Articles Posted in Arbitration & Mediation

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In this dispute between a law firm and the party it previously represented, the Supreme Court affirmed the judgment of the Court of Appeal insofar as it reversed the superior court’s judgment entered on an arbitration award but reversed the Court of Appeal’s judgment insofar as it ordered disgorgement of all fees collected, holding that the law firm's conduct rendered the parties' arbitration agreement unenforceable but that the ethical violation did not categorically disentitle the law firm from recovering the value of services it rendered to the opposing party. A law firm agreed to represent a manufacturing company in a federal qui tam action. The law firm was later disqualified, and the parties disagreed as to the manufacturer’s outstanding law firm bills. The dispute was sent to arbitration in accordance with the arbitration clause in the parties’ engagement agreement, and the arbitrators ruled in favor of the law firm. The superior court confirmed the award. The Court of Appeal reversed, concluding (1) the law firm committed an ethical violation that rendered the parties’ agreement, including the arbitration clause, unenforceable in its entirety; and (2) the law firm was disentitled from receiving any compensation for the work it performed for the manufacturer. The Supreme Court agreed that the law firm’s conduct rendered the parties’ agreement unenforceable but concluded that the ethical violation did not categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer. View "Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co." on Justia Law

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The Agricultural Labor Relations Act’s (ARLA) “mandatory mediation and conciliation” (MMC) statute neither violates equal protection nor unconstitutionally delegates legislative power. Further, employers may not refuse to bargain with unions - whether during the ordinary bargaining process or during MMC - on the basis that the union has abandoned its representative status. In this case, the United Farm Workers’ of America (UFW) filed an MMC request with the Agricultural Labor Relations Board after failing to reach a collective bargaining agreement with Gerawan Farming, Inc. Mediation also failed to produce an agreement, and therefore, the mediator submitted a report fixing the contractual terms. The Board adopted the report in its final order. The court of appeal concluded (1) the MMC statute on its face violates equal protection principles and improperly delegates legislative authority, and (2) an employer may not defend against a union’s MMC request by challenging the union’s certification as bargaining representative on the basis of abandonment. The Supreme Court disagreed, holding (1) the MMC statutes is not unconstitutional; and (2) an employer may not raise an abandonment defense to an MMC request. View "Gerawan Farming, Inc. v. Agricultural Labor Relations Board" on Justia Law

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Plaintiff opened a credit card account with Defendant Citibank, N.A. and purchased a credit protector plan. Defendant later amended the original agreement by adding an arbitration provision. The provision waived the right to seek public injunctive relief in any forum. The arbitration provision became effective in 2001. In 2011, Plaintiff filed this class action based on Defendant’s marketing of the Plan and the handling of a claim she made under it when she lost her job, alleging claims under the Consumers Legal Remedies Act (CLRA), the unfair competition law (UCL), and the false advertising law. Defendant petitioned to compel Plaintiff to arbitrate her claims on an individual basis pursuant to the arbitration provision. Based on the Broughton-Cruz rule, the trial court ordered Plaintiff to arbitrate all claims other than those for injunctive relief under the UCL, the CLRA, and the false advertising law. The Court of Appeal reversed and remanded for the trial court to order all of Plaintiff’s claims to arbitration, concluding that the Federal Arbitration Act preempts the Broughton-Cruz rule. The Supreme Court reversed, holding that the arbitration provision was invalid and unenforceable because it waived Plaintiff’s right to seek public injunctive relief in any forum. Remanded. View "McGill v. Citibank, N.A." on Justia Law

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When Plaintiff was hired by Defendants, he signed multiple arbitration agreements as a condition of employment. Plaintiff later sued Defendant, alleging racial discrimination, harassment, and retaliation. The complaint sought to bring claims on behalf of a “class of current and former employees of color.” Defendants filed a motion to compel individual arbitration based on the arbitration agreements. The trial court granted the motion but struck the class allegations, concluding that the agreements did not permit class arbitration. The court of appeal reversed in part, ruling (1) the trial court erred in concluding that existing precedent compelled the court to determine whether class arbitration was available; and (2) the availability of class proceedings under an arbitration agreement is for an arbitrator to decide in the first instance. The Supreme Court affirmed, holding (1) there is no universal rule allocating the decision of whether an arbitration agreement permits or prohibits classwide arbitration to a court or an arbitrator, but rather, who decides is in the first instance a matter of agreement with the parties’ agreement subject to interpretation under state contract law; and (2) under state law, the arbitration agreement in this case allocates the decision to the arbitrator. View "Sandquist v. Lebo Automotive, Inc." on Justia Law

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As a condition of her employment with Defendants, Plaintiff signed an agreement to resolve any employment-related disputes through arbitration. After Plaintiff resigned, she filed a complaint against Defendants, alleging that she suffered harassment, discrimination, and retaliation during the course of her employment. Defendants filed a motion to compel arbitration. Plaintiff opposed the motion, asserting that it was unconscionable. The trial court agreed with Plaintiff and denied the motion to compel arbitration. The court of appeal reversed. The primary issue before the Supreme Court was whether the arbitration agreement was unconscionable because of a clause in the agreement providing that, in the event a claim proceeds to arbitration, the parties are authorized to seek preliminary injunctive relief in the superior court. The Supreme Court affirmed, holding that the arbitration agreement was not unconscionable because the clause did no more that restate existing law. View "Baltazar v. Forever 21, Inc." on Justia Law

