California Mediation and Arbitration

Arbitration, Waiver, Disclosures, Record: 2/1 Affirms Judgment In Favor Of Doctor In Malpractice Case, Over Objections Of Failure To Disclose And Improper Testimony By Arbitrator

Court Chastises Plaintiff's Counsel And Neutral Arbitrator.

    The Court of Appeal expresses displeasure with "unfortunate conduct" by plaintiff's counsel and the neutral arbitrator. The conduct included "omissions of key facts and misrepresentations . . . that would allow us to deem plaintiff's challenges as forfeited," and testimony by the "neutral arbitrator" in the superior court, in which the neutral arbitrator appeared to side with defendant, as well as untimely disclosures by the arbitrator. However, the arbitrator's flubs did not affect the ultimate outcome, an opinion affirming a judgment confirming the arbitrator's award in favor of defendant in plaintiff/patient's med-mal case. Cox v. Bonni, B279476 (2/1  12/17/18) (Bendix, Rothschild, Chaney).

    Plaintiff unsuccessfully argued that defendant waived the right to arbitrate by participating for seven months in litigation, and by engaging in discovery. But plaintiff failed to mention that defendant sent her a letter demanding arbitration two months after defendant answered the complaint. When briefing the Court of Appeal, one must completely and fairly summarize the evidence supporting the trial court's findings and judgment, and this was not done.

    While defendant did engage in discovery, the arbitration agreement allowed for discovery. Therefore, the Court of Appeal concluded that plaintiff was unable to show prejudice resulting from defendant's conducting discovery in a court proceeding.

        Regarding the conduct by the arbitrator, the arbitrator failed to make timely disclosures. But the plaintiff overreached, claiming that the arbitrator "did not provide any disclosures regarding his work and other history" with a defense attorney who substituted in. And then, plaintiff sat on objections to the arbitrator's untimely disclosures until plaintiff received a disappointing result in arbitration. Just as the arbitrator needed to make timely disclosures, the plaintiff needed to timely object to untimely disclosure.

    The arbitrator testified before the trial court. Generally, that is forbidden, unless the arbitrator is testifying to defend against a charge of bias. "It does not appear to us, however, that the neutral arbitrator merely testified," explained the Court. "The record demonstrates that he propounded legal argument as if he were an advocate for defendant, pointing out, for example, plaintiff's failure to timely object to his late disclosures. This was improper, and the trial court erred in allowing the neutral arbitrator to do so." But the Court concluded that the arbitrator's faux pas amounted to harmless error.

    COMMENT: Over the course of an arbitration hearing, and a motion to confirm in trial court, errors are sometimes made by arbitrators and judges. But the doctrines of "harmless error" and "lack of prejudice" wash out many stains on appeal.

    

Arbitration, Collective Bargaining,Gateway Issues: 9th Circuit Rules That Arbitrator's And District Court's Confusion Over Arbitrability And Merits Determination Requires Reversal Of Court And Vacation Of Award

Majority, Concurring, And Dissenting Opinions.

Siegfried & Roy in their private apartment at the Mirage Hotel on the Vegas Strip, with one of their performing white lions. Photographer: Carol M. Highsmith. Library of Congress.

 

    Judge Bucklo, sitting by designation, describes the appeal of a labor arbitration award as "surprisingly nuanced", an "analytical puzzle" and "inscrutable." Judge Owens, concurring, believes, "most importantly, the extremely convoluted procedural posture of this case is so odd that our holding today likely will be limited to these very idiosyncratic facts." And Judge Friedland, dissenting, isn't having it. Let's try to unpack this case. Local Joint Executive Board of Las Vegas, et al. v. Mirage Casino-Hotel, Inc., No. 16-16754 (9th Cir.  12/13/18).

    The Union submitted a grievance with the Mirage Casino-Hotel to arbitration. The Union had agreed by way of a Collective Bargaining Agreement (CBA), Memorandum of Agreement, and side letter, that Mirage could subcontract its operations, and the Union culinary workers could work under the subcontracting arrangements for the subcontractor, with Mirage maintaining "full control of the terms and conditions of employment." After the subcontractor, BB King's, a restaurant concession, went bankrupt, the Union members filed a grievance to obtain vested vacation pay and other accrued benefits from Mirage. Because the scope of the arbitration provision covered Union grievances, the Union submitted the grievance to arbitration.

    Here's where it gets dicey. A merits issue was whether the Union members were employees, and Mirage, arguing that they were not employees of Mirage, objected that the dispute was not arbitrable, because Mirage was not the proper party for arbitrating the grievance. The arbitrator agreed, apparently concluding that the Union's remedy to recover was against BB King's, and determined that the dispute was not arbitrable, a result that was confirmed by the district court.

