Justia Arbitration & Mediation Opinion Summaries

Tracy and Jose married in 1996. They later separated. Tracy filed a petition for dissolution in 2011. In 2012, the superior court ordered temporary spousal support. The parties decided not to further litigate the case in the superior court and stipulated to the appointment of attorney Perkovich as judge pro tempore, under California Rules of Court 2.830-2.834. After Perkovich had served for two years, Tracy learned that Perkovich had not disclosed “in writing or on the record” professional relationships she had with lawyers in the proceeding, as required by the Rules. Tracy filed in the superior court a statement seeking disqualification. Perkovich failed to respond in accordance with statutory procedure. The presiding judge ordered her disqualified, holding that she was deemed to have consented to disqualification by her failure to file a consent or verified answer. The case was reassigned; discovery proceeded. The court delayed a hearing on Tracy’s motion to set aside orders made by Perkovich. The court of appeal held that Perkovich’s failure to contest the claims means that those factual allegations must be taken as true and that she was automatically disqualified. Her rulings are all void; the settlement agreement signed before her disqualification was tainted and may not be enforced. Perkovich’s conduct did not taint the proceedings before the superior court judge who replaced her. View "Hayward v. Super Court" on Justia Law

JAMS, Inc. provided private alternative dispute resolution services by promoting, arranging and handling the hiring of neutral individuals, such as retired judges, to assist with resolution of disputes. This action arose out of representations made on the JAMS Web site regarding the background of the Honorable Sheila Prell Sonenshine (Retired), and JAMS's operations in offering alternative dispute resolution (ADR) services. Kevin Kinsella alleged he relied upon certain representations made on the Web site when he agreed to stipulate to hire Sonenshine as a privately compensated judge to resolve issues related to his marital dissolution case and later discovered the representations were either untrue or misleading. JAMS and Sonenshine filed an anti-SLAPP motion to strike Kinsella's complaint. The court found the action exempt from the anti-SLAPP procedure under the commercial speech exemption of Code of Civil Procedure section 425.17, subdivision (c). JAMS and Sonenshine filed a petition for writ of mandate or other relief. The Court of Appeal stayed the proceedings and issued an order to show cause why relief should not be granted to allow the Court an opportunity to consider the issues raised in the petition related to the scope of the commercial speech exemption of section 425.17, subdivision (c). After consideration of the matter, the Court of Appeal agreed the commercial speech exemption applied and precluded the use of the anti-SLAPP procedure in this case. The petition was accordingly denied. View "JAMS, Inc. v. Super. Ct." on Justia Law

William E. Rice and others filed suit against Attorney Gary P. Downs for legal malpractice, breach of fiduciary duty, and breach of a written agreement Downs drafted to govern a limited liability corporation he formed with Rice and others. Both parties appealed after arbitration. The court concluded that Rice’s malpractice, breach of fiduciary duty, and rescission claims do not arise out of the operating agreements. Accordingly, the court reversed with respect to the court’s order compelling arbitration of Rice’s legal malpractice, breach of fiduciary duty, and rescission causes of action and otherwise affirmed the judgment. View "Rice v. Downs" on Justia Law

Attorney Baxter and his former clients, the Bocks, participated in arbitration under the Mandatory Fee Arbitration Act (Bus. & Prof. Code, 6200), stipulating to be bound by the result. In his decision, the arbitrator concluded the services provided by Baxter should be valued at the amount already paid by the Bocks and awarded Baxter nothing. The parties acknowledge that the arbitrator erred in stating the amount of fees paid by the Bocks. When the error was brought to his attention, the arbitrator declined to correct his award. Later, Baxter discovered the arbitrator was in the business of auditing attorney bills and had written extensively about attorney overbilling. Baxter argued unsuccessfully that the arbitration award should be vacated because the arbitrator erred in stating the amount paid and failed to disclose matters relating to bias. The court of appeal affirmed confirmation of the arbitration award, finding that the arbitrator was not obligated to disclose the nature of his practice and that Baxter was not prejudiced by the arbitrator’s handling of the evidence. The amount of the court’s award of attorney fees to the Bocks was vacated and remanded to the for reconsideration of a lodestar compensation rate assigned to an attorney. View "Baxter v. Bock" on Justia Law

Ling's employment as a Monterey restaurant manager was terminated. Her position was classified as exempt under Industrial Wage Order 5-2001(1)(B)(1), from overtime compensation and mandated meal periods. Ling sued, seeking unpaid overtime wages, waiting time penalties, and premium pay for failure to provide meal and rest periods; she alleged unfair competition and sought attorney‘s fees and costs. An arbitrator rejected Ling’s claim that she was wrongly classified and her contention that chronic staffing shortages required her to spend time performing nonexempt hourly work. Based on nine weeks when she attended training, Ling was compensated $1,038 for missed meal periods and $7,668 in waiting time penalties. The arbitrator deemed employer the prevailing party on all but that minor issue, awarded employer $29,046 in costs and $212,685 in attorney‘s fees based on the dominant contention of erroneous classification.The court corrected and remanded. The court of appeal agreed that the arbitrator exceeded his power by awarding statutory attorney‘s fees to an employer for work performed in defeating inextricably intertwined claims, contrary to public policy embedded in the Labor Code‘s one-way fee shifting provision. The court upheld the trial court‘s remedy and subsequent order confirming an award to plaintiff of costs but not attorney‘s fees based on intervening California Supreme Court authority. View "Ling v. P.F. Chang's China Bistro, Inc." on Justia Law

