The court held “no,” at least where the arbitrator has previously informed the parties—without any objection thereto—that no disclosure will be forthcoming in this scenario. Because the arbitrator’s disclosures were proper here, the trial court properly overruled an objection based on inadequate disclosure. View "Sitrick Group v. Vivera Pharmaceuticals" on Justia Law

Plaintiff Jimmy Hang sued defendants RG Legacy I, LLC, 1899 Raymond LLC, and Arlene Rosales for elder abuse and negligent hiring and supervision. The RG Legacy parties filed a petition to compel arbitration of those claims pursuant to arbitration agreements Jimmy entered on the decedent, Daniel Hang’s behalf when Daniel was admitted to a RG Legacy parties’ skilled nursing facility. Jimmy opposed the petition arguing, inter alia, Daniel had been indigent and his estate had no funds to pay arbitration fees and costs. Citing Roldan v. Callahan & Blaine, 219 Cal.App.4th 87 (2013), the trial court found Daniel was indigent at the time of his death and granted the petition to compel arbitration on the condition that, within 15 days, the RG Legacy parties agreed to pay all arbitration fees and costs, or waive the right to arbitrate the matter. The RG Legacy parties did not agree to pay all arbitration fees and costs and instead filed this appeal. The Court of Appeal affirmed: substantial evidence supported the trial court’s findings of Daniel’s indigence, and the trial court properly applied the holdings of Roldan and its progeny in ordering the RG Legacy parties to either agree to pay all arbitration fees and costs or waive arbitration. The RG Legacy parties’ refusal to so agree, within the time specified, effected the court’s denial of their petition to compel arbitration. View "Hang v. RG Legacy I" on Justia Law

Defendant In-N-Out Burgers appealed a trial court’s denial of its motion to compel arbitration of the claims of plaintiffs Tom Piplack and Donovan Sherrod for penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA). Defendant argued Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022), rendered while defendant’s appeal was pending, required plaintiffs’ individual PAGA claims to be arbitrated and all remaining representative claims dismissed for lack of standing. Plaintiffs contended: (1) the agreement did not require arbitration of individual PAGA claims; (2) defendant waived its right to arbitration by participating in trial proceedings; (3) plaintiff Sherrod was not bound by the arbitration agreement because he entered it before reaching the age of majority and disaffirmed it after reaching that age; and (4) that plaintiffs had standing to pursue representative PAGA claims in court even if their individual claims were sent to arbitration. The Court of Appeal concluded the arbitration agreements required individual PAGA claims to be arbitrated and defendant did not waive its right to compel arbitration. Accordingly, as to plaintiff Piplack, the Court of Appeal reversed: his individual PAGA claim had to be arbitrated. As to plaintiff Sherrod, the Court remanded for the trial court to consider his arguments regarding disaffirmance in the first instance, as those arguments were not properly briefed or decided in the trial court because they were irrelevant under pre-Viking law. View "Piplack v. In-N-Out Burgers" on Justia Law

Plaintiff suffered a stroke on August 18, 2009. He was hospitalized at St. John’s Regional Medical Center for two weeks, followed by a month in St. John’s inpatient rehabilitation facility. He entered Oxnard Manor, a skilled nursing facility, on October 3. Four days later, on October 7, Plaintiff signed an arbitration agreement. It stated that he gave up his right to a jury or court trial, and required arbitration of claims arising from services provided by Oxnard Manor, including claims of medical malpractice, elder abuse, and other torts. Plaintiff remained a resident at Oxnard Manor until his death nine years later, individually and as Plaintiff’s successors in interest, sued Oxnard Manor for elder abuse/neglect, wrongful death, statutory violations/breach of resident rights, and negligent infliction of emotional distress. Oxnard Manor filed a petition to compel arbitration. Both sides relied on medical records to demonstrate whether Plaintiff had the mental capacity to consent to the arbitration agreement.   The Second Appellate District affirmed. The court explained that evidence here that Plaintiff scored below the level necessary to “solve complex problems such as managing a checking account” supports the conclusion that he was unable to manage his financial affairs. But regardless of whether the presumption of Civil Code section 39, subdivision (b) applied, substantial evidence established that Plaintiff lacked the capacity to enter an arbitration agreement. View "Algo-Heyres v. Oxnard Manor" on Justia Law

