Updated October 15, 2008
Paul Dubow Arbitration Case Report 2005 to 2008
ARBITRATION
Case List By Name
Advantage Medical Services LLC v Hoffman (2008) (Disclosure)
Aral v. EarthLink, Inc. (2005) (Forum Selection)
Baker v. Osborne Development Corp. (2007) (Arbitrability)
Baker v. Osborne Development Corp. (2007) (Unconscionability)
Berg v Traylor (2007) (Minors)
Berglund v. Arthroscopic &
Boghos v Certain Underwriters at Lloyds of
Boghos v. Certain Underwriters at Lloyds of
Boucher v. Alliance Title Company, Inc. (2005) (Nonsignatories)
Brodke v Alphatec Spine, Inc. (2008) (Petition to Compel Arbitration)
Bruni v Didion (2008) (Arbitrability)
Bruni v Didion (2008) (Unconscionability)
Buckeye Check Cashing, Inc. v. Cardegna (2006) (Arbitrability)
Cable Connection, Inc. v. DirecTV, Inc. (2006) (Class Action Permitted)
Cable Connection, Inc. v. DirecTV, Inc. (2006) (Errors of Law)
Cable Connection, Inc. v. DirecTV, Inc. (2006) (Refusal to Admit Evidence)
Cable Connection, Inc. v. DirecTV, Inc. (2006) (Severance)
Comedy Club, Inc. v. Improv West Associates (9th Cir 2007) (Injunctive Relief)
Comedy Club, Inc. v. Improv West Associates (9th Cir 2007) (Manifest Disregard of the Law)
Comedy Club, Inc. v. Improv West Associates (9th Cir 2007) (Nonsignatories)
Comer v. Micor, Inc. (9th Cir 2006) (Nonsignatories)
Credit Suisse First Boston Corp. v. Grunwald (9th Cir 2005) (Ethics Standards)
Credit Suisse First Boston Corp. v. Grunwald (9th Cir. 2005) (Preemption)
Cronus Investments, Inc. v. Concierge Services (2005) (Consolidation in Litigation)
Cummings v. Future Nissan (2005) (Appeal to Second Arbitrator)
Cummings v. Future Nissan (2005) (Waiver of Issue)
Discover Bank v. Superior Court (2005) (Class Action Waiver)
Discover Bank v. Superior Court (2005) (Preemption)
Ervin Cohen Jessup LLP v.
Gray Cary Ware & Freidenreich v Vigilant Insurance Co. (2004) (Cumis Counsel)
Gueyffier v. Ann Summers, Ltd. (2008) (Exceeding Powers)
Gueyffier v. Ann Summers, Ltd. (2008) (Preemption)
Gueyffier v. Ann Summers, Ltd. (2008) (Vacatur - International)
Guisenov v. Burns (2006) (Disclosure)
Guisenov v. Burns (2006) (Waiver of Appeal)
Hall Street Associates Inc v Mattel Inc (2008) (Errors of Law)
Haworth v Superior Court, (2008) (Disclosure)
Higgins v. Superior Court (2006) (Unconscionability)
Hotels
Independent Association of Mailbox Center Owners, Inc. v. Superior Court (2005) (Forum Fees)
Independent Association of Mailbox Center Owners, Inc. v. Superior Court (2005) (Remedy Restrictions)
Independent Association of Mailbox Center Owners, Inc. v. Superior Court (2005) (Unconscionability)
Jakks Pacific Inc v Superior Court (2008) (Disclosure)
Klussman v. Cross Country Bank (2005) (Injunctive Relief)
Lee v. Southern
Lee v. Southern
Long v Century Indemnity Co. (2008) (Cumis Counsel)
Luce Forward Hamilton & Scripps LLP v Koch (2008) (Disclosure)
Martinez v Master Protection Corp (2004) (Court Appointed Arbitrator)
Morgan Phillips, Inc. v. JAMS/Endispute (2006) (Immunity)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Arbitrability)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Forum Fees)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Forum Selection)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Repeat Players)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Severance)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Unconscionability)
Nagrampa v. Mailcoups, Inc. (9th Cir 2006) (Waiver of Litigation)
Nguyen v. Tran (2007) (Nonsignatories)
Ontiveros v. DHL Express (
Ontiveros v. DHL Express (
Ontiveros v. DHL Express (
Ontiveros v. DHL Express (
Ontiveros v. DHL Express (
Ovitz v. Schulman (2005) (Disclosure)
Ovitz v. Schulman (2005) (Preemption)
Reigelsperger v. Siller (2007) (Agreement to Arbitrate)
Reigelsperger v. Siller (2007) (Medical Services Agreement)
Rodriguez v. American Technologies, Inc. (2006) (Consolidation in Litigation)
Rodriguez v Blue Cross of
Roehl v. Ritchie (2007) (Award Correction)
Sanford
Sanford
Schatz v. Allen Matkins Leek Gamble & Mallory LLP (2007) (Attorney/Client Fee Arbitration)
Shepard v. Edward Mackay Enterprises, Inc. (2007) (Preemption)
