California Mediation and Arbitration

Pending Cases: Viking Cruises Is No Longer "Pending" And 9th Circuit Withdraws Opinion Re AB 51 And Mandatory Arbitration

Catching Up From Last Week . . .

Viking Cruises v. Moriana, PAGA, And Federal Preemption. 

        We posted on June 19, 2022 about the Viking Cruises case, in which SCOTUS ruled individual PAGA claims can be arbitrated. In a concurrence, Justice Sotomayor wrote, "As a whole, the Court’s opinion makes clear that California is not powerless to address its sovereign concern that it cannot adequately enforce its Labor Code without assistance from private attorneys general." She so much as invited the California Supreme Court and the Legislature to address the interpretation of state law, and to clarify the issue of standing to bring representative claims. SCOTUS denied a request for rehearing of Viking Cruises on August 22, 2022. See the August 24, 2022 post by attorneys Mia Farber and Scott P. Lang.

Chamber of Commerce v. Bonta. California, ABA 51, And Federal Preemption.

        We posted on September 19, 2021 about Chamber of Commerce v. Bonta, the 9th Circuit case holding the Federal Arbitration Act does not preempt AB 51, the California legislation forbidding employers from requiring agreement to mandatory arbitration as a condition of employment. The majority opinion drew a dissent from Judge Ikuta.

        As we wrote in our post at the time, "The Ninth Circuit has probably set up a conflict between federal circuits in Chamber of Commerce v. Bonta, and with Judge Ikuta's dissent, there is a reasonable probability that the majority opinion will not be the last word on the subject." That turns out to have been an understatement, as the 9th Circuit took the unusual step of withdrawing the opinion and granting a panel rehearing. See August 23, 2022 post by attorneys Mia Farber, Scott P. Lang, and Cecilie E. Read.

Pending Case, PAGA, FAA: Viking Cruises, Inc. v. Moriana Is A Case To Watch

The United States Supreme Court Granted Cert On December 15, 2022.

        The issue: "Whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under the California Private Attorneys General Act."

        Readers of this blog will know that California courts have repeatedly ruled, following Iskanian, that employees cannot be forced to arbitrate PAGA representative claims. The basic reason underlying this conclusion is that PAGA representative claims are in the nature of qui tam actions, and therefore the interest of the state of California is involved. But since the state is not a party to the employee's arbitration agreement, arbitration of representative claims cannot be compelled. The issue before the United States Supreme Court is whether this "carve-out" of mandatory arbitration is preempted by the Federal Arbitration Act.

        COMMENT: I have been publishing this blog since 2012, and I don't think I have ever before predicted the outcome of a case. This time, I'm going to stick my neck out and predict that the Supreme Court's decision, given the current composition of the court and its decision to take the case, will not go well for the employee. We shall see. If my prediction proves to be accurate, I will let you know. And if I'm wrong . . . well, we'll see.

Pending Case, Waiver: Ninth Circuit Panel Denies Petition For Rehearing And En Banc In Hodges v. Comcast

Panel Denies  Motion For Rehearing And Request For En Banc.

        On September 15, 2021, we posted about Hodges v. Comcast, No. 19-16483 (9th Cir.  9/10/21) (Collins, VanDyke; Berzon, dsst.) In that case, the court held that non-waivable public injunctive relief (i.e., relief that falls under the McGill rule), must be forward looking and benefit the general public. Judge Berzon dissented, believing that relief that would require Comcast to rewrite its contract with its customers would be forward looking  and benefit the  public, given the size of Comcast's customer base. On December 23, 2021, the panel denied a petition for a rehearing, and denied on behalf of the court a petition for a rehearing en banc.

Arbitration, Employment, Nonsignatories, Pending Cases: Vasquez v. San Miguel Produce, Inc. Is Now Published

This Case Involves The Ability Of  Co-Employers To Compel Arbitration With Workers Where Workers Have An Arbitration Agreement With The Co-Employer They Do Not Sue, And Do Not Have An Arbitration Agreement With The Co-Employer They Do Sue.

    We blogged about Vasquez v. San Miguel Produce, Inc. on January 4, 2019, at which time it had not been certified for publication. We can report that on January 30, 2019, the case was certified for publication. The case holds that co-employers could compel arbitration with workers under circumstances where a staffing agency had an arbitration agreement with the workers, the workers sued the produce packing company to which they were assigned but not the staffing company, the produce packing company did not have an arbitration agreement, and the produce packing company cross-claimed against the staffing agency. Got that?

 

Arbitration, Class, Pending Cases: SCOTUS Case May Decide Whether Arbitration Clause Allowed For Class Arbitration

The Case Is Lamps Plus Inc. v. Varela.

    Yesterday, I posted about three arbitration cases pending before the Supreme Court,  one of which is Lamps Plus Inc. v. Varela. Charlotte Garden, Co-Associate Dean For Research and Faculty Development,  and Associate Professor at the Seattle University School of Law, has drilled down with a preview of arguments in the Lamps Plus case in today's Scotusblog.

    "In Lamps Plus Inc. v. Varela," Prof. Garden explains, "the Supreme Court will decide whether the U.S. Court of Appeals for the 9th Circuit correctly held that an employer did consent to class arbitration when it included language in the arbitration contract that committed the parties to use arbitration 'in lieu of any and all lawsuits or other civil legal proceedings,' specified that arbitral claims include those 'that, in the absence of this Agreement, would have been available to the parties by law,' and authorized the arbitrator to 'award any remedy allowed by applicable law.'" [Query whether a convoluted explanation puts the 9th Circuit behind the eight ball]. Then Prof. Garden has some fun explaining the sub-arguments in the case that could, conceivably, enable SCOTUS to duck the issue entirely if it so chose to do.