Skillz provides a mobile platform that hosts games in which players compete for cash prizes. To participate in paid-entry competitions, a user must save the player account; after entering a date of birth, the user must tap a box with the word “Next.” Below the “Next” box is the advisory statement: “By tapping ‘Next,’ I agree to the Terms of Service and the Privacy Policy.” A hyperlink, if tapped, takes the user to Skillz’s terms of service. Gostev saved a Skillz player account in 2019. The Terms of Service then had 15 pages.Gostev sued Skillz, alleging that its games constituted illegal gambling, predatory and unlawful practices, and violated the Unfair Competition Law and the Consumers Legal Remedies Act, Gostev alleged the arbitration agreement was unenforceable. Skillz argued that Gostev’s challenges to the enforceability of the arbitration provision had to be submitted to an arbitrator.The court of appeal affirmed a finding that the arbitration agreement was procedurally and substantively unconscionable. The court noted provisions that a plaintiff’s damages are limited, the arbitration must occur in San Francisco, a plaintiff only has one year to bring his claim, the parties must split the arbitration fees and costs, and the defendant can obtain equitable relief without posting a bond or security. Unconscionability ”permeates the agreement such that severance is unavailable,” View "Gostev v. Skillz Platform, Inc." on Justia Law

Plaintiff sued her former employer, Dolgen California, LLC (Dollar General), to recover civil penalties under the Private Attorneys General Act of 2004 for various Labor Code violations suffered by her or by other employees. Dollar General moved to compel arbitration, which the superior court denied. In November 2021, the Fifth Appellate District affirmed the trial court’s order. That affirmance was vacated by the United States Supreme Court when it granted Dollar General’s petition for writ of certiorari and remanded the case for further consideration in light of Viking River Cruises, Inc. v. Moriana.   The Fifth Appellate District reversed in part the order denying the motion to compel arbitration judgment. The court affirmed Plaintiff’s Type O claims. The court reversed as to Plaintiff’s Type A claims, and the court remanded the matter with directions that the trial court enters a new order requiring Plaintiff to arbitrate the Type A claims. The court concluded Viking River and the Federal Arbitration Act do not invalidate the rule of California law that a provision in an arbitration agreement purporting to waive an employee’s right to pursue representative actions is not enforceable as to representative claims pursued under PAGA. Second, the severability clause in the arbitration agreement allows the unenforceable waiver provision to be stricken from the arbitration agreement. Third, the surviving provisions of the agreement require arbitration of the PAGA claims that seek to recover civil penalties for Labor Code violations suffered by Plaintiff. View "Galarsa v. Dolgen California, LLC" on Justia Law

Tribal lending entities (TLEs) retained the LLCs to manage their online lending programs. In 2017, the relationships began to deteriorate. The LLCs and their managing members, the Koettings, allegedly persuaded customers to continue borrowing from new lenders controlled by the Koettings. The TLEs terminated the agreements and claimed breach of contractual and fiduciary duties, fraud, theft, failure to safeguard customer data, and failure to transfer revenue owed. The LLCs also accused the TLEs of breaching the agreements. An arbitrator ruled against the LLCs and the Koettings.The court of appeal reversed in part because the TLEs failed to demonstrate that the Koettings clearly consented to the arbitrator’s determination of whether they as nonsignatories were bound by the arbitration agreement in the contracts between the TLEs and the LLCs. JPV (successor to the TLEs) unsuccessfully moved to amend the judgment to add the Koettings as judgment debtors on an alter ego theory.JPV argued the trial court abused its discretion by disregarding the collateral estoppel effect of the arbitrator’s findings underlying the judgment against the LLCs and failing to consider all circumstances relevant to the alter ego inquiry, including the arbitral findings that the LLCs wrongfully diverted the TLEs’ customers and business opportunities to other entities controlled by the Koettings. The court of appeal vacated. The trial court made erroneous legal assumptions and misunderstood the proper scope of its discretion. View "JPV I L.P. v. Koetting" on Justia Law

