Deadlines: Lombard Knight v. Rainstorm Pictures, Inc., B253246 (2/1 March 25, 2015).
In this case involving agreements to finance the production of motion pictures, Plaintiff sought to “confirm” a multi-million dollar arbitration award, while also asking to dismiss individuals, on the grounds that they had not been properly served, and jurisdiction over them was lacking. The superior court refused to dismiss the individual plaintiffs, who appealed. Unfortunately for the individuals, their petition to “confirm” was too late. The Court of Appeal treated the petition to the superior court judge as one to vacate or correct an award, which must be served and filed not later than 100 days after the date of the service of a signed copy of the award on the petitioner. Plaintiffs blew that deadline. The opinion was penned by Judge Bendix, assigned to the Court of Appeal case.
Perhaps the most interesting issue was one addressed by the trial court. That trial court ruled, as “an issue of first impression,” that the Hague Service Convention did not apply to private arbitration.
Waiver:: Achterkirchen v. Montiel, A140277 (1/1 March 24, 2015).
In a dispute among tenants in common, the trial court entered a judgment confirming an award against Montiel, who then appealed. Montiel contended that various procedural requirements had not been satisfied, as a result of which the other parties had waived their right to arbitrate – and that waiver should have been decided by a court, not an arbitrator.
Writing for the Court, Justice Margulies explains that ordinarily the court decides waiver issues because, “the doctrine of arbitration waiver is ordinarily one of general application governed by the common law.” But that was not the case here, where waiver depended on whether procedural requirements had been satisfied under the specific language of the arbitration agreement – subject matter within the jurisdiction of the arbitrator. Judgment affirmed.
Scope: Arbitration Disposed of Employer’s Equitable Claims. Vista International Insurance Brokers v. Bernstein, B247681 (2/3 March 24, 2015).
Bernstein, “a successful insurance broker”, obtained a monetary award in arbitration against her former employer. The trial judge entered judgment confirming the award, but excluded Vista’s claim for an injunction against its former employee from the judgment. Both sides appealed.
The Court of Appeal affirmed the judgment in favor of Bernstein, but reversed the judgment to the extent it it not dispose of the the equitable claims against Bernstein. The Court of Appeal rejected employer’s argument that equitable claims were excluding from the entry of judgment, reading the exclusion in the arbitration agreement narrowly. The employer had the right to equitable relief “to immediately obtain an injunction from a court” – for example, prior to the appointment of an arbitrator, where an employer would have no place to seek relief but in a court of law. However, the employer did not avail itself of that opportunity. Therefore, when the arbitrator entered the award in favor of Bernstein, the arbitrator effectively decided the entire dispute, as immediate equitable relief was no longer an issue. Justice Kitching is the author of this opinion.
Employment, Enforceability, FINRA:: Riley v. Morgan Stanley Wealth Management and Emma Bridges, B256177 (2/6 March 23, 2015).
Morgan Stanley and Bridges appealed from an order denying their motion to compel arbitration of eight statutory causes of action relating to Plaintiff Riley’s allegations that she was subjected to sexual harassment by her female supervisor. The trial court also required that causes of action nine through fifteen, which were non-statutory causes of action, be arbitrated, and that the Riley’s lawsuit be stayed pending arbitration.
Riley had entered into arbitration agreements with Morgan Stanley in a Financial Industry Regulatory Authority (FINRA) Submission Agreement, and in promissory notes for low-interest loans she received from her employer. However, the Court of Appeal agreed that the arbitration agreements, as worded, did not require employment discrimination claims in violation of statute be arbitrated. The non-statutory claims, however, properly belonged in arbitration.
As an affirmative defense in arbitration, Riley had alleged that her FEHA claims in her civil action were a defense to Morgan Stanley’s claim in arbitration on the notes. However, she abandoned that defense, leaving the statutory claims to be litigated, and the non-statutory issues to be arbitrated. Judgment affirmed. Justice Yegan authored the opinion.
Query whether abandonment of the defense that sexual harassment resulted in constructive termination, and acceleration of her notes, will prove to be a problem for the employee down the road.
Employment, Class Action, Unconscionability: Valdez v. Santa Lucia Preserve Company, H040685 (District 6 March 23, 2015).
Plaintiffs filed a putative class action complaint alleging wage and other claims against their former employer. The trial court denied employer’s motion to compel arbitration on the grounds that the arbitration agreements were unconscionable. However, the Court of Appeal reversed, holding that the arbitration agreements were not substantively unconscionable, in an opinion written by Justice Bamattre-Manoukian.
The most interesting part of the opinion concerns limiting review in FEHA cases. Because the plaintiffs’ complaint involved unwaivable statutory rights, their arbitration was subject to minimal requirements set forth in Armendariz, including a written arbitration decision and judicial review sufficient to ensure the arbitrators comply with the requirements of the statute. However, the Court of Appeal did not view the arbitration agreements as limiting judicial review. Thus, references in the agreement to “limited review” of an arbitration award and to the award not being “overturned even if it is incorrect legally or factually,” are described by the Court as “merely attempts to inform the employee about the legal effect of the arbitration agreement in general, without attempting to unlawfully limit judicial review available . . . “
Employment, Arbitrability: City of Colton v. Guerrero, E058346 (4/2 March 12, 2015).
A police officer appealed an order denying his motion to compel arbitration with the City of Colton over an employment dispute with the City. Judgment was entered denying his petition for arbitration and enjoining him from pursuing arbitration against the City. The Court of Appeal affirmed. Because Officer Guerrero was not a permanent employee, he was subject to a probationary period, during which period he was not entitled to arbitration of his grievance under a Memorandum of Understanding between the City and the police officers’ association. Justice McKinster authored the opinion.