Justia Arbitration & Mediation Opinion Summaries

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

Plaintiff sued her former employer Xceed Financial Credit Union (Xceed) for wrongful termination and age discrimination in violation of the Fair Employment and Housing Act (FEHA). The case was submitted to binding arbitration pursuant to the stipulation of the parties. The arbitrator granted summary judgment in favor of Xceed on the ground Plaintiff’s claims were barred by a release in her separation agreement. The arbitrator rejected Plaintiff’s assertion that the release violated Civil Code section 1668, which prohibits pre-dispute releases of liability in some circumstances. Plaintiff moved to vacate the arbitration award, arguing the arbitrator exceeded his powers by enforcing an illegal release. The trial court denied the motion to vacate and entered judgment confirming the arbitration award.   The Second Appellate District affirmed. The court held that the arbitrator’s ruling for clear error. The arbitrator correctly ruled the release did not violate Civil Code section 1668. Plaintiff signed the separation agreement after she was informed of the decision to terminate her but before her last day on the job. At the time she signed, she already believed that the decision to terminate her was based on age discrimination and that she had a valid claim for wrongful termination. The alleged violation of FEHA had already occurred, even though the claim had not yet fully accrued. Accordingly, the release did not violate section 1668 because it was not a release of liability for future unknown claims. View "Castelo v. Xceed Financial Credit Union" on Justia Law

Maria chose her family’s benefits during her 2014 orientation, using Coppola laptops. Coppola’s HR team was available to answer questions. The authorization agreement notifies enrollees that "clicking the SAVE button below ... will serve as my electronic signature of agreement to the ... Arbitration Agreement (above)," and “If you do not wish to accept the arbitration agreement above you must click on the CANCEL button below.”Andrea (Maria’s daughter) sued Kaiser, for its failure to timely diagnose her aggressive cancer. Kaiser petitioned to compel arbitration. Andrea argued Kaiser failed to comply with Health and Safety Code 1363.1’s specific requirements for disclosing arbitration agreements with healthcare service plans. Maria declared she was unaware of signing an arbitration agreement. Although Maria had a good understanding of English, she was not a native speaker and declared she could not read English well enough to understand she was agreeing to arbitration. Maria also stated she did not know how to operate the computer. The court granted Kaiser’s motion. The parties selected an arbitrator from a list. A disclosure statement listed the arbitrator’s prior and pending cases involving Kaiser. The arbitrator later sent notices informing the parties he had agreed to arbitrate additional Kaiser cases. The arbitrator concluded Kaiser was not liable for Andrea’s death.The court of appeal affirmed the denial of a motion to vacate. The arbitrator had an initial obligation to disclose he had pending cases involving Kaiser and was not obligated to disclose their outcome; the fact the arbitrator decided cases in Kaiser’s favor during the pendency of the Perezes’ arbitration would not raise doubt the arbitrator would be impartial. View "Perez v. Kaiser Foundation Health Plan, Inc." on Justia Law

Plaintiff is a former employee of appellant Cambrian Homecare. When she was hired, Plaintiff signed a written arbitration agreement. Plaintiff brought wage-and-hour claims against Cambrian. Cambrian petitioned for arbitration. The trial court denied the petition. The trial court found that even if the parties had formed an arbitration agreement, the agreement had unconscionable terms, terms that so permeated the agreement they could not be severed.   The Second Appellate District affirmed. The court held that the agreement, read together—as it must be—with other contracts signed as part of Plaintiff’s hiring, contained unconscionable terms. The trial court had discretion to not sever the unconscionable terms and to refuse to enforce the agreement.   The court explained that it has no difficulty concluding that the Arbitration Agreement and the Confidentiality Agreement should be read together. They were executed on the same day. They were both separate aspects of a single primary transaction—Plaintiff’s hiring. They both governed, ultimately, the same issue—how to resolve disputes arising between Plaintiff and Cambrian arising from Alberto’s employment. Failing to read them together artificially segments the parties’ contractual relationship. Treating them separately fails to account for the overall dispute resolution process the parties agreed upon. So, unconscionability in the Confidentiality Agreement can and does affect whether the Arbitration Agreement is also unconscionable. View "Alberto v. Cambrian Homecare" on Justia Law

When she was hired by Kindercare, Westmoreland signed a “Mutual Arbitration Agreement Regarding Wages and Hours,” including a “Waiver of Class and Collective Claims” and a “Savings Clause & Conformity Clause,” stating that if the Waiver of Class and Collective Claims is found to be unenforceable, the agreement is invalid and any claim brought on a class, collective, or representative action basis must be filed in court. Kindercare terminated Westmoreland. She filed suit asserting violations of the Labor Code, on an individual and class action basis. Kindercare successfully moved to compel arbitration of Westmoreland’s individual non-PAGA (Private Attorneys General Act) claims, and to stay her PAGA claim. The court of appeal concluded that the unenforceable PAGA waiver was not severable and rendered the entire agreement unenforceable. The California Supreme Court and the U.S. Supreme Court rejected Kindercare’s petitions for review. Kindercare filed a “Renewed Motion to Compel Arbitration of Non-PAGA Claims and Stay PAGA Claims Based on New Law” citing a July 2021 California decision, “Western Bagel.”The court of appeal affirmed, noting that an order denying a renewed motion is not appealable but exercising its discretion to hear the matter as a petition for writ of mandate. Western Bagel is not “new law” that justifies a different decision. As a consequence of Kindercare’s drafting decisions, the agreement is invalid by operation of the unambiguous “Savings Clause and Conformity Clause.” Kindercare must litigate all of Westmoreland’s claims in court. View "Westmoreland v. Kindercare Education LLC" on Justia Law

Plaintiff signed an online arbitration agreement before starting work at a car dealership. He had to sign if he wanted a job: the car dealership presented it as a take-it-or-leave-it mandatory condition. Plaintiff signed the arbitration contract, and the dealership hired him. The employment relationship turned out to be unsuccessful: Plaintiff sued the dealership for firing him. The dealership moved to compel arbitration. The trial court ruled the arbitration contract was unconscionable.   The Second Appellate District reversed. The court held that Plaintiff suffered no substantive unconscionability, which is indispensable to the unconscionability defense. The court held that, to some extent, the contract-at-issue seems to be a common form, at least for some car dealerships. Second, all four agreements containing the arbitration clauses extended for more than a page of print. Third, the font size and functional readability of the contracts here did not seem to trouble Plaintiff.   Further, the court explained that Plaintiff argues this language implies to laypeople that it bars filing a charge with the Department of Fair Employment and Housing or the Equal Employment Opportunity Commission. The court found that Plaintiff’s argument fails on two counts. As Plaintiff himself notes, there is clear language to the contrary: “I understand and agree that nothing in this agreement shall be construed so as to preclude me from filing any administrative charge with, or from participating in any investigation of a charge conducted by, any government agency such as the Department of Fair Employment and Housing and/or the Equal Employment Opportunity Commission.” More fundamentally, arguments about prolix legalese go to procedural and not substantive unconscionability. View "Basith v. Lithia Motors, Inc." on Justia Law