    Judge Bucklo explained that the arbitrator, and the district court, confused the merits issue with arbitrability. While everyone seemed to agree that the merits issue was within the scope of the arbitration provision, and to be decided by the arbitrator, the threshold issue of "who should decide who should decide" was not "clearly and unmistakably" submitted to the arbitrator, who had decided that the matter was not arbitrable. Therefore, the court, not the arbitrator, should decide whether the matter was arbitrable, and deciding that the merits were arbitrable, the court should vacate the award and send the parties back to arbitration -- which is what the 9th Circuit has now done.

    Judge Owens joined the majority "because I believe it is more consistent with current controlling law." But he thinks "the dissent reaches the more equitable result and, if the slate were blank, I would join it."

    And Judge Friedland dissents, explaining that, under the facts here, "the 'clear and unmistakable' test for determining whether a party resisting arbitration has nevertheless consented to having the arbitrator decide substantive  arbitrability" should not apply "when determining whether a party that initiates arbitration has so consented." Here, the Union submitted the matter to arbitration, and therefore should be stuck with the result.

    COMMENT: Yes, the Union submitted the grievance to arbitration, but obviously the disagreement among the judges is about whether the Union submitted the threshold question of "who should decide who should decide" arbitrability to the arbitrator by submitting the grievance to arbitration and participating in the arbitration.

    If the matter is now returned to the arbitrator, and the arbitrator focuses on whether the CBA and other agreements impose on Mirage an obligation to provide the benefits that BB King's should have provided, then I suppose the arbitrator might reach a result in favor of the Union. But this could instead end up as an exercise, albeit quite an interesting one, in futility, if the arbitrator, upon concluding earlier that Mirage was not the employer, also believed that BB King's was the employer, and that Mirage was not the guarantor of the employer's obligations.

    

    

    

Mediation, Attorney's Fees And Tort Of Another

Tort Of Another Fees Are Consequential Damages, Not Recoverable As A Cost Item.

    The December 2018 issue of Orange County Lawyer includes an article by mediator William J. Caplan, entitled "Backdoor Attorneys' Fees Based on the Tort of Another: A Mediator's Perspective." The article is useful for its clarity, for its brevity, and because this can be a confusing area of practice. An understanding of the "tort of another" doctrine, as a basis for recovering attorney's fees, is a useful tool for mediators, because counsel will sometimes advance a claim for attorney's fees based on the doctrine, making it important for a mediator to evaluate whether the doctrine applies in a particular case. In addition, an unexpected claim for attorney's fees in a mediation can give a party leverage.

    My colleague Mike Hensley and I have also written an article about the topic, and our blawg California Attorney's Fees includes sidebar topics on fees as damages and tort of another.

Collective Bargaining, Standard Of Review: 9th Circuit Concludes Arbitrator Acted Within His Authority When Reforming Labor Agreement To Cure Mutual Mistake

And Judge Ikuta Dissents.

    The Ninth Circuit affirmed the district court's order confirming an arbitration award in favor of a union seeking relief concerning a bonus provision in the parties' collective bargaining power. The employer had argued that the arbitration award was invalid because the arbitrator reformed the Basic Labor Agreement (BLA) between the Union and the employer, despite a "no-add" provision in that agreement. The district affirmed the award, and the employer appealed. ASARCO v. United Steel, et al., No. 16-16363 (9th Cir. 12/4/18) (Gettleman, McNamee; Ikuta, dsst).

    The arbitrator found that the BLA was based on a mutual mistake, because the Union was unaware of a link between a change in the pension plan and the opportunity of employees to obtain annual bonuses. The arbitrator reformed the BLA to remedy the mutual mistake. It was undisputed that the parties did not discuss the bonus when negotiating, and neither party indicated that the bonus would be impacted by modifying eligibility for the pension.

    The panel concluded "that the arbitrator was acting within his authority when he crafted a remedy to cure the parties' mutual mistake."

    In a characteristically vigorous dissent, Judge Ikuta wrote, "[t]he 'no-add' language in the collective bargaining agreement . . . is unmistakably clear. . . . . Because the arbitrator ignored the no-add provision, his award fails to draw its essence from the BLA and is invalid." She concluded, "the BLA deprives the arbitrator of the authority to rewrite the agreement, and also deprives the arbitrator of the authority to reconsider and reject this limitation on his authority."

    COMMENT: The majority usefully summarizes the standard of review: the district court's decision confirming an arbitration award is de novo, whereas the review of labor arbitration awards is extremely deferential because the courts do not hear claims of factual or legal error by an arbitrator. However, there are three exceptions to the general rule of deference to an arbitrator's decision: "(1) when the arbitrator's award does not draw its essence from the collective bargaining agreement and the arbitrator is dispensing his brand of industrial justice; (2) when the arbitrator exceeds the boundaries of the issues submitted to him; and (3) when the award is contrary to public policy."