Law firms Campbell Harrison & Dagley, L.L.P. (CHD), and Calloway, Norris, Burdette & Weber, P.L.L.C. (CNBW) (collectively, the firms), challenged the district court’s partial vacatur of most of an arbitration award, rendered pursuant to a fee agreement (combining a high hourly-rate fee and a low-percentage contingency fee), which governed the firms’ representation of Albert G. Hill, III, and his wife, Erin Hill. After arbitrating a dispute over the requested payment to the firms under the fee agreement, the arbitrators awarded them approximately $28 million. Although the district court, inter alia, enforced the hourly-rate fee award, it vacated the contingency-fee award as unconscionable. In rejecting the arbitrators’ determinations regarding the uncertainty of recovery, the reasonableness of the total fee, and unconscionability, the Fifth Circuit concluded the district court “substitute[d] [its] judgment for that of the arbitrators merely because [it] would have reached a different decision”. As a result, it erred in vacating the contingency-fee-portion of the award and related awards (for the arbitration, the firms’ attorney’s fees, other fees, expenses, and arbitrators’ compensation; and pre-judgment interest on the contingency-fee portion). The Fifth Circuit vacated the district court with respect to the unconscionability issue, and remanded the case for further proceedings. The district court was affirmed in all other respects. View "Campbell Harrison & Dagley, et al v. Hill" on Justia Law

Amis alleged that his former attorneys committed malpractice by “caus[ing]” him to execute a settlement agreement that converted his company’s corporate obligations into Amis’s personal obligations without advising Amis that he had little to no risk of personal liability in the underlying litigation. All advice he received from the attorneys regarding the settlement agreement was given during mediation. The attorneys argued that Amis could not obtain evidence to support his claims, and that the law firm could not produce evidence to defend itself, because the disclosure of such evidence was barred by the mediation confidentiality statutes, Evidence Code section 1115. The trial court agreed on both counts and entered summary judgment for the firm. The court of appeal affirmed. The California Supreme Court has broadly applied the mediation confidentiality statutes and all but categorically prohibited judicially crafted exceptions, even in situations where justice seems to call for a different result. View "Amis v. Greenberg Traurig, LLP" on Justia Law

Bell sued attorney Ruben and his firm, alleging that they negligently and fraudulently mismanaged her trust, causing a loss of $34 million. Before arbitration, Ruben filed for Chapter 7 bankruptcy. Bell filed an adversary complaint opposing discharge of Ruben’s fraud-based debt to her, 11 U.S.C. 523(a)(2)(A), (4). The bankruptcy judge granted Ruben a discharge of his other debts, but not of that fraud debt. Ruben’s liability insurance did not cover fraud. Bell settled her negligence claims against Ruben and all claims against the other defendants in arbitration. The arbitration panel ruled, with respect to the fraud claim, that “damages proven to be attributable to the actions of [Ruben] have been compensated,” but ordered Ruben to pay administrative fees and expenses of the American Arbitration Association (AAA) totaling $21,200.00 and that compensation and expenses of the arbitrators, advanced by Bell, totaling $150,304.54 would be borne by Ruben. AAA rules, which governed the arbitration, provide that expenses of arbitration “shall be borne equally” unless the parties agree otherwise or the arbitrator assesses expenses against specified parties. Ruben refused to pay. The bankruptcy judge entered summary judgment in favor of Ruben. The district court reversed, in favor of Bell. The Seventh Circuit affirmed. View "Ruben v. Bell" on Justia Law

More than 13 years ago, lawyers around the country began class actions challenging the installation of fiberoptic cable on property without landowners’ consent. The cases began to settle on a state-by-state basis, leaving the lawyers to allocate awarded and expected attorney’s fees. The lawyers informally grouped themselves based on their negotiation and litigation positions. The Susman Group participated in mediation and agreed to a fee division, but balked at signing a written agreement, ostensibly because Susman disliked its enforcement terms. The district court held that Susman is bound by the agreement despite his failure to sign. The Seventh Circuit affirmed, reasoning that, given the parties’ lengthy course of dealing, Susman’s failure to promptly object to the written agreement can objectively be construed as assent. A finding that Susman’s refusal to sign was a case of “buyer’s remorse” rather than a genuine objection to the enforcement terms in the agreement was supported by the record. View "McDaniel v. Qwest Commc'ns Corp." on Justia Law

When Plaintiff retained a Maine law firm to represent him in a legal action, he signed an attorney-client engagement letter that contained an arbitration provision. Plaintiff later sued the law firm and individual defendants (collectively, Defendants) for malpractice and violations of Maine's Unfair Trade Practices Act. Defendants moved to compel arbitration and dismiss the action. The district court granted the motion under the Federal Arbitration Act (FAA). Plaintiff appealed, arguing that the district court erred in enforcing the arbitration clause. The First Circuit Court of Appeals affirmed, holding that the district court did not err in granting the motion to compel arbitration and dismissed the action, as (1) Maine professional responsibility law for attorneys permits arbitration of legal malpractice claims so long as there is no prospective limitation on the law firm's liability; and (2) Maine law, like the FAA, is not hostile to the use of the arbitration forum, and Maine would enforce the arbitration of malpractice claims provision in this case. View "Bezio v. Draeger" on Justia Law