California Mediation and Arbitration

Arbitration, Celebrities, Delegation: Second District Div. 2 Explains No Authority Permits Sending Matter To Arbitration Simply Because Parties Agreed To Arbitrate Different Matter

A Case To Read On The Limits Of The Delegation Doctrine.

        Neal Moritz, the film producer and industry executive associated with the Fast and Furious (FF) franchise, sued Universal City Studios LLC and others for breach of an oral contract and promissory estoppel after the distributor allegedly removed him as lead producer of the FF spinoff, Hobbs & Shaw. Defendants moved unsuccessfully to compel arbitration, and appealed the order denying the motion to arbitrate. Neal Moritz v Universal City Studios LLC, et al. B299083 (2/1  9/2/20) (Chaney, Rothschild, Bendix).

        Moritz had entered into several FF film contracts with arbitration clauses. Appellants argued first, that the court compel arbitration of the threshold question of arbitrability, based on delegation provisions in any arbitration clauses in the FF contracts. Alternatively, if the Court of Appeal decided it had jurisdiction to decide arbitrability, then it should compel arbitration, because the dispute "related to" one or more of the FF contracts.

        The interesting part of the case, which perhaps explains why it is published, is the discussion in footnote 2, and in the body of the opinion, about the so-called "wholly groundless" doctrine. If there is a valid delegation clause, i.e., clear and convincing evidence establishes that the parties intended to delegate a decision about arbitrability to the arbitrator, then the fact that the arbitrability argument itself is "wholly groundless" does not mean that the decision can't be delegated to the arbitrator. Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524 (2019). This, at least, is the rule under the Federal Arbitration Act, and it was undisputed that the FAA governed the case.  Avoiding whether the "wholly groundless" rule might still be good California law, the Court of Appeal explains that "Schein presupposes a dispute arising out of the contract or transaction, i.e. some minimal connection between the contract and the dispute. That is so because under the FAA, contractual arbitration clauses are 'valid, irrevocable, and enforceable' if they purport to require arbitration of any 'controversy thereafter arising out of such contract.'" Such was not the case here, because Hobbs & Shaw was not the subject of the earlier FF contracts. The FF contract relied upon by appellants applied to "remakes" or "sequels", and the court states that Hobbes & Shaw was neither.

        Does this mean that the Court of Appeal has smuggled the "wholly groundless" exception in through the back door by using different words to say that appellant's arbitrability argument was "wholly groundless"?  We don't think so. There still needs to be "some minimal connection between the contract and the dispute." Just because the parties entered into a contract providing for the delegation of arbitrability issues and covering prequels and sequels doesn't mean the delegation of arbitrability issues applies to a film, if it is undisputed that the film is neither a prequel nor a sequel. 

        Affirmed.

        COMMENT: Unless the matter now settles, the parties will get to litigate whether an oral contract isn't worth the paper it's written on.

       COMMENT ON COMMENT: Did Samuel Goldwyn really say that an oral contract isn't worth the paper it's written on? Quote Investigator tells us that he disavowed this, and many other malapropisms attributed to him. In fact, this witticism has been floating around since the 19th century.

Samuel Goldwyn by photographer Arnold Genthe. 1919 or 1920. Library of Congress. 

 

 

Celebrities: ADR And Peace Comes To Westeros In Game Of Thrones

Alternative Dispute Resolution And Alternative Facts, As Peace Comes To Westeros.

    Elmo of Sesame Street has provided us with a model for dispute resolution between Queen Cersei and Tyrion Lannaster in Game of Thrones:

 

    The best alternative to a negotiated agreement (BATNA) is never a pretty picture in Game of Thrones.

Arbitration, Conflicts, Stay & Celebrities: Second District, Div. 7 Rules That Disqualification Motion Was Premature While Motion To Compel Arbitration And To Stay Were Pending

The Code Of Civil Procedure 1281.4 Stay Is Mandatory.

