Source: https://www.calmediation.org/2018/11/index.html
Timestamp: 2019-04-19 03:32:09+00:00

Document:
Amanda Meleski was injured when Albert Hotlen ran a red light and collided with her vehicle. But by the time Mr. Hotlen could be served with a summons, he was dead. However, Mr. Hotlen had purchased a $100,000 policy from Allstate. Ms. Meleski offered to settle with Allstate for one dollar less than policy limits, to wit, for $99,999. Allstate rejected the offer, went to trial, and took a hit from the jury for $180,613.86. Ms. Meleski then sought to recover expert witness fees and other litigation costs, in the amount of $66,017.08, pursuant to section 998, having done better at trial than the offer that Allstate rejected. However, the trial court held that her recovery against Allstate was limited by the policy limit of $100,000. She appealed. Meleski v. Estate of Albert Hotlen, C080023 (3rd Dist. 11/29/18) (Blease, Robie, Mauro).
The Court refused to ignore the reality that Allstate controlled the litigation, adding: "Moreover, we find it manifestly unfair that section 998 could be employed by Allstate to recover costs from the plaintiff (which costs it would have no obligation to pay to the estate), but Allstate would have no corresponding responsibility to pay costs merely because it is not the named party."
The Court reversed the order denying an award of costs from Allstate, and modified the award to add $66,017.08 to $100,000 in damages.
Ferguson v. Camarillo Health Care District, B281856 (2/6 11/28/18) (Tangeman, Gilbert, Yegan) (unpublished).
When a an opinion begins, "Calling it an 'unproductive waste of time,' attorney Ralph T. Ferguson did not participate in mandatory arbitration of a fee dispute with his client Camarillo Health Care District (CHCD). The arbitrators ruled in favor of CHCD," you can make a pretty good guess how it will end. And you would be right here.
Attorney Ferguson blew off the Mandatory Fee Arbitration, failed to appeal the judgment on the award or the denial of relief from the judgment. Instead, he collaterally attacked the award in a separate lawsuit, then appealed. No go. The final award, confirmed by the trial court, was res judicata, and Ferguson failed to timely appeal.
It was obvious that the Court of Appeal was not amused by the way the attorney handled his fee dispute with his client. "He declined to give CHCD its legal files," writes Justice Tangeman, "asserting they are privileged, or too heavy to lift, or the subject of a ransomware attack on his computer."
COMMENT: Perhaps the moral is that clients are entitled by statute to arbitrate fee disputes, and the attorney who does not treat mandatory fee arbitration seriously does so at the attorney's risk.
Massicotte v. A-One Janitorial LLC, G055604 (4/3 11/26/18) (Aronson, Bedsworth, Moore) (unpublished).
The parties entered into an Asset Purchase Agreement under which "the parties agreed an independent accounting firm would render a conclusive and binding decision concerning any disagreement the parties had over a specific accounting issue." The buyers contended this provision did not constitute an arbitration agreement (a) because it did not include the word "arbitration" and (b) because it allowed the determination of the neutral (an accounting firm) to be challenged "for manifest error", as a result of which an award could not be final and binding.
The Court of Appeal wasn't buying it. The use of the word "arbitration" is not determinative, and case law is clear about this. If it looks like a duck, swims like a duck, and quacks like a duck, it is a duck. (No, the Court didn't write that, I did.) As to the "manifest error" language, an arbitration decision may be reviewed for legal errors if the parties contractually agreed to judicial oversight. Cable Connection, Inc. v. DIRECTV, Inc., 44 Cal. 4th 1334, 1355-1356 (2008).
Doan v. Nhan Hoa Comprehensive Health Care Clinic, Inc., G055323 (4/3 11/26/18) (Bedsworth, Moore, Fybel) (unpublished).
This is one of the many cases in which an employer seeks to enforce an arbitration agreement against a former employee who did not sign the arbitration agreement. Sometimes those cases arise because of problems obtaining electronic signatures, but that was not the case here. And sometimes those cases arise because an employee who did not sign a change to an employment agreement that included an arbitration clause did not sign the new agreement, but continued to work for a long time, but that was not the case here. Here, the employee straight up didn't sign an arbitration provision that had lines for a date and an employee signature. The final paragraph included an acknowledgment that the agreement had been carefully read and understood, and that binding arbitration would apply, but those darn date and signature lines were blank. And Doan, a new hire, only worked at the company from early May till the end of July 2016. The Court of Appeal concluded that substantial evidence supported the decision of the trial court that the evidence did not establish an intent to be bound by an unsigned document.
Porter v. AG Arcadia, LLC, B285461 (2/5 11/26/18) (Jaskol, Baker, Moor) (unpublished).
This lawsuit involved a dispute between a patient's relatives and a nursing home after the aged patient "died of sepsis related to her wound from the pressure sore and urinary infections." The arbitrator, the Hon. Judy Chirlin, ret., found that the defendants acted recklessly and awarded damages for elder abuse and wrongful death. The nursing home appealed. The appeal was dismissed under the "one judgment rule", because there was a pending claim for violation of the Patient's Bill of Rights that had not been decided. Thus, the appeal was taken from a non-appealable order.