Shroyer v New Cingular Wireless Services, Inc. (9th Cir 2007) (Class Action Waiver)
Shroyer v. New Cingular Wireless Services, Inc. (9th Cir 2007) (Preemption)
Schoenduve Corporation v. Lucent Technologies, Inc. (9th Cir 2006)
Titolo v. Cano (2007) (Medical Services Agreement)
Turtle Ridge Media Group, Inc. v. Pacific
Veliz v. Cintas Corp. (ND Cal 2005) (Forum Fees)
Veliz v. Cintas Corp. (ND Cal 2005) (Venue)
Woolls v. Superior Court (2005) (Preemption)
Woolls v. Superior Court (2005) (Residential Contracts)
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Case List By Subject/Full Review
Agreement to Arbitrate
Reigelsperger v. Siller, 40 Cal 4th 574, 53 Cal Rptr 3d 887 (2007)-An agreement to arbitrate that pertains to all transactions “now or in the future” applies to future transactions even if the parties did not contemplate future transactions at the time that the agreement was executed. This does not mean that the agreement binds the parties in perpetuity. Arbitration agreements that do not specify a term of duration are terminable at will after a reasonable time has elapsed.
Appeal-Federal Court
Sanford v. Member Works, Inc., 483 F 3d 956, 961 (9th Cir 2007)-Defendant moved to compel arbitration of plaintiff’s class action complaint. The motion was granted, but the court stated that if the arbitration were not completed within twelve months, it would dismiss the case. After the arbitration was completed within the requisite period, plaintiff moved to vacate, continuing to argue that the dispute was not arbitrable. The motion was denied and plaintiff appealed. Defendant argued that plaintiff had waived her right to appeal because she should have appealed from the initial ruling compelling arbitration, citing Section 16(a)(3) of the FAA which provides for an immediate appeal of a “final decision with respect to an arbitration”. The Ninth Circuit rejected this argument. The order compelling arbitration was not a final decision. An order granting a motion to compel arbitration and dismissing the action without prejudice constitutes an appealable final decision. An order compelling arbitration and staying the case is not immediately appealable. Here, there was no final decision because the court did not dismiss plaintiff’s claim and instead stated that it would terminate the action if the arbitration were not completed within twelve months.
Appeal to Second Arbitrator
Cummings v. Future Nissan, 128 Cal App 4th 321, 27 Cal Rptr. 3d 10, n. 4 (2005)-A second level of review, even if it imports judicial standards for review of a civil judgment on appeal and therefore erodes the traditional informality of arbitration is not invalid so long as there is no dollar amount threshold for invoking it (which would make it almost exclusively an employer remedy). The Court also held, at p. 331, that the second arbitrator was not limited by the holding in Moncharsh v Heily & Blasé, 3 Cal 4th 1 (1992) when ruling on the appeal.
Arbitrability
Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440, 126 S.Ct. 1204, 163 L.Ed 2d 1038 (2006)-A decision by the Florida Supreme Court denying the arbitration of a dispute arising out of a contract that was alleged to be void because it was usurious was reversed. Previous Supreme Court rulings in Prima Paint v Conklin and Southland v. Keating established three propositions. First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, then the issue of the contract’s validity is considered by the arbitrator in the first instance. Third, this arbitration law applies in state as well as federal courts. Thus, because the plaintiffs challenged the agreement but not the arbitration clause specifically, the arbitration provisions are enforceable apart from the remainder of the contract. This decision effectively overruled Hotels-Nevada LLC v Bridge Banc LLC, 130 Cal App 4th 1431, 30 Cal Rptr 3d 903 (2005).
Nagrampa v. Mailcoups,Inc., 2006 US App LEXIS 29687(9th Cir 2006)-When the crux of the complaint is not the invalidity of the contract as a whole, but rather the arbitration provision itself, then the court, not the arbitrator, must decide whether the arbitration clause is invalid and unenforceable.
