California Mediation and Arbitration

Arbitration, Disclosures: Fourth Dist. Div. 3 Distinguishes Monster Energy Case And Concludes Arbitrator's And JAMS' Disclosures Were Sufficient

Disclosure Of Extent Of JAMS's "Business Relationship" With O'Melveny & Myers And Arbitrator's Ownership Interest In JAMS Were At Issue.

        A former investment fund manager sued the investment funds and successfully compelled arbitration. Steven M. Speier v. The Advantage Fund, LLC, et al. G059216 (4/3  4/19/21) (Fybel, Bedsworth, Goethals). JAMS and the arbitrator made boilerplate CYA disclosures (as in Monster Energy Co. v. City Beverages, LLC), stating the neutral had an economic interest in the overall financial success of JAMS, and that the parties should assume one or  more of the JAMS neutrals had arbitrated or mediated other dispute resolution proceedings with the  parties, counsel, or insurers. The arbitrator further disclosed she had served as an arbitrator in other matters involving a party, lawyer for a party, or law firm for a party to the current arbitration. JAMS provided reports showing matters involving the arbitrator and Speier, Speier's arbitration counsel, and the  Funds' arbitration counsel, O'Melveny & Myers. Unhappy with the outcome of the arbitration, Speier moved to vacate the award.

        The Court of Appeal affirmed the judgment, concluding that a reasonable person aware of the facts would not entertain a doubt that the arbitrator could be impartial. Justice Fybel had to distinguish Monster Energy, as well as an opinion he earlier authored in  Advantage Medical Services, LLC v. Hoffman.

        Monster Energy. First, Monster Energy is a federal case that did not rely on California statute, Ethical Standards, or case law. Second, unlike the Monster Energy case, Speier, the party complaining about disclosures, not the Fund, had moved to arbitrate. And the repeat player in Monster Energy had been the party that wrote JAMS into its arbitration provisions, whereas in Speier, the repeat player was a law firm. Third, O'Melveny & Myers and Alston & Bird, the big law firms that appeared at the arbitration, had each had 245 matters with JAMS, which rather leveled the playing  field. 

        Your blogger posted about Monster Energy on 10/23/19, and wrote an article about it for the Daily Journal, "9th Circuit arbitrator disclosure ruling: In search of a solution to a problem it's unable to solve."

        Advantage Medical Services, LLC v. Hoffman. Speier relied on this case to argue that, even if the arbitrator was not aware of her ownership interest in JAMS or JAMS' business history with O'Melveny & Myers, she wasn't  excused from disclosing it. Advantage was a case in which the arbitrator allowed plaintiff's request to permit its insurance representative to attend the arbitration, without requiring the plaintiff to disclose to the defendants or the arbitrator the identity of the representative or the insurer. However, the arbitrator and his law firm's relationship with the insurer was such that Justice Fybel explained that  the arbitrator had a duty to inquire and to disclose,  because a person with knowledge of the relationships could reasonably doubt the impartiality of the arbitrator. But Speier was a different case, because even if a party knew about the arbitrator's small financial interest or O'Melveny & Myers' many matters, under the circumstances here, it would not  have made any difference.

        COMMENT: This case demonstrates how fact-specific disclosure issues can be. This case also demonstrates that  Monster Energy need not be persuasive in state court whenever its facts can be readily distinguished. Finally, Justice Fybel, who authored the Speier and the Advantage opinions, is a co-author of  the Cal. Jud. Conduct Handbook. Justice Fybel is thoroughly cognizant of the important of disqualification and disclosure issues to the integrity of decisions and the decision-making process.

Arbitration, Waiver, Employment, Civil Rights: Ninth Circuit Allows Statutory Claims, Including Civil Rights And Employment Discrimination, To Be Arbitrated

Zoller v. GCA Advisors Lays Out Rules For Determining Whether Statutory Claims Can Be Arbitrated.

        Zoller v. GCA Advisors, No. 20-15595 (9th Cir. 4/14/21) (Wallace, Smith, Restani), reverses the district court's denial of defendants' motion to compel arbitration of statutory employment discrimination and civil rights claims.

        Shannon Zoller, a corporate attorney turned investment banker, sued her former employer for contract claims, gender discrimination, denial of equal pay, and conspiracy to violate her civil rights. An agreement to arbitrate existed. The parties agreed to arbitrate some of the claims, but she refused to arbitrate her statutory claims. The district court agreed on the ground she did not knowingly waiver her right to pursue the statutory claims in court.

        Judge Wallace, writing for the court, explains that if the parties agree to arbitrate, statutory claims will be arbitrated, unless a party can prove a congressional intent to prelude a waiver of judicial remedies. This put a burden of proof on Zoller and she could not carry that burden.

        There is a proviso. Arbitration of Title VII claims for employment discrimination requires at least showing a knowing agreement to arbitrate employment disputes. Here, that was demonstrated by a number of documents that referred to employment and arbitration. Assuming, without deciding, that the "knowing waiver requirement remains good law", the appeal "is resolved on the arbitration agreement's clear language encompassing employment disputes and evidence that Zoller knowingly waived her right to a judicial forum to resolve her statutory claims."

