State Of The Record And Substantial Evidence Of Waiver Result In Affirmance.
Defendants appealed the trial court’s order denying First American Title Insurance Company and First American Title Company’s motion to compel individual arbitration of plaintiffs’ claims. Kaufman v. First American Title Insurance Company, No. B248689 (2/5 Feb. 2, 2010) (Turner, Kriegler, Goodman) (unpublished).
The Court of Appeal reached three conclusions resulting in affirmance of the trial court’s orders denying arbitration: (1) defendants “failed to fairly summarize all of the material evidence”; (2) defendants “failed to provide a proper record”; and (3) substantial evidence supported trial court’s finding defendants waived the right to compel individual arbitration.
Regarding the issue of waiver, the intensity of the litigation, evidenced by millions of dollars in attorney’s fees, considerable costs, many documents, and discovery that included the appointment of discovery referees, provided the “substantial evidence” of waiver.
The most interesting argument made by defendants/appellants was that before AT&T Mobility LLC v. Concepcion was decided by SCOTUS in 2010, a motion to compel arbitration would have been futile, because the unconscionability analysis in Discover Bank v. Superior Court applied to class action claims in California, making the arbitration agreement unenforceable before Concepcion.
However, the Court of Appeal rejected the futility argument because there was substantial evidence that the Discover Bank rule, had it been applied, would not have prevented arbitration, because Plaintiffs could not have satisfied each of the elements Discover Bank required to torpedo a motion to compel arbitration. Besides, even if the Discover Bank rule had applied, defendants continued to litigate after the cert petition was granted by SCOTUS in Concepcion
NOTE: Mayer Brown, the law firm that represented appellants in this case, is the same law firm that represented AT&T Mobility in the landmark Concepcion case.