Sanford v. Member Works, Inc., 483 F 3d 956, 963-4 (9th Cir 2007)-Plaintiff purchased a set of fitness tapes in response to a television advertisement and when the tapes were sent to her, they were accompanied by a membership in a program operated by defendant that provided discounts to program members. The membership material also contained a contract with an arbitration clause. Plaintiff’s credit card was charged $72. She filed a class action alleging violation of 39 USC 3009, which makes the mailing of unordered merchandise an unfair trade practice. Defendant moved to compel arbitration. Plaintiff argued that no contract was formed. The District Court ruled that since plaintiff challenged the contract as a whole, the decision whether there was a valid contract belonged to the arbitrator. Plaintiff’s motion to vacate the arbitrator’s award of $72 was denied by the District Court but that decision was reversed by the Ninth Circuit. Issues regarding the validity or enforcement of a putative contract mandating arbitration should be referred to an arbitrator, but challenges to the existence of a contract as a whole must be determined by the court prior to ordering arbitration.
Baker v. Osborne Development Corp., 159 Cal App 4th 884, 893-4, 71 Cal
Preston v Ferrer, 128 S. Ct 978, 169 L.E. 2d 917, 2008 US
Bruni v Didion, 160 Cal App 4th 1272, 1287, 73 Cal Rptr 3d 395 (2008)-Where a party asserts that it has never agreed to an arbitration provision, it cannot be required to arbitrate anything—note even arbitrability—until a court has made a threshold determination that the party did, in fact, agree to arbitrate something. In such a case, the court makes the determination even if the arbitration clause provides that the arbitrator decides arbitrability.
Ontiveros v. DHL Express (USA), Inc., 79 Cal Rptr 3d 471 (2008)-The court found here that a clause providing that the arbitrator shall decide arbitrability set forth in an adhesion contract that contained multiple examples of unconscionability is itself substantively unconscionable and hence unenforceable. The court also followed the holding in Bruni v Didion, supra, that the court decides arbitrability if it finds that the party opposing arbitration never agreed to arbitrate. Plaintiff herein met that threshold because the undisputed circumstances in which she received and signed the agreement—including her receipt of the one page document in a binder file along with numerous other employment related documents, the lack of time for any real review of the documents, and the failure of anyone to explain the significance of the agreement—supported her claim that she did not know that she had signed an agreement to arbitrate until she filed suit and the defendant filed a motion to compel arbitration.
RN Solution, Inc. v. Catholic Healthcare West. 165 Cal App 4th 1511, 1523, 81 Cal Rptr 3d 892 (2008)-RN and its founder-president, Woo, brought suit against Catholic Healthcare West (“CHW”) and a former employee of CHW arising largely out of the termination of a contract between RN and CHW. The individual defendant was the CHW employee who administered the contract. There was no dispute that the contractual claims were arbitrable. However, Woo also alleged claims of gender discrimination and sexual battery against the defendants arising from an intimate relationship between Woo and the CHW employee. The employee moved to compel arbitration of these claims as well. The motion was denied and the decision was affirmed on appeal. The arbitration clause in issue was part of an agreement between two business entities governing their business relationship. While the language of the arbitration provision might be broadly construed to cover every type of business dispute that might arise between the two signators, it cannot be seriously argued that the parties intended it to cover tort claims arising from a violent physical assault by an employee of one company against an employee of the other in the context of an intimate domestic relationship between them.
Attorney/Client Fee Arbitrations
Schatz v. Allen Matkins Leek Gamble & Mallory LLP, 146 Cal App 4th 674, 53 Cal
Ervin Cohen Jessup LLP v. Kassel, 147 Cal App 4th 821, 54 Cal Rptr 3d 685 (2007)-Once a client waives his right to proceed under the MFAA, he cannot invoke the MFAA as a means of avoiding the agreement for binding arbitration of all disputes contained in the retainer agreement.
