California Mediation and Arbitration

Miscellaneous: Reference Rot -- Plague and Partial Solutions

Damn Those Hyperlinks That Rot In Cyberspace !

      Jill Lepore, Professor of American History at Harvard, has written a fascinating article in the January 26, 2015 edition of the The New Yorker.  Her subject, which interests and plagues every blogger, is archiving the Internet before the information vanishes into cyberspace.

      If you have been reading this blog, or the other blog to which I contribute with my colleague Mike Hensley, California Attorney’s Fees, or any other blog, you are familiar with the problem.  All the hyperlinks degrade over time and become useless.  You click on a hyperlink, and you get an annoying message:  “Page Not Found” (“link rot”).  Or the page has been overwritten.  Or the page has moved, and something else appears in its place (“content shift”).  These are examples of “reference rot.”

      This problem should be of particular concern to attorneys, because an astounding number of legal footnotes relying on web addresses now rely on invalid addresses, a problem that includes footnote references in SCOTUS opinions.

      The sheer petabyte volume of Internet information makes the archiving problem a Sisyphean task.  There are, however, some constructive efforts to ameliorate the problem.

      There is, of course, the famous internet archive “Wayback Machine,” a valuable Internet resource for people searching for old information on the Internet.  “Wayback Machine” alludes to Mr. Peabody and Sherman’s fictional “WABAC Machine”, allowing time travel through Peabody’s Improbable History, a feature of the Rocky and Bullwinkle show.

      There is also a nifty patch, currently in Beta development phase, for the legal footnote problem.   Perma.cc has been developed by the Harvard Library Innovation Lab as a way to create a permanent link (“permalink”) for legal footnotes.  Perma.cc is powered by various libraries, and now used by the Michigan Supreme Court, as well as the Harvard Law Review.  A Perma.cc account allows you to “create links to archived versions of web pages cited in your work.”  Cool!

      Even Perma.cc won’t guarantee that the permalink it creates to reference a source will last as long as a diamond.  However, Perma.cc does claim that a permalink will last for two years, with the possibility of renewal, and that it may last longer for a person, such as a legal librarian, who is given “vesting rights.”

      I note that most of the links on my blog are to newly filed California appellate opinions.  Those links become stale after a few months.  However, if the case is of lasting interest, you should be able to find it on LexisNexis, on Westlaw, or on Google Scholar with the case information provided in my post.

      HAT TIP to Deborah Tint, librarian, artist, and Wonder Woman fan, who pointed me to Jill Lepore’s article.  Professor Lepore is also the author of the wonderful new book, The Secret History of Wonder Woman.

      QUERY:  How long will the links on this page last?

Arbitration, Employment, Public Policy, Standard Of Review: Cal Supreme Court Rules Arbitrator May Have Erred About Employee’s Unwaivable Statutory Rights, But Valid Alternative Ground Existed For Dismissing Employee

California Supreme Court Leaves Employer’s “Honest Belief Defense” Unsettled.

     This case fits under the rubric “no harm, no foul.”

      Plaintiff Richey sued his employer AutoNation, Inc., for terminating his employment after he went out on sick leave, thereby violating his right to reinstatement under the California Family Rights Act (CFRA).  While on sick leave, Mr. Richey worked to start up a restaurant, in violation of his employer’s policy that employees must not seek outside employment. 

      The arbitrator rejected Richey’s claims, concluding the employer could terminate Mr. Richey if it had an “an ‘honest’ belief that he is abusing his medical leave and/or is not telling the company the truth about his outside employment.”  The trial court confirmed the award.  The Court of Appeal reversed, concluding the arbitrator violated plaintiff’s right to reinstatement by applying an “honest belief” defense of the employer to the employee’s claim, thereby eliminating the employee’s unwaivable statutory right to reinstatement.  The employer appealed. Richey v. AutoNation, Inc., S207536 (Cal. S. Ct. Jan. 29, 2015) (Chin, J., author).