Appellants (the brothers) appealed following a judgment affirming an arbitration award that resolves an employment dispute between the brothers, their former employer, defendant and respondent U-Haul Co. of California (U-Haul), and their former manager at U-Haul and Respondent. On appeal, the brothers challenge the court’s order compelling their dispute to arbitration, arguing that the arbitration agreement they signed with U-Haul is unconscionable and thus unenforceable.   The Second Appellate District affirmed the order compelling arbitration. The brothers also challenged the court’s order, issued before the court ordered the matter to arbitration, denying them leave to amend their complaint. The proposed amendment includes a Labor Code cause of action against Sandusky for unpaid wages regarding work the brothers allegedly performed at Respondent’s residence solely for his personal benefit. The court saw no basis for which the trial court could deny the brothers leave to assert such a claim. The brothers’ proposed amendment also includes a claim for relief under California’s Private Attorney General Act (the PAGA) based on the Labor Code violations by U-Haul and/or Respondent reflected in the proposed amended complaint. But the brothers cannot establish PAGA standing to bring a claim based on Labor Code violations by U-Haul already alleged in the operative complaint, because the arbitrator found no such violations occurred, and that finding has issue preclusive effect. The arbitrator’s finding does not affect the brothers’ ability to establish PAGA standing based on the proposed alleged Labor Code violation by Respondent involving unpaid wages; however, the court saw no other fatal deficiencies in the proposed PAGA claim against Respondent. View "Rocha v. U-Haul Co. of Cal." on Justia Law

Fleming filed a class action complaint, alleging Oliphant violated the California Rosenthal Fair Debt Collection Practices Act. Oliphant filed a petition to dismiss Fleming’s class action claims and compel binding arbitration of his individual claims under the Federal Arbitration Act (9 U.S.C. 2). According to Oliphant’s records custodian, Fleming electronically applied for a credit card in December 2013. The electronic application included no reference to an arbitration agreement. Fleming received the card, used his card for purchases, made payments on his account, and received account statements, which did not include any reference to arbitration. There is no evidence of any signed agreement. Oliphant provided no evidence that it even sent such an agreement to Fleming. Oliphant proffered three Cardmember Agreements—or exemplars—that were in effect when Fleming opened his account, when he made his last payment to the account in March 2018, and when the account was charged off in May 2018, which included arbitration agreements. Fleming denied receiving any of the exemplars.The court of appeal affirmed the denial of the petition to compel arbitration. Oliphant did not meet its burden in proving the existence of a valid arbitration agreement with Fleming. Nothing in the record suggests that Fleming might have consented to an arbitration provision. View "Fleming v. Oliphant Financial, LLC" on Justia Law

Casandra Murrey, a single, 46-year-old female, worked for General Electric Company (GE) as a product sales specialist for ultrasound equipment. The complaint alleged GE hired Murrey in early 2018 and she was a “top performer.” In 2019, GE hired Joseph Gorczyca, III. In January 2020, he became Murrey’s direct supervisor, and he engaged in continuous sexual harassment in the workplace with Murrey and others. She alleged GE “never properly completed an immediate [n]or appropriate investigation or took any . . . corrective action. Instead, [GE] later informed [her] that Gorczyca was ‘no longer with the company.’” Thereafter, GE “commenced an illegal pattern of retaliatory behavior against Murrey because [she] engage[ed] in protective activity” that included “denying appropriate support for [her] sales position” and refusing to promote her. Eight months after Murrey filed the complaint, GE moved to compel arbitration. GE sent all new hires a “welcome e-mail” to the new hire’s personal e-mail address that contained a link to GE’s electronic onboarding system/portal. Each document was assigned a separate task and the new hire signed employment-related agreements using his or her electronic signature. Based on this process and GE’s other security measures, GE’s lead HR specialist Michelle Thayer concluded Murrey’s electronic signature on an Acknowledgment was made by Murrey that Murrey assented to an included arbitration in the onboarding materials. The trial court granted the motion to compel arbitration, concluding:(1) GE met its burden of showing the arbitration agreement covered Murrey’s claims; (2) all of Murrey’s causes of action arose out of or were connected with her employment; and (3) Murrey met her burden showing procedural unconscionability because it was a contract of adhesion; but (5) Murrey failed to show a sufficient degree of substantive unconscionability to render the agreement unenforceable. The Court of Appeal reversed, finding the arbitration agreement in this case contained a high degree of procedural unconscionability. "When we consider the procedural and substantively unconscionable provisions together, they indicate a concerted effort to impose on an employee a forum with distinct advantages for the employer." The Court issued a writ of mandate on the trial court to vacate the order compelling arbitration, and to enter a new order denying the motion. View "Murrey v. Superior Court" on Justia Law