Award Correction
Roehl v. Ritchie, 147 Cal App 4th 338, 351, 54 Cal
Class Action Not Mentioned
Cable Connection, Inc. v. DirecTV, Inc., 44 Cal 4th 1334, 82 Cal Rptr 3d 229
(2008)-The agreement herein, entered into between DirecTV and its dealers, made no reference to class actions. The agreement did require the arbitrators to apply the substantive law of California
Class Action Waivers
Discover Bank v. Superior Court, 36 Cal 4th 148, 30 Cal Rptr 3d 76 (2005)-Although all class action waivers are not necessarily unconscionable, when the waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then the waiver will be held to be unconscionable. On remand, the provision was upheld because the contract contained a Delaware Delaware California Cal Cal
Shroyer v New Cingular Wireless Services, Inc., 498 F 3d 976 (9th Cir 2007)-A class action waiver is unconscionable if 1) it is a consumer contract of adhesion drafted by the party with superior bargaining power; 2) it involves small amounts of damages suffered by each member of the class; and 3) it is alleged that the party with superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small amounts of money. All three prongs applied here. The contract was one of adhesion, involving consumers and drafted by the party with superior bargaining power. It involved small amounts of damages by the individual members of the class because the monthly charges ranged from $9.99 to $59.99. And the third prong was met because plaintiffs alleged that defendant had entered into a scheme to deliberately cheat large numbers of consumers by representing to them that their services would be improved only if they entered into contract extensions with defendant following its merger with AT&T Wireless Services. See also Lowden v T-Mobile USA, Inc., 512 F 3d 1213 (9th Cir 2008).
Consolidation with Other Matters in Litigation (Section 1281.2(c) )
Cronus Investments, Inc. v. Concierge Services, 35 Cal 4th 376, 25 Cal California California United States United States
Rodriguez v. American Technologies, Inc., 136 Cal App 4th 1110, 1122, 39 Cal Rptr. 3d 437 (2006)-In the Cronus case, above, although the Court found that the FAA did not apply and invoked Section 1281.2(c), it also held that parties to an arbitration contract could expressly designate that the FAA would apply, in which event there would be a different result. In this case, the arbitration contract provided that disputes between the parties would be settled by arbitration “pursuant to the FAA” and the Court held that this met the exception cited in Cronus. The phrase ‘pursuant to the FAA” is broad and unconditional, unlike the Cronus clause, which deferred to the contract’s California choice of law provisions by invoking only “applicable” provisions of the FAA. The parties thus adopted the FAA---all of it---to govern their arbitration. The FAA controls, including Section 3, which requires the court to stay the judicial proceedings and compel arbitration. Although Section 3 may not generally apply to state courts, here the parties did as Cronus suggested they could. They expressly designated that their arbitration proceeding should move forward under the FAA’s procedural provisions rather than under state procedural law.
RN Solution, Inc. v. Catholic Healthcare West. 165 Cal App 4th 1511, 1523, 81 Cal Rptr 3d 892 (2008)-RN Solution and its founder-president, Woo, filed suit against Catholic Healthcare West (“CHW”) and a former employee arising primarily as a consequence of the termination by CHW of a contract that it had with RN. The individual defendant was the person at CHW who administered the contract. However, the complaint also contained allegations of gender discrimination and sexual battery alleged by Woo as a consequence of an intimate relationship that she had had with the individual defendant. Because Woo and the individual defendant were not parties to the contract, the court invoked Section 1281.2(c) and denied defendants’ motion to compel arbitration. The decision was reversed. Woo benefited financially and professionally from the contract and thus was bound by the arbitration agreement. The individual defendant was CHW’s agent with respect to the contract and, as such, was also bound by the arbitration agreement and could enforce it. The gender discrimination and sexual battery claims were non-arbitrable. Hence, the court should have ordered all the arbitrable claims to arbitration. The court would then have had the discretion to delay its order to arbitrate the arbitrable claims under Section 1281.2(c), only if it first determined that the adjudication of the non-arbitrable claims in court might make the arbitration unnecessary.
Court Appointed Arbitrator (Section 1281.6)
Martinez v Master Protection Corp, 118 Cal App 4th 107, 120, 12 Cal California
Cumis Counsel
Gray Cary Ware & Freidenreich v Vigilant Insurance
Case List By Subject/Full Review
Agreement to Arbitrate
Reigelsperger v. Siller, 40 Cal 4th 574, 53 Cal Rptr 3d 887 (2007)-An agreement to arbitrate that pertains to all transactions “now or in the future” applies to future transactions even if the parties did not contemplate future transactions at the time that the agreement was executed. This does not mean that the agreement binds the parties in perpetuity. Arbitration agreements that do not specify a term of duration are terminable at will after a reasonable time has elapsed.