     In fact, “[a]rbitrators may exceed their powers by issuing an award that violates a party’s unwaivable statutory rights or that contravenes an explicit legislative expression of public policy.” And the interesting question in this case is whether the arbitrator exceeded his powers by adopting the employer’s “honest belief” defense that it can terminate an employee based on a reasonable belief the employee is violating company policy while on sick leave under the California Family Rights Act or its federal counterpart. 

     The Court acknowledges this is “an unsettled question of law.”  Unsettled it remains, for the Court concluded that the question need not be resolved here, because the “arbitrator found plaintiff’s firing was based on a clear violation of company policy – a legally sound basis for upholding the arbitrator’s award . . . “As for the employee’s argument that the company policy “forbidding outside employment in this context is an illegal restraint on his CFRA leave”, that had been forfeited by a failure to raise it in the trial court. 

     An interesting case for the narrow issue it resolves, as well as for the important issues it leaves unresolved.

PAGA: Under Settled Principles Of Stare Decisis, Fourth District, Div. 2 Follows California Supreme Court Opinion In Iskanian, Not SCOTUS Opinion In Concepcion

Court Concludes Trial Court Correctly Denied Petition To Compel Employee To Arbitrate His PAGA Claims.

     On January 20, 2014, we blogged that SCOTUS had denied petitioner’s writ of certiorari in the United States Supreme Court (petition for cert filed Sept. 22, 2014, No. 14-341).  That denial of cert is already having consequences, for in Salazar v. Apple American Group, LLC v. Apple American Group, LLC, Case No. E059562 (4/2 Jan. 26, 2015) (McKinster, Miller, Codrington) (unpublished), the Court of Appeal brushed aside the request of appellant/employer to stay its appeal of an order denying its petition to compel employee Salazar to arbitrate his representative claim for penalties under the Private Attorneys General Act of 2004.

     The Court succinctly stated:  “Under settled principles of stare decisis, we do not have the luxury to question whether Iskanian was correctly decided and we are duty bound to apply it in this appeal.  Moreover, the United States Supreme Court has now denied the petition for writ of certiorari.”

      Interesting:  California state and federal courts are not on the same page on PAGA/FAA analysis.  However, without a split among state supreme courts or federal courts of appeal, there may be no urgency for SCOTUS to address the issue.

Employment: After Rehearing, Court Of Appeal Again Reverses Trial Court’s Order Denying Employer’s Motion To Compel Arbitration

Same As Before – Only This Time A Third Judge Signs On To The Opinion

     I blogged about this very same case in a post on August 27, 2014.  So I was puzzled at first as to why another published opinion was issued following rehearing on January 20, 2015.  Cruise v. Kroger Co., B248430 (2/3 Jan. 20, 2015) (Aldrich, Kitching, Klein) (published).  The disposition before and after rehearing is identical:  “The order denying the motion to compel arbitration and stay the action is reversed with directions to grant the motion.”  The opinions are not identical, but are substantially the same.

     This time around, Justice Kitching’s concurrence is added, making it a threesome.  The first time around, a third judge was unavailable, and the Court relied on a provision allowing judgment upon the concurrence of two judges.  Cal. Const., art. VI, § 3.  Puzzle solved.

PAGA: SCOTUS Punts On Iskanian, Denying Cert Petition

 PAGA Issue Will Continue To Percolate Through Federal Courts.

      The United States Supreme Court today denied the petition for a writ of certiorari brought by CLS Transportation Los Angeles, LLC, No. 14-341.  Left intact, for now, is the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), that the Federal Arbitration Act does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract.

       The denial of the petition should not come as a great shock.  There was no conflict among decisions of state supreme courts or federal courts of appeal. 

       However, the issue is percolating through the federal district courts in California, and the outcomes have been mixed.  The issue is also pending in the Ninth Circuit in Hopkins v. BCI Coca Cola Bottling Co., No. 13-56126. 

PAGA: Iskanian Compels Reversal Of Order Dismissing Plaintiff’s Representative Claims–And The PAGA Issue Is Presented In Cert Petition To The United States Supreme Court

Is A Class Action Waiver Different From A Representative Action Waiver?

     On January 7, 2015, I posted that on September 22, 2014, a cert petition was filed in the SCOTUS to consider the PAGA/FAA preemption issue in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). 