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As a condition of her employment with Defendants, Plaintiff signed an agreement to resolve any employment-related disputes through arbitration. After Plaintiff resigned, she filed a complaint against Defendants, alleging that she suffered harassment, discrimination, and retaliation during the course of her employment. Defendants filed a motion to compel arbitration. Plaintiff opposed the motion, asserting that it was unconscionable. The trial court agreed with Plaintiff and denied the motion to compel arbitration. The court of appeal reversed. The primary issue before the Supreme Court was whether the arbitration agreement was unconscionable because of a clause in the agreement providing that, in the event a claim proceeds to arbitration, the parties are authorized to seek preliminary injunctive relief in the superior court. The Supreme Court affirmed, holding that the arbitration agreement was not unconscionable because the clause did no more that restate existing law. View "Baltazar v. Forever 21, Inc." on Justia Law

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In this dispute over the sale of a car, Plaintiff filed a class action lawsuit against Defendant, alleging, inter alia, that Defendant violated the Consumer Legal Remedies Act by making false representations about the condition of the automobile. Defendant filed a motion to compel arbitration pursuant to an arbitration clause in the sale contract that had a class action waiver. The trial court denied the motion, concluding that the class waiver was unenforceable, and therefore, the entire arbitration agreement was unenforceable. After the trial court’s decision was filed, the United States Supreme Court in AT&T Mobility LLC v. Concepcion held that the Federal Arbitration Act (FAA) preempts California’s unconscionability rule prohibiting class waivers in consumer arbitration agreements. On appeal, the Court of Appeal declined to address whether the class waiver at issue was enforceable and instead held that the arbitration appeal provision and the arbitration agreement as a whole were unconscionably one-sided in favor of Defendant. The Supreme Court reversed, holding that the Court of Appeal erred as a matter of state law in finding the agreement unconscionable, as, in light of Concepcion, the FAA preempts the trial court’s invalidation of the class waiver on unconscionability grounds. View "Sanchez v. Valencia Holding Co., LLC" on Justia Law

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An Employee was terminated for engaging in outside employment in violation of company policy during his absence on approved medical leave. The Employee sued, arguing that the Employer violated his right to reinstatement under the Moore-Brown-Roberti Family Rights Act (CFRA) and the federal Family and Medical Leave Act. The trial court granted the Employer’s motion to compel arbitration. The arbitrator relied on the federal “honest belief” defense and rejected Plaintiff’s contentions. The Court of Appeals vacated the award in the Employer’s favor, concluding that the arbitrator violated Plaintiff’s right to reinstatement under the CFRA when he applied the honest belief defense to Plaintiff’s claim. The Supreme Court reversed, holding that, although the arbitrator may have committed error in adopting the honest belief defense, any error did not deprive the Employee of an unwaivable statutory right because the arbitrator relied on the substantial evidence that the Employee violated his Employer’s written policy prohibiting outside employment while he was on medical leave. View "Richey v. Autonation, Inc." on Justia Law

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The Riverside County Sheriff’s Department fired Deputy Kristy Drinkwater for falsifying her payroll forms. On administrative appeal, Drinkwater sought discovery of redacted records from personnel investigations of eleven other Department employees who were disciplined, but not fired, for similar acts of misconduct. The administrative hearing officer granted the motion. The Department sought a writ of administrative mandate, arguing that only judicial officers could grant Pitchess motions, which are discovery motions for officer personnel records. The superior court agreed and granted mandate. The Court of Appeal reversed. The Supreme Court affirmed, holding that when hearing an administrative appeal from discipline imposed on a correction officer, an arbitrator may rule upon a Pitchess motion. View "Riverside County Sheriff's Dep’t v. Stiglitz" on Justia Law

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After declaring a fiscal emergency, the City of Los Angeles adopted a mandatory furlough program for its civilian employees. Many of those employees that were represented by a union (Union) filed grievances against the City, contending that the furloughs violated memorandums of understanding (MOUs) governing the terms and conditions of their employment. The grievances were denied, and the City denied the employees' request to arbitrate. The superior court subsequently granted the Union's petition for an order compelling the City to arbitrate the dispute. The court of appeal granted the City's petition for a writ of mandate, concluding that the City could not be compelled to arbitrate under the terms of the MOUs because arbitration would constitute an unlawful delegation to the arbitrator of discretionary policymaking powers that the City's charter vested in its city council. The Supreme Court reversed, holding (1) arbitration of the employee furlough dispute did not constitute an unlawful delegation of discretionary authority to the arbitrator; and (2) the City was contractually obligated to arbitrate the dispute. View "City of Los Angeles v. Superior Court" on Justia Law