Appeal-Federal Court
Sanford v. Member Works, Inc., 483 F 3d 956, 961 (9th Cir 2007)-Defendant moved to compel arbitration of plaintiff’s class action complaint. The motion was granted, but the court stated that if the arbitration were not completed within twelve months, it would dismiss the case. After the arbitration was completed within the requisite period, plaintiff moved to vacate, continuing to argue that the dispute was not arbitrable. The motion was denied and plaintiff appealed. Defendant argued that plaintiff had waived her right to appeal because she should have appealed from the initial ruling compelling arbitration, citing Section 16(a)(3) of the FAA which provides for an immediate appeal of a “final decision with respect to an arbitration”. The Ninth Circuit rejected this argument. The order compelling arbitration was not a final decision. An order granting a motion to compel arbitration and dismissing the action without prejudice constitutes an appealable final decision. An order compelling arbitration and staying the case is not immediately appealable. Here, there was no final decision because the court did not dismiss plaintiff’s claim and instead stated that it would terminate the action if the arbitration were not completed within twelve months.
Appeal to Second Arbitrator
Cummings v. Future Nissan, 128 Cal App 4th 321, 27 Cal Rptr. 3d 10, n. 4 (2005)-A second level of review, even if it imports judicial standards for review of a civil judgment on appeal and therefore erodes the traditional informality of arbitration is not invalid so long as there is no dollar amount threshold for invoking it (which would make it almost exclusively an employer remedy). The Court also held, at p. 331, that the second arbitrator was not limited by the holding in Moncharsh v Heily & Blasé, 3 Cal 4th 1 (1992) when ruling on the appeal.
Arbitrability
Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440, 126 S.Ct. 1204, 163 L.Ed 2d 1038 (2006)-A decision by the Florida Supreme Court denying the arbitration of a dispute arising out of a contract that was alleged to be void because it was usurious was reversed. Previous Supreme Court rulings in Prima Paint v Conklin and Southland v. Keating established three propositions. First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, then the issue of the contract’s validity is considered by the arbitrator in the first instance. Third, this arbitration law applies in state as well as federal courts. Thus, because the plaintiffs challenged the agreement but not the arbitration clause specifically, the arbitration provisions are enforceable apart from the remainder of the contract. This decision effectively overruled Hotels-Nevada LLC v Bridge Banc LLC, 130 Cal App 4th 1431, 30 Cal Rptr 3d 903 (2005).
Nagrampa v. Mailcoups,Inc., 2006 US App LEXIS 29687(9th Cir 2006)-When the crux of the complaint is not the invalidity of the contract as a whole, but rather the arbitration provision itself, then the court, not the arbitrator, must decide whether the arbitration clause is invalid and unenforceable.
Sanford v. Member Works, Inc., 483 F 3d 956, 963-4 (9th Cir 2007)-Plaintiff purchased a set of fitness tapes in response to a television advertisement and when the tapes were sent to her, they were accompanied by a membership in a program operated by defendant that provided discounts to program members. The membership material also contained a contract with an arbitration clause. Plaintiff’s credit card was charged $72. She filed a class action alleging violation of 39 USC 3009, which makes the mailing of unordered merchandise an unfair trade practice. Defendant moved to compel arbitration. Plaintiff argued that no contract was formed. The District Court ruled that since plaintiff challenged the contract as a whole, the decision whether there was a valid contract belonged to the arbitrator. Plaintiff’s motion to vacate the arbitrator’s award of $72 was denied by the District Court but that decision was reversed by the Ninth Circuit. Issues regarding the validity or enforcement of a putative contract mandating arbitration should be referred to an arbitrator, but challenges to the existence of a contract as a whole must be determined by the court prior to ordering arbitration.
Baker v. Osborne Development Corp., 159 Cal App 4th 884, 893-4, 71 Cal
Preston v Ferrer, 128 S. Ct 978, 169 L.E. 2d 917, 2008 US
Bruni v Didion, 160 Cal App 4th 1272, 1287, 73 Cal Rptr 3d 395 (2008)-Where a party asserts that it has never agreed to an arbitration provision, it cannot be required to arbitrate anything—note even arbitrability—until a court has made a threshold determination that the party did, in fact, agree to arbitrate something. In such a case, the court makes the determination even if the arbitration clause provides that the arbitrator decides arbitrability.
