California Mediation and Arbitration

Arbitration/Collective Bargaining/Appealability: Union Employee's Writ Petition Was Not Proper Route To Challenge Arbitrator's Award

San Francisco Trolley Operator's Writ Petition And Motion To Vacate Go Off The Rails.

San Francisco Trolley on Market St.  2012.  Carol M. Highsmith, photographer.  Library of Congress.

         Appellant's procedural quagmire is underscored by the following statement of the Court of Appeal:  "In a somewhat puzzling argument, appellant contests his own standing to challenge the arbitration award."  Quiambao v. San Francisco Municipal Transportation Agency  et al., A148511 (1/4  9/28/17) (Ruvolo, Reardon, Streeter) (unpublished).

        Mr. Quiambao, a San Francisco trolley car operator engaged with his municipal employer in a union grievance and arbitration procedure resulting in his dismissal, based on safety violations and conduct issues.   Rather than moving to vacate the award in court pursuant to CCP 1286.2, Mr. Quiambao filed a writ of mandamus.    The thought process here is a bit obscure:  an employee does not have standing to appeal an arbitration award where a union acts on his behalf, as was the case here, so apparently Mr. Quiambao decided to file a writ.  The trial court concluded, and the Court of Appeal agreed, that the Court of Appeal properly dismissed the writ petition too, because a writ petition is not the way to challenge a private arbitration award.

            A motion to vacate would be appropriate, if it had been filed by the Union, which would have had standing.  But the trial court, the Muni, and the employee all allowed Mr. Quiambao's challenge to be treated as a motion to vacate, even though he, rather than the union, acted as a party.  Respondent Muni argued appellant could not now "press rewind" and undo his standing, because if the trial court granted standing erroneously, it was "invited error."  The Court of Appeal explained that "invited error" didn't apply, since the trial court was not mislead in any way.  Instead, Mr. Quiambao could not press rewind, because he had expressly agreed to the action taken by the trial court when it treated his papers as a motion to vacate.  Thus, the proper label was "waiver" rather than "invited error."

        On the merits, the employee lost his appeal, with the Court of Appeal finding no evidence of fraud, and with the Court explaining that even mistake of law or fact is ordinarily no reason for setting aside an arbitrator's award.

        

Arbitration/CCP 1281.2/FAA/Existence Of Agreement: 4/3 CCA Hold That, Despite Interstate Commerce, Procedural Aspects Of California Arbitration Act Apply Where Contract Is Silent About Application Of FAA To Procedure

Oh, And An Attempt At Incorporation By Reference Failed To Create An Arbitration Agreement.

        Lennar Corporation v. General Security Indemnity Company of Arizona, G053418 (4/3  9/28/17) (Fybel, Aronson, Ikola) (unpublished) involved a dispute between a developer, Lennar, and its excess insurer, General Security, arising after a "drywall product manufactured in China and used in Lennar houses began releasing gases, causing bodily injury to occupants, and property damage to wiring, pipes, and other materials in the houses."  Yech.  The excess insurer sought to compel arbitration, failed, and appealed.

        The appeal was unsuccessful. 

        First, the Court of appeal held that General Security failed to prove the existence of a valid arbitration agreement between it and Lennar.  General Security's insurance policy "followed form to" another insurer's policy that did contain an arbitration clause.  A "following form" policy incorporates the terms and conditions of another carrier's policy.  Unfortunately for General Security, however, the Court held that the incorporation by reference was not effective, because there was no specific reference to the fact that the other policy included an arbitration provision, and the arbitration provision in the other policy, which required arbitration in London pursuant to English arbitration rules, was not one to be reasonably expected.

        The Court also held that the provisions of CCP 1281.2, allowing a Court to not enforce an arbitration agreement when pending litigation with a third party creates the possibility of conflicting rulings, applied here, so that the trial court could properly deny the motion to compel arbitration.  

        Interestingly, the Court agreed that the Federal Arbitration Act applied, because interstate commerce was involved. When the FAA governs arbitration procedures, then it preempts CCP 1281.2.  However, here, the agreement did not provide that the FAA or the CAA governed procedure in state court, and thus the Court concluded that where the agreement is silent about procedure, then the CAA governs procedure in state court.

        COMMENT:  Where the FAA rather than the CAA governs procedure, it is more likely that courts will grant a motion to compel arbitration.   If the parties want the procedural aspects of the FAA to apply in state court in California, they should so specify, because otherwise the procedural aspects of the FAA may not apply.  Of course, specifying that the FAA governs procedural aspects would not have made a difference here if, in fact, the incorporation by reference failed to create an arbitration agreement.