     This is how the issue is framed in SCOTUSblog:

“Issue: Whether an employee’s waiver in an arbitration agreement of a collective or “representative action” under the California Private Attorneys General Act, Cal. Labor Code § 2698 et seq., is so distinguishable from a “class action” waiver that it is immune from the otherwise preemptive effect of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., as held by this Court in AT&T Mobility v. Concepcion.”

     Meanwhile, back here in California, the California Court of Appeal rules today that in light of Iskanian, the representative PAGA claims of a salesperson working for Fry’s Electronics are cognizable in the trial court, requiring reversal of the trial court’s order dismissing the plaintiff’s representative claims brought under PAGA.  Hutchinson v. Fry’s Electyronics, Inc., D063219 (4/1 Jan. 15, 2015) (Benke, Nares, Irion) (unpublished).   Because “representative PAGA claims are brought on behalf of the state”, the employee cannot be compelled to waive those claims by means of an arbitration clause requiring arbitration of individual claims only.

Arbitration, Class, Gateway Issues, Employment: A Rift In Court Of Appeals Decisions As To Whether Judge Or Arbitrator Decides If Agreement Allows Class-Wide Arbitration

Fourth District Says When Agreement Is Silent, Judge Decides; Second District Says Arbitrator Decides – So The California Supreme Court Will Have To Decide.

     GATEWAY.  Carol M. Highsmith, photographer.  2013.  Library of Congress.

     When the arbitration agreement is silent, who gets to decide whether the arbitration agreement allows for class arbitration?  Judge or arbitrator?  Gateway issue or procedural issue?

     SCOTUS decisions hold a party may not be compelled under the Federal Arbitration Act to submit to class arbitration unless there is a contractual basis for concluding the parties agreed to do so, Stolt-Nielsen S.A. v. Animalfeeds International Corp., 559 U.S. 662 (2010), with a plurality of the SCOTUS holding the arbitrator decides whether class-wide arbitration is available if the arbitration agreement is valid and the underlying dispute is within its terms, Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003).

     I have blogged about two published Fourth District decisions that analyze the availability of class-wide arbitration as a threshold issue of arbitrability, and thus a gateway issue that the judge must decide.  Network Capital Funding Corporation v. Papke, 230 Cal.App.4th 503 (2014) and Garden Fresh Restaurant Corp. v. Superior Court, 231 Cal.App.4th 678 (2014).  See my posts of November 17, 2014 and October 13, 2014.

     Now, in an unpublished decision, the Second District, Division 2, disagrees with the Fourth District, and holds that “the determination whether the parties to an arbitration agreement agreed to arbitrate class claims is a procedural question for the arbitrator, not the court.”  Rivers v. Cedars-Sinai Medical Care Foundation, B249979 (2/7 Jan. 13, 2015) (Perluss, Woods, Feuer).  The Court here views the issue not as a gateway issue of arbitrability, but rather as a subsidiary issue of how the arbitration proceeds – a procedural issue that the arbitrator can decide.  The Court therefore reversed the order of the judge compelling the plaintiff to arbitrate her individual wage and hour claims, leaving it instead to the arbitrator to decide whether the class claims can be arbitrated.

     NOTE:  Footnote 2 states the issue is currently pending before the California Supreme Court.  Sandquist v. Lebo Automotive, Inc., 228 Cal.App.4th 65, review granted, Nov. 12, 2014, S220812.  See my post of July 22, 2014, regarding Sandquist.

Arbitrator’s Refusing To Issue A Subpoena And Limiting Arbitration Hearing To One Day Did Not Provide Basis For Vacating Award.

Arbitrators Can Make Mistakes And Here The Record Didn’t Even Show A Mistake Had Been Made.

