Failure To Establish Existence Of Actual Agreements To Arbitrate With Any Class Members Dooms Effort To Compel Arbitration.
How should one move to compel arbitration with members of a potential class who are parties to arbitration agreements giving them the opportunity to opt out of arbitration? Apparently, not the way First American Title Company and its parent First American Title Insurance Company (together, “First American”) did so here. Kirk v. First American Title Insurance Company and First American Title Company, B252238 (2/5 April 7, 2015) (Goodman, Turner, Mosk) (unpublished). Unpublished this case may be, but it is nevertheless a BIG case, because it involves a potential class of 272,037 members.
The action was filed in 2007. The complaint alleged First American charged illegal fees during the escrow process to purchasers of residential real estate. By April 2013, First American produced an electronic list of 272,037 potential class members. The motion to compel arbitration was filed on July 3, 2013 and heard on October 24, 2013, nine days after conclusion of the class action opt-out period. Apparently the date for the motion to compel arbitration was pushed back to October 24, 2013 by agreement of the parties.
The problem with First American’s motion in the trial court was that it failed to identify any specific agreements to arbitrate with any specific class members. Instead, First American produced four exemplar arbitration agreement forms – but forms are different than agreements. And the forms provided individual customers the opportunity to opt-out of arbitration. Unfortunately, First American’s motion to compel arbitration did not identify specific customers who had opted to arbitrate and specific customers who had opted out of arbitration. Of course, it is the obligation of the party seeking to compel arbitration to establish an agreement to arbitrate. Forms providing an option to opt in or out of arbitration are not the same as agreements to arbitrate.
Unsympathetic to First American’s request for more time to identify which customers deleted the arbitration provision, the Court of Appeal noted, “they had the time from the class ruling in November 2012, or from their production of the FAST list by April 2013, or as of the date they obtained the July hearing date for the subject motion, to conduct the file review which, in October 2013, they sought additional time to commence.”
COMMENT: Quite a few of the arbitration cases we have posted about involve the threshold issue: was there ever an agreement to arbitrate? Today, we initiate a new sidebar category: “Existence of Agreement.”