    Top Kick Productions, Inc., Chuck Norris's production company, sued CBS Broadcasting Inc. over allegations of what might be characterized as Hollywood Accounting. CBS moved to compel arbitration, and to stay the litigation pursuant to CCP 1281.4, while Top Kick had a pending motion to disqualify CBS's attorneys based on conflict of interest. In true kick-ass Walker, Texas Ranger style, Top Kick convinced the trial court to hear the disqualification motion first, and to deny the stay request. Next, CBS obtained a temporary stay in the Court of Appeal, and the Court issued an OSC to determine whether the trial court had abused its discretion by denying the stay. CBS Broadcasting Inc., et al., Petitioners,  v. Superior Court of Los Angeles County, Respondent; Top Kick Productions, Inc., et al., Real Parties in Interest, No. B292277 (2/7  2/21/19) (Zelon, Segal, Feuer) (not for publication).

    The Court held that the trial court erred, because the 1281.4 stay is mandatory, once a petition to compel arbitration is brought. So now the stay will go into effect, the motion to compel arbitration will be heard, and if the motion is granted, then the arbitrator would get to rule on the disqualification motion. 

    The Court acknowledged that there are  New York state law cases and federal law Second Circuit cases providing disqualification is not a matter for arbitrators to determine, but explains those cases are contrary to California law where disqualification motions have been decided by arbitrators. Furthermore, the Court acknowledges a situation might arise where the issue of disqualification is intertwined with the issue of arbitrability "so that the potentially disqualified lawyer should not be permitted to argue the motion to compel". However, because Top Kick conceded the disqualification motion had nothing to do with arbitrability, the Court did not need to address the issue.

    The opening theme to Walker, Texas Ranger, is available on YouTube:

 

 

Arbitration, News, Celebrities: WSJ & CNN Report Trump Personally Directed His Attorney Michael Cohen To Seek Restraining Order Through Arbitration

New Blawg Sidebar Category: Infotainment?

    The WSJ and CNN report today, October 2, 2018, that Pres. Donald J. Trump (aka David Dennison) directed his attorney Michael Cohen to seek a restraining order through an arbitration proceeding to prevent Stormy Daniels (aka Peggy Peterson aka Stephanie Clifford) from airing dirty laundry in a TV interview. 

    The WSJ reports that the arbitrator issued a restraining order, which, evidently, did not restrain Ms. Daniels.

    We have previously posted on March 8, 2018,  about the Trump/Daniels arbitration.

 

Celebrities: Arbitrator Denies NFL's Summary Judgment Motion In Dispute With Colin Kaepernick

Did Owners Collude To Keep Him From Playing Or Did All The Owners Happen To Individually Decide To Keep Him From Playing?

    The NYT and other news sources report that arbitrator Stephen B. Burbank denied the NFL's motion for summary judgment in its dispute with Colin Kaepernick. For now, Kaepernick can proceed with his grievance against the NFL. Kaepernick, of course, is now famous as the quarterback who initiated the wave of kneeling during the national anthem to protest police brutality and racial inequality. He became a free agent in March 2017, after which he has faced protracted unemployment. He is represented by famed litigator Mark Geragos.

Arbitration, Celebrities: Trump v. Omarosa Celebrity Wrestling Match, Round 1, Arbitration?

Celebrity Wrestling Match/Cat Fight.

            I have received a confidential television script from a disloyal former staff member of the White House.  In episode 571 of the long-running reality show, “Raging Dumpster Fires At 1600 Pennsylvania Avenue,” the courtly, urbane and impeccably mannered DJT and the villainous Omarosa Manigault Newman (OMN) grease up for a wrestling match in the ring. But this soon turns into a cat fight, with DJT and OMN trying to scratch out each other’s eyes. DJT calls OMN “a dog” and “crazed low-life” and OMN calls DJT “unhinged” and a “racist”. OMN smacks DJT with a rolled-up copy of Forbes. And as everyone by now knows, DJT, who is a germaphobe, and has a long history of using canine insults, has an intense dislike of dogs, being the first president in a long time, perhaps the first president ever, not to have a White House First Dog. The match seems remarkably even, given DJT’s little paws, and OMN’s sharp nails. Is this truly a made-for TV reality show, or is this a telenovela, complete with betrayal, infidelity, and violent emotion? Alas, those attributes do not help at all to distinguish between the TV reality show and the telenovela. Is this rotten script believable enough to be accepted even by a tasteless TV show with tabloid standards? To ask the question is to answer it: of course.