        COMMENTS: This is an impactful case, since it makes it clear that statutory claims, including civil rights and employment claims, may be subject to arbitration, and that a carefully drafted agreement will result in a knowing waiver of the employee's right to a judicial forum. In his 2017 book, Closing the Courthouse Door: How Your Constitutional Rights Became Unenforceable, Erwin Chemerinsky discussed how arbitration has made it more difficult to get into court to vindicate rights. Zoller is an example of that trend. All her claims will now be sent to arbitration -- though it does not  automatically follow that her rights will be unenforceable.

Arbitration, Health Care: Wife's Employment Under CalPERS Agreement Means Husband Is Bound By Kaiser Arbitration Requirement

Because Enrollment Process Was Handled By CalPERS, Statutory Requirements That Notice Of Arbitration Be Conspicuous in a Health Plan Did Not Apply.

        Edward William Kuntz's wife, children, and estate sued Kaiser for Elder Abuse and other claims, and Kaiser move successfully to compel arbitration of the Elder Abuse claim and stay the other claims. This outcome was upheld by the Court of Appeals. Edward William Kuntz et al. v. Kaiser Foundation Hospital, et al., C087967 (3d Dist. 4/12/21) (Murray, Robbie, Krause) (certified for partial publication).

        The first two section of the opinion are unpublished and the third section is published.

        In the first two sections, the court agrees that the decedent was enrolled in the Kaiser plan, though no enrollment form was produced. Mr. Kuntz was enrolled through his wife's  This conclusion was based on Kaiser enrollment record keeping and a declaration, evidence that apparently was not objected to. Furthermore, the court could find no legal requirement that enrollment could only be proven through an enrollment application form.

            Mr. Kuntz was enrolled as a member of the Kaiser Health Plan, through his wife’s employment under a California Public Employees’ Retirement System (CalPERS) Group Coverage Agreement between Health Plan and the Board of Administration of CalPERS. The enrollment process was administered by CalPERS.

        In the third section, the court addresses whether Health and  Safety Code § 1361.1 requirements apply to CalPERS enrollments. Section 1361.1 requires that the enrollment form signed by the subscriber contain a prominently displayed arbitration notice, and such a notice did not exist here. However, the court agreed that Government Code  § 22869 applied to CalPERS, which handled the enrollment process, and as a consequence, the materials disseminated by CalPERS were automatically deemed to satisfy the requirements of § 1361.1. Read the case and code sections, lest this be opaque.

 

Arbitration, Enforceability, Delegation: Ninth Circuit Holds Collective Bargaining Agreement As Drafted Did Not Cover Statutory Claims

Ninth Circuit Agrees With District Court That  Labor Dispute Was Not Arbitrable And That Arbitrability Was Properly Decided By The Court.

        In Tramon Wilson-Davis v. SSP America, et al., B306781 (2/3  4/9/21) (Edmon, Lavin, Egerton), a dishwasher sued his employer, individually and behalf of a putative class, for wage and hour violations. A collective bargaining agreement with an arbitration provision existed between Wilson-Davis's union and his employer, so the employer moved to compel arbitration. The district court held that the dispute was not arbitrable, and the Ninth Circuit affirmed, in a  decision originally filed on 3/11/21 and later certified for publication.

        The motion to compel arbitration failed because: "The collective bargaining agreement ... provides for arbitration of claims arising under the agreement, but it does not waive the right to a judicial forum for claims based on statutes." Also, the parties did not  "clearly and unmistakably" delegate to an arbitrator a determination about whether the  matter was arbitrable.

 

 

 

 

Reviews: Our Blogger's Review Of New Book About Gov. Jerry Brown Is Republished Here

The Book Is Journalist Jim Newton's Man of Tomorrow: The Relentless Life of Jerry Brown.

        For those of you who enjoy reading about California politics and politicians, I've written a review of Jim Newton's new book about former Governor Jerry Brown. The review, which appears in California Litigation, Vol. 34, No. 1 (2021), is republished here with the permission of the California Lawyers Association and its publication, California Litigation. The review is republished with the disclaimer that I alone am responsible for any opinions expressed therein.

Mediation, Attendance, And Settlement: Parties Failing To Attend Probate Court-Ordered Mediation Could Not Complain About Settlement Reached By Participating Parties And Judge Changes His Mind

Justice Tangeman, Who Concurred Before, Now Dissents After Rehearing.

        We posted on February 2, 2021 about Breslin v. Breslin, B301382 (2/6  1/26/21) (Gilbert, Yegan, Tangeman), an opinion authored by Justice Gilbert in which Justices Yegan and Tangeman concurred. The case held  the party receiving notice of a mediation ordered by the probate court and failing to participate in court-ordered mediation is bound by the result.

        Justice Tangeman, who concurred, has now dissented, having changed his position after a rehearing.

        Justice Tangeman explains his position: "A charitable gift must be carried into effect if it 'can possibly be made good.' (Estate of Tarrant (1951) 38 Cal.2d 42, 46.) The majority’s newfound requirement that a party participate in mediation before it can inherit ignores this command. It will reduce the number of gifts that 'can possibly be made good' by encouraging parties to send out mediation notices whenever they desire to eliminate gifts to beneficiaries that don’t appear—for whatever reason."