Ontiveros v. DHL Express (USA), Inc., 79 Cal Rptr 3d 471 (2008)-The court found here that a clause providing that the arbitrator shall decide arbitrability set forth in an adhesion contract that contained multiple examples of unconscionability is itself substantively unconscionable and hence unenforceable. The court also followed the holding in Bruni v Didion, supra, that the court decides arbitrability if it finds that the party opposing arbitration never agreed to arbitrate. Plaintiff herein met that threshold because the undisputed circumstances in which she received and signed the agreement—including her receipt of the one page document in a binder file along with numerous other employment related documents, the lack of time for any real review of the documents, and the failure of anyone to explain the significance of the agreement—supported her claim that she did not know that she had signed an agreement to arbitrate until she filed suit and the defendant filed a motion to compel arbitration.
RN Solution, Inc. v. Catholic Healthcare West. 165 Cal App 4th 1511, 1523, 81 Cal Rptr 3d 892 (2008)-RN and its founder-president, Woo, brought suit against Catholic Healthcare West (“CHW”) and a former employee of CHW arising largely out of the termination of a contract between RN and CHW. The individual defendant was the CHW employee who administered the contract. There was no dispute that the contractual claims were arbitrable. However, Woo also alleged claims of gender discrimination and sexual battery against the defendants arising from an intimate relationship between Woo and the CHW employee. The employee moved to compel arbitration of these claims as well. The motion was denied and the decision was affirmed on appeal. The arbitration clause in issue was part of an agreement between two business entities governing their business relationship. While the language of the arbitration provision might be broadly construed to cover every type of business dispute that might arise between the two signators, it cannot be seriously argued that the parties intended it to cover tort claims arising from a violent physical assault by an employee of one company against an employee of the other in the context of an intimate domestic relationship between them.
Attorney/Client Fee Arbitrations
Schatz v. Allen Matkins Leek Gamble & Mallory LLP, 146 Cal App 4th 674, 53 Cal
Ervin Cohen Jessup LLP v. Kassel, 147 Cal App 4th 821, 54 Cal Rptr 3d 685 (2007)-Once a client waives his right to proceed under the MFAA, he cannot invoke the MFAA as a means of avoiding the agreement for binding arbitration of all disputes contained in the retainer agreement.
Award Correction
Roehl v. Ritchie, 147 Cal App 4th 338, 351, 54 Cal
Class Action Not Mentioned
Cable Connection, Inc. v. DirecTV, Inc., 44 Cal 4th 1334, 82 Cal Rptr 3d 229
(2008)-The agreement herein, entered into between DirecTV and its dealers, made no reference to class actions. The agreement did require the arbitrators to apply the substantive law of California
Agreement to Arbitrate
Reigelsperger v. Siller, 40 Cal 4th 574, 53 Cal Rptr 3d 887 (2007)-An agreement to arbitrate that pertains to all transactions “now or in the future” applies to future transactions even if the parties did not contemplate future transactions at the time that the agreement was executed. This does not mean that the agreement binds the parties in perpetuity. Arbitration agreements that do not specify a term of duration are terminable at will after a reasonable time has elapsed.
Appeal-Federal Court
Sanford v. Member Works, Inc., 483 F 3d 956, 961 (9th Cir 2007)-Defendant moved to compel arbitration of plaintiff’s class action complaint. The motion was granted, but the court stated that if the arbitration were not completed within twelve months, it would dismiss the case. After the arbitration was completed within the requisite period, plaintiff moved to vacate, continuing to argue that the dispute was not arbitrable. The motion was denied and plaintiff appealed. Defendant argued that plaintiff had waived her right to appeal because she should have appealed from the initial ruling compelling arbitration, citing Section 16(a)(3) of the FAA which provides for an immediate appeal of a “final decision with respect to an arbitration”. The Ninth Circuit rejected this argument. The order compelling arbitration was not a final decision. An order granting a motion to compel arbitration and dismissing the action without prejudice constitutes an appealable final decision. An order compelling arbitration and staying the case is not immediately appealable. Here, there was no final decision because the court did not dismiss plaintiff’s claim and instead stated that it would terminate the action if the arbitration were not completed within twelve months.
Appeal to Second Arbitrator
Cummings v. Future Nissan, 128 Cal App 4th 321, 27 Cal Rptr. 3d 10, n. 4 (2005)-A second level of review, even if it imports judicial standards for review of a civil judgment on appeal and therefore erodes the traditional informality of arbitration is not invalid so long as there is no dollar amount threshold for invoking it (which would make it almost exclusively an employer remedy). The Court also held, at p. 331, that the second arbitrator was not limited by the holding in Moncharsh v Heily & Blasé, 3 Cal 4th 1 (1992) when ruling on the appeal.