       A major attorney’s fees dispute between a law firm and its client hinged on when mediation ended, for the parties agreed that the law firm would receive a five percent contingency fee for a successful mediation, and a 20 percent fee if the mediation was unsuccessful.  The increase would occur 10 days after “the mediation”, though “mediation” was not defined.  You can probably guess what happened:  the mediation was unsuccessful, the law firm ramped up for trial, and the lawsuit settled just before trial, with the involvement of the mediator in settlement negotiations.  So when did the mediation end?  The arbitrator concluded that “the mediation” meant the session that ended unsuccessfully, ten days elapsed, and thus the 20 percent contingency fee applied.  This resulted in an award of roughly $2,440,000.

      The inevitable appeal of the judgment confirming the award alleged that the arbitrator exceeded powers and acted unfairly by refusing to issue a subpoena for time records, and by limiting the arbitration to one day.

      The Court of Appeal affirmed the judgment.  Thorsnes Vatolotta McGuire, LLP v. Pointe San Diego Residential Community, LP, D064907 (4/1 Jan. 13, 2015) (Benke, Huffman, McDonald) (unpublished).  The arbitrator had concluded that the time records were irrelevant, because the award was based on a contingency.  And appellant had seemingly agreed to the one-day arbitration, or at least had failed to object.

    

Vacating Arbitration Award: Plaintiff Waived Request For Continuance When Her Counsel Stipulated To Proceed With Arbitration Without Live Testimony

Failure To Postpone Arbitration Hearing Upon Sufficient Cause May Be Grounds For Vacating Award – But Not When Request For Continuance Is Waived !

     Plaintiff sought to postpone an arbitration hearing in a wrongful death/medical malpractice action, because she was studying abroad, and counsel’s medical condition adversely affected his cognitive status and performance.  However, based on the record, it appeared that the arbitrator never actually ruled on plaintiff’s request for a continuance.  Instead, the parties stipulated to proceed with a hearing by submitting declarations and medical records, in lieu of live testimony.  The arbitrator ruled in favor of defendant Kaiser, the trial court confirmed the arbitration award, and the Court of Appeal affirmed the judgment.  Anderson v. Kaiser Permanente Medical Group, B252061 (2/3 Jan. 12, 2015) (Kitching, Aldrich, Kussman) (unpublished).

     Motions for a continuance – and the ruling -- need to be carefully documented.  Here, there was substantial evidence to support the court’s factual finding that the arbitrator didn’t even rule on the motion.

Arbitration, Deadlines, Vacatur: Court of Appeal Rejects Carrier’s Argument That Arbitrator Exceeded Her Powers And That Award Was Untimely.

 

    Lanois v. Employers Fire Insurance Company, Case No. B251403 (2/1 Jan. 9, 2015) (Chaney, Rothschild, Johnson) (unpublished) involved an underinsured motorist insurance carrier’s challenge to an arbitration award, on the grounds that the award was rendered untimely, and that the arbitrator exceeded her powers by adding interest to a 950K award, after the parties had agreed that the insurer’s liability for damages under its policy could not exceed 950K.  The trial court disagreed with the carrier, confirming the award and denying the carrier’s motion to vacate.  The carrier appealed – unsuccessfully.

     The carrier’s policy was for $1M.  However, because the plaintiffs had already been paid $50K under another policy, the parties agreed the maximum liability the arbitrator could award under the underinsured motorist policy was $950K.  The arbitrator awarded $1M in an award on November 8, 2012, and subsequently corrected the award to $950K, adding pre-judgment interest from November 8, 2012.

     First, regarding the carrier’s contention the arbitrator could not add interest on top of the 950K award, the Court held:  “Neither Insurance Code section 11580.2, subdivision (p)(4), nor any provision in the insurance policy precludes plaintiffs’ recovery of prejudgment interest because, when added to the liability damages award (which does not exceed the policy limit), plaintiffs’ total recovery exceeds Employers’ maximum liability under the policy.”  So the interest award was not improper.

     Second, the carrier contended the initial November 8, 2012 award, an Interim Binding Arbitration Award, resolved the liability incorrectly, and then the arbitrator exceeded her powers by waiting more than 30 days to correct the amount to $950K.  The Court of Appeal disagreed, pointing out that the arbitrator’s time to correct did not run from the interim award, particularly so here, because there was evidence that other issues remained open at the time of the initial reward, as a result of which the final binding award could be issued later.