    COMMENT: If SCOTUS were to reach the merits and conclude that the correct result is that the allegedly ambiguous arbitration clause referencing legal proceedings that "would have been available to the parties by law" authorizes class arbitration, it seems likely that sophisticated employers will soon find a drafting solution to forestall class arbitration in the future. Or SCOTUS may save them the effort.

    

Arbitration, Gateway Issues, Delegation, Pending Cases, FAA: We Are Watching Three Cases Pending Before SCOTUS

Federal Arbitration Act Cases Pending Before SCOTUS Present Issues of Interpretation Of FAA, And Who Decides Gateway Issues.

    Henry Schein, Inc. v. Archer & White Sales Inc., scheduled to be argued in November, presents as an issue whether judge or arbitrator decides the gateway issue of arbitrability. The general rule is that the judge decides, unless the arbitration provision clearly and unmistakably delegates the decision to the arbitrator. The twist in the Henry Schein case is that the 5th Circuit will not send a case to arbitration if the basis for doing so is "wholly groundless." Will SCOTUS endorse that position, or leave the decision up to the arbitrator, if there is a delegation clause with clear and unmistakable language?

    On October 1, 2018, and February 26, 2018, I blogged about New Prime Inc. v. Oliveira, a case that presents an FAA interpretive issue. Does an exemption clause in Section 1 of the FAA for workers engaged in interstate commerce apply to independent contractors? And who decides?

    And on August 22, 2018, and May 12, 2018, I blogged about Lamps Plus Inc. v. Varela, which presents a question as to whether generalized language in an arbitration agreement forecloses a state law interpretation authorizing class arbitration under the FAA.

    Ronald Mann posted on October 22, 2018, about these cases. As Mann writes, "I don't think the Supreme Court has rejected an FAA claim yet this century." However, he adds, "the argument in New Prime . . . displayed a bench that was not only open to rejecting the claim for arbitration there, but indeed strongly predisposed to reject it." We'll know more when these three cases are decided. And we'll keep you posted.

    

Pending Cases, Federal Arbitration Act, Delegation: New Prime v. Oliveira Is Scheduled For SCOTUS Oral Argument On October 3, 2018

Does Exemption In Section 1 Of The FAA For Workers Engaged In Interstate Commerce Apply To Independent Contractors? And Who Decides?

    We posted earlier about this case on February 26, 2018. The issues presented are:

(1) Whether a dispute over applicability of the Federal Arbitration Act's Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and (2) whether the FAA's Section 1 exemption, which applies on its face only to “contracts of employment,” is inapplicable to independent contractor agreements."

    COMMENT: Oliveira worked for an interstate trucking company under a contract that purported to set up an independent contractor relationship. He sued the trucking company for labor violations. The district court determined that it, rather than the arbitrator, should decide the threshold arbitrability issue. Affirming the district court, the First Circuit Court of Appeals held that Section 1, which defines terms in the FAA, and provides that nothing in the FAA shall apply to workers engaged in interstate commerce, applies to contracts that purport to establish the independent contractor relationship.

Pending Cases/Federal Arbitration Act: SCOTUS Will Hear Oral Argument In November In Two Cases Involving Interpretation Of The FAA

Henry Schein, Inc. v. Archer & White Sales, and Lamps Plus v. Varela.

    On August 20, 2018, Amy Howe reported in SCOTUSblog that the Supreme Court will hear oral argument (Nov. 7) on two cases involving interpretation of the FAA. She reports:  "Henry Schein, Inc. . . .  asks the justices to decide whether the act allows a court to decline to enforce an arbitration agreement that gives the arbitrator the power to decide questions about arbitrability if the court believes that the arbitrability claim is 'wholly groundless.' . . . .  [I]n Lamps Plus the court will consider whether the act bars a state-law interpretation of an arbitration agreement that would allow class arbitration, even when the agreement itself does not mention class arbitration."

     

Arbitration/Agents: Hutcheson v. Eskaton Fountainwood Lodge Is Filed On Rehearing

Deficient Power Of Attorney Was Used For Making Decisions Relating To Health Care.

        Hutcheson v. Eskaton Fountainwood Lodge, C074846 (3rd Dist. 11/28/17) has been ordered filed on rehearing.  We posted earlier about this case on June 15, 2017.  The case held that a residential facility for care of the elderly could not enforce an arbitration provision, because the power of attorney under which the agreement was executed did not provide for making health care decisions.

     COMMENT:  This is a fact-specific outcome, depending on whether in this instance this residential care facility for the elderly provided health care for its residents.   Nevertheless, prudence dictates that residential care facilities for the elderly also follow the requirements of the Health Care Decision Law, Probate Code sections 4600 et seq., in order to  have enforceable arbitration clauses.

 

Settlement Agreements/Pending Cases: CCA 4/3 Vitatech Opinion Is Now Certified For Publication

An Unenforceable Settlement: Vitatech Held Stipulation To Enter Judgment For $300K After Defendant Defaults On One-Time Payment of $75K Is An Unenforceable Penalty.   

        On October 3, 2017, I posted about Vitatech International, Inc. v. Sporn,  G053477, a Fourth District, Division Three opinion.  Unpublished at the time, the case was certified for publication on October 30, 2017.