Arbitrability
Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440, 126 S.Ct. 1204, 163 L.Ed 2d 1038 (2006)-A decision by the Florida Supreme Court denying the arbitration of a dispute arising out of a contract that was alleged to be void because it was usurious was reversed. Previous Supreme Court rulings in Prima Paint v Conklin and Southland v. Keating established three propositions. First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, then the issue of the contract’s validity is considered by the arbitrator in the first instance. Third, this arbitration law applies in state as well as federal courts. Thus, because the plaintiffs challenged the agreement but not the arbitration clause specifically, the arbitration provisions are enforceable apart from the remainder of the contract. This decision effectively overruled Hotels-Nevada LLC v Bridge Banc LLC, 130 Cal App 4th 1431, 30 Cal Rptr 3d 903 (2005).
Nagrampa v. Mailcoups,Inc., 2006 US App LEXIS 29687(9th Cir 2006)-When the crux of the complaint is not the invalidity of the contract as a whole, but rather the arbitration provision itself, then the court, not the arbitrator, must decide whether the arbitration clause is invalid and unenforceable.
Sanford v. Member Works, Inc., 483 F 3d 956, 963-4 (9th Cir 2007)-Plaintiff purchased a set of fitness tapes in response to a television advertisement and when the tapes were sent to her, they were accompanied by a membership in a program operated by defendant that provided discounts to program members. The membership material also contained a contract with an arbitration clause. Plaintiff’s credit card was charged $72. She filed a class action alleging violation of 39 USC 3009, which makes the mailing of unordered merchandise an unfair trade practice. Defendant moved to compel arbitration. Plaintiff argued that no contract was formed. The District Court ruled that since plaintiff challenged the contract as a whole, the decision whether there was a valid contract belonged to the arbitrator. Plaintiff’s motion to vacate the arbitrator’s award of $72 was denied by the District Court but that decision was reversed by the Ninth Circuit. Issues regarding the validity or enforcement of a putative contract mandating arbitration should be referred to an arbitrator, but challenges to the existence of a contract as a whole must be determined by the court prior to ordering arbitration.
Baker v. Osborne Development Corp., 159 Cal App 4th 884, 893-4, 71
Preston v Ferrer, 128 S. Ct 978, 169 L.E. 2d 917, 2008
Bruni v Didion, 160 Cal App 4th 1272, 1287, 73 Cal Rptr 3d 395 (2008)-Where a party asserts that it has never agreed to an arbitration provision, it cannot be required to arbitrate anything—note even arbitrability—until a court has made a threshold determination that the party did, in fact, agree to arbitrate something. In such a case, the court makes the determination even if the arbitration clause provides that the arbitrator decides arbitrability.
Ontiveros v. DHL Express (USA), Inc., 79 Cal Rptr 3d 471 (2008)-The court found here that a clause providing that the arbitrator shall decide arbitrability set forth in an adhesion contract that contained multiple examples of unconscionability is itself substantively unconscionable and hence unenforceable. The court also followed the holding in Bruni v Didion, supra, that the court decides arbitrability if it finds that the party opposing arbitration never agreed to arbitrate. Plaintiff herein met that threshold because the undisputed circumstances in which she received and signed the agreement—including her receipt of the one page document in a binder file along with numerous other employment related documents, the lack of time for any real review of the documents, and the failure of anyone to explain the significance of the agreement—supported her claim that she did not know that she had signed an agreement to arbitrate until she filed suit and the defendant filed a motion to compel arbitration.
RN Solution, Inc. v. Catholic Healthcare West. 165 Cal App 4th 1511, 1523, 81 Cal Rptr 3d 892 (2008)-RN and its founder-president, Woo, brought suit against Catholic Healthcare West (“CHW”) and a former employee of CHW arising largely out of the termination of a contract between RN and CHW. The individual defendant was the CHW employee who administered the contract. There was no dispute that the contractual claims were arbitrable. However, Woo also alleged claims of gender discrimination and sexual battery against the defendants arising from an intimate relationship between Woo and the CHW employee. The employee moved to compel arbitration of these claims as well. The motion was denied and the decision was affirmed on appeal. The arbitration clause in issue was part of an agreement between two business entities governing their business relationship. While the language of the arbitration provision might be broadly construed to cover every type of business dispute that might arise between the two signators, it cannot be seriously argued that the parties intended it to cover tort claims arising from a violent physical assault by an employee of one company against an employee of the other in the context of an intimate domestic relationship between them.