          Where in the world is this post going? Oh yes, Team DJT has filed with the AAA to enforce a non-disclosure agreement (NDA) in arbitration in New York. And if, as Politico reports, the enforcement proceeding has been launched by the Trump for President Campaign, based on  OMN's release of her book Unhinged, what impact, if any, will this have on confidentiality during the time in the White House?

          We previously had some fun posting about Team DJT’s efforts to enforce an NDA with Stephanie Gregory Clifford (Stormy Daniels) in the privacy of arbitration, where dirty linen is not to be aired in public. I will not begin to opine where the latest fight between DJT and OMN is destined to end. Badly, is my best guess. What does the NDA say? Which one will apply, an NDA for the Apprentice? For the campaign? For the White House? What remedies does the NDA provide, and will they be found to be enforceable? Did OMN have a security clearance requiring pre-publication review of any writing that might contain classified information? Will OMN be able to obtain the legal firepower necessary to carry on a legal battle? Will the anti-matter DJT, Michael Avenatti, now step forward and represent her? Will she be able to successfully stake out a position as a whistleblower? Is there a written rule or statute that prohibits taping a conversation in the Situation Room? Were OMN’s tapes recorded in Florida (where both parties must consent to taping) or in Washington D.C. (where taping can be done unilaterally)? Does one have a reasonable expectation of privacy if taping can be done unilaterally? Are there considerations of public policy and freedom of speech that militate against using a private NDA to ensure confidentiality in the White House? Have other White Houses routinely required staff members to sign NDAs? Will parallel court proceedings be filed, resulting in a public airing of grievances and naked transparency? And even if the matter can be forced into arbitration, will the cat be out of the bag, so to speak, with so-called confidential information no longer confidential?

          I plan to consume many bags of popcorn while I sit back and watch the hideous show.

      BONUS: For a serious discussion of OMN's free speech rights in this kerfuffle, see Bradley P. Moss's article published August 14, 2018 in Lawfare, entitled "Why the White House Can't Stop Omarosa Manigault-Newman From Talking."

News/Celebrities: ADR, Donald J. Trump aka David Dennison, and Stephanie Clifford aka Stormy Daniels

Stormy Weather . . . 

 

 

Above:  Video/recording:  Comedian Harmonists Sing Quand Il Pleut (Stormy Weather/Ohne Dich).  1933.

     News about our latest reality show, Stephanie Clifford a.k.a. Stormy Daniels a.k.a. Peggy Peterson v. Donald J. Trump a.k.a. David Dennison, and Essential Consultants, LLC, LASC Case No. BC696568 (filed March 6, 2018) is now splattered across the information superhighway.  The lawsuit seeks declaratory relief that a non-disclosure agreement or "hush agreement" created to prevent adult film actress Stormy Daniels from communicating about her relationship with Donald J. Trump a.k.a. David Dennison, is unenforceable.  A copy of the secret non-disclosure agreement is attached as Exhibit 1 to the very public complaint.

    Meanwhile -- and this is where alternative dispute resolution enters into the picture -- President Trump's press secretary Sarah Huckabee Sanders, has announced that President Trump has already won in arbitration, thereby perhaps inadvertently admitting that President Trump, who did not sign the non-disclosure agreement, is the real party in interest seeking to shut up Ms. Daniels.

    Seth Abramson, in a series of Twitter tweets, has analyzed the enforceability of the arbitration agreement.  The enforceability of the agreement is also discussed by Emily Bazelon, David Plotz, and John Dickerson, in their March 8, 2018 Political Gabfest podcast. 

    Here is my own somewhat random collection of issues relating to the enforceability of the arbitration agreement:    

    1.  Is the agreement too ambiguous to be enforceable, because the parties are a shell corporation and/or Donald J. Trump (who is identified in a side agreement).  

    2.  Does it matter that DJT did not sign the agreement, though there is a signature line for him?

    3.  Is the agreement enforceable, because there is an offer, an acceptance, consideration ($130,000), and a meeting of the minds?

    4.  Was there a meeting of the minds if the agreement, as DJT's press secretary apparently admitted, is for the benefit of DJT, yet he did not sign it?

    5.  Can DJT enforce the agreement as a third-party beneficiary?

    6.  Does DJT need to sue in his name to enforce the agreement on his behalf?

    7.  Did Ms. Daniels violate the non-disclosure agreement when she filed a public document attaching the NDA as Exhibit 1, rather than filing under seal?

