California Mediation and Arbitration

Sanctions: 4th Dist. Div. 3 Affirms Sanctions For Frivolous Opposition To Proceedings To Confirm Arbitration Award

Once Again, Judicial Review Of Arbitration Awards Is Extremely Limited.

        Kenneth J. Catanzarite, representing plaintiffs, filed an opposition to defendant's petition to confirm the award. The court imposed $37,000 in sanctions against Catanzarite for presenting unsupported and meritless arguments, including a claim that the arbitrator had refused to consider evidence, despite no evidence supporting this claim.

        Affirmed. "A party’s abstract right to oppose a petition, or to preserve arguments for appeal, is not an entitlement to pursue frivolous arguments in the trial court or this court. Nor are we persuaded by Catanzarite’s contention that his reliance on a case he knew had been explicitly disapproved by our Supreme Court, on the very point he cites no less, demonstrates his argument was a reasonable one to make. We consequently find no abuse of discretion in the trial court’s sanction award against Catanzarite. Plantations’s response to Catanzarite’s opening brief on appeal included a motion for sanctions which we also conclude is meritorious. Catanzarite filed an opening brief in this court which repeats the arguments he made below—including his refusal to acknowledge the binding Supreme Court authority that fatally undermines his claim, and his opposition to the sanctions motion is more of the same."  Plantations at Haywood 1, LLC et al v. Plantations at Haywood, LLC, G062909 (4/3  2/10/25) (Goethals, Sanchez, Delaney).

        COMMENT. The case reaffirms judicial review of arbitration awards is extremely limited, and challenges must meet specific statutory grounds. Regarding sanctions, the case highlights the serious consequences of filing frivolous motions and appeals.

Section 998 Settlement Offers: Different Code Provisions Govern Post-Judgment Fees And Costs

This Case Involves The (Non) Application Of Civil Code § 998 To Postjudgment Fees And Costs.

        The plaintiff, Caesar Elmi, rejected a settlement offer made by the defendant, Related Management Company, pursuant to section 998. The case was later resolved for an amount lower than what was offered, leading to a limitation on Elmi’s recovery of prejudgment costs and attorney fees, specifically limiting them to those incurred before the settlement offer.

        After the judgment, Elmi sought additional postjudgment fees and costs for efforts to enforce the judgment. However, the trial court denied the request, stating that section 998 only applied to prejudgment costs and fees, and not to postjudgment enforcement costs.

        The court of appeal reversed this decision, clarifying that postjudgment costs, including attorney fees incurred during enforcement, are not governed by section 998. Caesar Elmi v. Related Management Company, L.P., G062788 (4/3  pub. 2/6/25) (Goethals, Moore, Sanchez). Instead, they are governed by other provisions, particularly section 685.040, which allows recovery of costs necessary for enforcing a judgment. Consequently, the case was remanded to the trial court to reconsider Elmi’s request for postjudgment fees and costs.

Gateway Issues: JAMS' Consolidation Of Arbitration Claims Did Not Present Gateway Issue Of Arbitrability

Plaintiff Was Not Harmed Because Defendant Had Not Refused To Arbitrate, And Questioned Consolidation Of Claims Could Still Be Addressed By Arbitrator.

        Kiana Jones sued Starz Entertainment, LLC, claiming violations of federal and state privacy laws after Starz allegedly disclosed her identity and video viewing history to third parties. Jones initiated arbitration proceedings under Starz’s Terms of Use, which included a mandatory arbitration clause. However, Jones and other claimants’ filings were consolidated by the arbitration provider, JAMS, to be presided over by a single arbitrator. Jones objected to the consolidation, arguing that it conflicted with her right to individual arbitration as outlined in the Terms. She petitioned the district court to compel individual arbitration. The district court denied her petition, holding that Jones was not "aggrieved" under the Federal Arbitration Act (FAA) and that the consolidation did not present a gateway question of arbitrability for the court.

        The Ninth Circuit affirmed the district court’s decision, ruling that Jones was not aggrieved because Starz had not failed, neglected, or refused to arbitrate. Kiana Jones v. Starz Entertainment, LLC, 24:1645 (9th Cir.  2/28/25) (Clifton, Gould, Sanchez). The court found that the arbitration provider’s consolidation of the claims under its rules did not constitute a refusal to arbitrate and that Jones could raise her concerns about consolidation within the arbitration process itself. Additionally, the court ruled that Jones could not invoke unconscionability to modify the arbitration agreement she sought to enforce.

        NOTE: 9 USC § 4 of the FAA states in part: "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement." 

Enforceability Of Arbitration Agreement On Internet: 9th Circuit Agrees Terms Were Not Conspicuous Enough

"A Question Of Ever-Increasing Ubiquity In Today's E-Commerce World."

        The question: did an internet user’s online activities bind her to certain terms and conditions? 

        The majority opinion in Katherine Chabolla v. ClassPass Inc., et al, 23:15999 (9th Cir.  2/27/25) (Mendoza, Fitzgerald; Bybee, dsst.) affirmed the district court’s decision to deny ClassPass’s motion to compel arbitration. The key issue was whether Chabolla agreed to ClassPass's Terms of Use, specifically the arbitration clause. The majority found that Chabolla did not unambiguously manifest her assent to the Terms. ClassPass's website displayed links to the Terms, but the notice on screens 1, 2, and 3 was not sufficiently conspicuous. Screen 1, in particular, had the notice placed far from the action items and used a small, gray font that could be overlooked. Even though screens 2 and 3 provided more prominent notices, the majority concluded Chabolla never unambiguously assented to the Terms. For an online agreement to be enforceable, the user must be explicitly notified that their action (e.g., clicking a button) binds them to the terms. Because Chabolla's actions were ambiguous and the website did not clearly indicate continuing would manifest assent to the Terms, the majority affirmed the lower court’s ruling, denying enforcement of the arbitration provision.

        Dissenting, Judge Bybee argued Chabolla agreed to the Terms of Use, including the arbitration clause. The dissent highlighted Chabolla clicked “Continue” or “Redeem Now” three times, with each click accompanied by a clear notice she was agreeing to the Terms. The dissent found the notices to be conspicuous, especially when compared to other cases like Patrick and Oberstein, where similar sign-in wrap agreements were upheld. The dissent argued the majority's stricter interpretation would create uncertainty for online contracts and compel businesses to adopt more rigid contract structures like clickwrap or scrollwrap agreements. Thus, the dissent would have enforced the arbitration provision.