Attorney/Client Fee Arbitrations
Schatz v. Allen Matkins Leek Gamble & Mallory LLP, 146 Cal App 4th 674, 53
Ervin Cohen Jessup LLP v. Kassel, 147 Cal App 4th 821, 54 Cal Rptr 3d 685 (2007)-Once a client waives his right to proceed under the MFAA, he cannot invoke the MFAA as a means of avoiding the agreement for binding arbitration of all disputes contained in the retainer agreement.
Award Correction
Roehl v. Ritchie, 147 Cal App 4th 338, 351, 54
Class Action Not Mentioned
Cable Connection, Inc. v. DirecTV, Inc., 44 Cal 4th 1334, 82 Cal Rptr 3d 229
Class Action Waivers
Discover Bank v. Superior Court, 36 Cal 4th 148, 30 Cal Rptr 3d 76 (2005)-Although all class action waivers are not necessarily unconscionable, when the waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then the waiver will be held to be unconscionable. On remand, the provision was upheld because the contract contained a
Shroyer v New Cingular Wireless Services, Inc., 498 F 3d 976 (9th Cir 2007)-A class action waiver is unconscionable if 1) it is a consumer contract of adhesion drafted by the party with superior bargaining power; 2) it involves small amounts of damages suffered by each member of the class; and 3) it is alleged that the party with superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small amounts of money. All three prongs applied here. The contract was one of adhesion, involving consumers and drafted by the party with superior bargaining power. It involved small amounts of damages by the individual members of the class because the monthly charges ranged from $9.99 to $59.99. And the third prong was met because plaintiffs alleged that defendant had entered into a scheme to deliberately cheat large numbers of consumers by representing to them that their services would be improved only if they entered into contract extensions with defendant following its merger with AT&T Wireless Services. See also Lowden v T-Mobile USA, Inc., 512 F 3d 1213 (9th Cir 2008).
Consolidation with Other Matters in Litigation (Section 1281.2(c) )
Cronus Investments, Inc. v. Concierge Services, 35 Cal 4th 376, 25
Rodriguez v. American Technologies, Inc., 136 Cal App 4th 1110, 1122, 39 Cal Rptr. 3d 437 (2006)-In the Cronus case, above, although the Court found that the FAA did not apply and invoked Section 1281.2(c), it also held that parties to an arbitration contract could expressly designate that the FAA would apply, in which event there would be a different result. In this case, the arbitration contract provided that disputes between the parties would be settled by arbitration “pursuant to the FAA” and the Court held that this met the exception cited in Cronus. The phrase ‘pursuant to the FAA” is broad and unconditional, unlike the Cronus clause, which deferred to the contract’s California choice of law provisions by invoking only “applicable” provisions of the FAA. The parties thus adopted the FAA---all of it---to govern their arbitration. The FAA controls, including Section 3, which requires the court to stay the judicial proceedings and compel arbitration. Although Section 3 may not generally apply to state courts, here the parties did as Cronus suggested they could. They expressly designated that their arbitration proceeding should move forward under the FAA’s procedural provisions rather than under state procedural law.
RN Solution, Inc. v. Catholic Healthcare West. 165 Cal App 4th 1511, 1523, 81 Cal Rptr 3d 892 (2008)-RN Solution and its founder-president, Woo, filed suit against Catholic Healthcare West (“CHW”) and a former employee arising primarily as a consequence of the termination by CHW of a contract that it had with RN. The individual defendant was the person at CHW who administered the contract. However, the complaint also contained allegations of gender discrimination and sexual battery alleged by Woo as a consequence of an intimate relationship that she had had with the individual defendant. Because Woo and the individual defendant were not parties to the contract, the court invoked Section 1281.2(c) and denied defendants’ motion to compel arbitration. The decision was reversed. Woo benefited financially and professionally from the contract and thus was bound by the arbitration agreement. The individual defendant was CHW’s agent with respect to the contract and, as such, was also bound by the arbitration agreement and could enforce it. The gender discrimination and sexual battery claims were non-arbitrable. Hence, the court should have ordered all the arbitrable claims to arbitration. The court would then have had the discretion to delay its order to arbitrate the arbitrable claims under Section 1281.2(c), only if it first determined that the adjudication of the non-arbitrable claims in court might make the arbitration unnecessary.
Court Appointed Arbitrator (Section 1281.6)
Martinez v Master Protection Corp, 118 Cal App 4th 107, 120, 12
Cumis Counsel
Gray Cary Ware & Freidenreich v Vigilant Insurance