    8.  How can a shell corporation make representations in the NDA on behalf of DJT, if the shell corporation is not his agent or attorney?

    9.  Did attorney Michael Cohen violate campaign election law by funneling a $130,000 payment to Ms. Daniels to help DJT win the presidential election, without declaring an in-kind campaign contribution?

    10.  Did attorney Michael Cohen violate rules of professional ethics by settling a legal dispute without a real client, or without the knowledge of the client, whose fingerprints are not on the agreement?

    11.  Has the NDA been compromised by public statements  of the President's attorney and the President's press secretary, such that it cannot be enforced?

    12.  How do you feel about the use of NDAs to prevent someone from  speaking about the sexual conduct of an important public figure?  Is it important that the NDA was entered into just before the election, when DJT was not yet a public official, rather than after the election?  Does it matter to you whether the person seeking to speak was a victim, or whether the conduct was consensual?

    13.  Is enforceability of this NDA, concerning the President, against public interest?

    14.  Is the million dollar liquidated damages provision in the NDA unenforceable as a forfeiture having no reasonable relationship to the actual injury?  Has DJT ever been monetarily damaged by publicity?

    15.  If an award has been issued against Ms. Daniels in arbitration, how will it now be enforced?  Does a petition to confirm the award in court lead to a public circus that will vitiate the benefit of such an award?

    16.  Are the private lives of important public officials fair game?

     17.  Was the original sin an effort to blackmail, making enforcement of the arbitration remedies with the help of a private arbitration process more acceptable?

    Dear readers, please let us know if you spot additional issues worthy of consideration.

    BONUS:  The original Comedian Harmonists, who sing Stormy Weather in its French version in the recording above, were a German  harmony ensemble active between 1928 and 1934.  They are the subject of an entertaining 1997 German movie entitled The Harmonists, directed by Joseph Vilsmaier.  Our blogger's grandfather, Eric Collin, was the second tenor in the group.

 

 

 

 

Arbitration: Roger Dodger – Ailes, Carlson, And Arbitration

Roger Ailes/Gretchen Carlson Dispute May End Up In Arbitration.

     Empirical studies support the perceptions of employees that they do better in court than in arbitration.  See, for example, the study by Alexander Colvin of Cornell:  “An Empirical Study of Employment Arbitration: Case Outcomes and Processes.”

     Roger Ailes’ defense team knows this too.

     CNN Legal Analyst Danny Cevallos reported on July 18, 2016 about the strategic maneuvers of Mr. Ailes’ attorneys to move Gretchen Carlson’s sexual harassment suit from the the court to arbitration – and presumably to enforce confidentiality, so that dirty linen need not be washed in public.

     Ms. Carlson’s lawsuit was filed in New Jersey State Court on July 6, 2016.  Under diversity jurisdiction, the case was removed by Mr. Ailes to federal court in New Jersey.  Mr. Ailes’ attorneys are seeking to change venue to New York federal court, and to compel arbitration.

     “Overall, the defendants have a good chance of sending this back to arbitration,” concludes Mr. Cevallos.

     TRIVIA:  Wikipedia attributes the phrase “Roger Dodger” to an apocryphal World War II story.  The punch line of the story is, “"Roger Dodger, you ol' codger. I'm a Commander too!”

         HAT TIP:  Hat tip to my wife, Catherine Campbell, who brought the Ailes/Carlson arbitration story to my attention, and who also suggested the “Roger Dodger” title.

Arbitration/Gateway Issues/Waiver/Employment: Court Of Appeal Affirms Order Denying Employer’s Motion Seeking To Compel Kurt The CyberGuy To Arbitrate

Opinion Addresses Substantive Versus Procedural Arbitrability – And Who Gets To Decide

     Kurt Knutsson, aka Kurt the CyberGuy, and his company, Woojivas, Incorporated, filed claims against KTLA, LLC, a television broadcaster, for breach of contract, misappropriating CyberGuy’s name and likeness, unfair business practices, and age discrimination.  The company brought a motion to compel arbitration that the trial court denied, leading to an appeal.  Knutsson v. KTLA, LLC, B251567 (2/5 Aug. 12, 2014) (Turner, Mosk, Kriegler). 

     Defendant argued that plaintiffs were bound by a personal services agreement to an arbitration clause in a collective bargaining agreement that contained a tiered grievance procedure.  That procedure included three steps:  (1) the union or employee were allowed to resolve a grievance by discussion with a supervisor; (2) if the union was dissatisfied with the supervisor’s resolution of the matter, it could formally present a grievance to a manger; (3) the union could (a) file an appeal followed by a discussion process; (b) if that did not resolve the dispute, arbitration could result.

     The defendant’s problems were several:  first, “defendant has forfeited the right to compel compliance with the collective bargaining agreement’s non-arbitration provisions” in the grievance process by moving to compel arbitration without mentioning steps one and two; second, the arbitration provisions simply did not say that the defendant could compel arbitration – only the union could compel arbitration; and third, the trial court, not the arbitrator, was entitled to resolve the substantive arbitrability issue – a so-called “gateway issue.”

      The last issue – whether the court or the arbitrator gets to decide arbitrability – is the most interesting.  By labeling the issue as a substantive arbitrability issue, the Court of Appeal telegraphed that this was a gateway issue for the trial judge to decide. 

      When the issue of “arbitrability” is whether procedural prerequisites to arbitration have been complied with, the issue may be decided by the arbitrator.  See, e.g., our March 6, 2014 post on BG PLC v. Republic of Argentina, 573 U.S. __, 134 S. Ct. 1198 (2014).

      At first blush, John Wiley v. & Sons, Inc. v. Livingston, 376 U.S. 543, 556-558 (1986) should have supported defendant’s argument that an arbitrator should have decided the arbitrability issue, because “John Wiley held an arbitrator should decide whether the first two steps of a grievance procedure, which were prerequisites to arbitration, had been completed.”   However, John Wiley also “held the issue of whether the dispute must be arbitrated is decided by the court.”  And here in Knutsson, “as we have explained, defendant cannot compel plaintiffs to arbitrate anything – there is no agreement between them.”

     One curious point about the opinion is that the issue of “substantive arbitrability” decided by the Court of Appeal – the “gateway issue” – is seemingly resolved on the ground that there is no arbitration agreement between plaintiff and defendant, and therefore no duty to arbitrate.  The trial court’s reasoning, at least as described by the Court of Appeal, is different:  “Concluding the grievance procedure was a condition precedent for arbitration and it had not occurred, the trial court denied the motion.”     

     

Arbitration/Celebrities/Vacatur: Narrow Grounds For Vacating Arbitrator’s Award Were Not Satisfied In Arbitration Involving Adam Sandler’s Children’s Nanny

In Which An In Pro Per Defendant/Appellant Takes On Adam Sandler’s Corporation . . .

     HP, a company owned by Adam Sandler, employed McDonald as a nanny for his children.  When her employment ended, she entered into a confidential settlement agreement, and as a result, $48K was paid to her, and $32K was paid to her attorneys.  After McDonald “purported to terminate the settlement agreement and threatened to sue,” HP invoked an arbitration provision.   Things did not go so well for McDonald in arbitration, because she was ordered to cough up the $48K, was permanently enjoined from filing suit against HP and from disclosing confidential information, and was directed to pay $33K in attorneys fees and costs.  The award was confirmed, and McDonald appealed in pro per.  HP Production, Inc. v. McDonald, B252175 (2/4 Aug. 5, 2014) (Epstein, Willhite, Edmon) (unpublished).

     The grounds for vacating a judgment under CCP 1286.2 are narrow.  And McDonald’s arguments that the fee award was “exorbitant,” and “obscene”; that HP breached the settlement agreement; that it was unconscionable for her to have to pay more than she could afford; that the disparity in net worth of the parties made consideration for settlement unfair; and that she signed the settlement agreement under economic duress, just didn’t cut it.  Nor did her argument that the trial court had no authority to issue an injunction, because the arbitration clause gave broad authority to the arbitrator to issue an injunction, and the trial court could confirm the award.

     Sometimes it’s better not to stir the pot.

Stirring the pot.  Thomas Fogarty.  Sometime between 1890 and 1938.  Library of Congress.