COMMENT: Interestingly, the Court of Appeal acknowledges, "we have a sufficient record for writ review and the issues have been fully briefed." Yet the Court concludes that writ review is not appropriate, because it has no information suggesting the Appellants lack of an adequate remedy at law by way of an appeal. The "adequate remedy at law" issue needs to be carefully briefed by appellants seeking writ review. Query whether that was done in this case.
Issues Covered Include Class Action, Unconscionability, Powers Of Arbitrator, Enforcement, Non-Signatories, PAGA, Severability, Costs.
Martinez v. Ready Pac Produce, Inc., B279225 (2/3 11/20/18) (Lavin, Egerton, Dhanidina) (Unpublished): Waiver Of Class Action Meant Employee Could Not Participate In Pending Class Action.
The Court of Appeal reverses order denying employer Read Pac's motion to compel arbitration. The superior court had found the arbitration agreement to be unconscionable because it included a provision waiving the right to participate in a class action, including a pending class action. Relying on Concepcion, the Court of Appeal stated, "It is well settled that class action waivers in arbitration agreements are generally enforceable." While the employee lost the right to participate in a pending class action, the employee still had the right to pursue her individual claims in arbitration.
O'Brien v. Sajahtera, Inc., B282037 (2/3 11/20/18) (Lavin, Egerton, Dhanidina) (Unpublished): Arbitrator Did Not Exceed Powers.
The Court of Appeal affirms judgment entered after the superior court denied the plaintiff employee's petition to vacate an arbitration award in favor of defendant.
Plaintiff/appellant argued that the arbitrator had violated unwaivable statutory rights -- something that would in fact be a basis for vacating an arbitrator's award. The Court of Appeal, however, disagreed, explaining plaintiff "improperly equates the violation of unwaivable statutory rights -- which may support vacatur of an arbitration award -- with an unfavorable resolution of a claim relating to unwaivable statutory right -- which does not."
Albarran v. Midwest Roofing Co., Inc., B284151 (2/1 11/19/18) (Bendix, Rothschild, Johnson) (Unpublished): Court Reverses And Orders Arbitration, Except For PAGA Claim.
The Court of Appeal rejected trial court's finding that arbitration agreement was unconscionable because it lacked mutuality (a) because it was not signed by defendants; and (b) because it only required employees to arbitrate their claims. Generally an agreement can be enforced when signed by the parties against whom enforcement is sought. As to the claim that the agreement was not mutual, the Court explained that the employee' agreement to arbitrate is read as mutual under existing case law. The Court added two caveats: first, certain of the cost-shifting provisions, which were unconscionable, had to be severed; second, the arbitration agreement did not apply to PAGA claims brought in the state's name.
Happy Thanksgiving To All Our Blawg Readers !
The Holiday Season is off and running. Circa 1909. Library of Congress.
But Civil Code Section 1668 Does Negate Contractual Clause Exempting Party From Responsibility When Elements Of Tort Are Concurrent Or Future Events When Contract Is Signed.
Until Lingsch v. Savage, 213 Cal.App.2d 729 (1963) and Orlando v. Berkeley, 220 Cal.App.2d 224 (1963) came along, sellers attempted to remove liability for the condition of property by using "as-is" conditions in contracts, taking advantage of the ancient rule, "caveat emptor" or "buyer beware." As a consequence of those cases, interpreting as-is clauses so as to be consistent with Civil Code section 16681, which does not allow one to exempt oneself from one's own fraud, an as-is provision is ineffective to relieve the seller of fraud. And so argued the assignee of an apartment complex purchased earlier from a developer when suing the developer and related entities for defective construction. SI 59 LLC v. Variel Warner Ventures, LLC et al., B285086 (2/2 11/15/18) (Ashmann-Gerst, Chavez, Hoffstadt).
In affirming dismissal of Plaintiff/Appellant's complaint, the Court explains the temporal limitation of section 1668: "section 1668 negates a contractual clause exempting a party from responsibility for fraud or a statutory violation only when all or some of the elements of the tort are concurrent or future events at the time the contract is signed. Contrariwise, we hold that section 1668 does not negate such a clause when all the elements are past events. Regarding the element of damages, which is necessary for tort liability, this means that at least some form of economic or physical damage has occurred." Thus, with a suitable disclaimer, one can be off-the-hook for past fraud, but not fraud occurring concurrently with or after the contract is signed.
COMMENT: This is a slippery area, and the ruling, particularly with regard to damages, could invite future litigation. One can foresee future argument arising over whether a statutory violation that arguably led to a diminution in market value before a contract was signed, and which was known to the seller but not to the buyer, and subsequently led to physical injury after the contract was signed, nevertheless allows for a complete release of liability, despite Civil Code section 1668, because some damage by way of diminution of value occurred before the contract was signed.
1 Section 1668 provides: "All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law."
"Restoring Justice For Workers Act."
Vox reports on November 14, 2018, that on October 30, 2018, Rep. Jerrold Nadler (D-NY) and other House Democrats introduced the "Restoring Justice for Workers Act." The self-explanatory caption of the Bill is: " A BILL -- To prohibit forced arbitration in employment disputes, and for other purposes." Republicans have thus far shown little interest to eliminate mandatory arbitration for workers, and of course the Bill would also require Senate approval to become law.
The Vox article references an Economic Policy Institute report dated September 27, 2017, and authored by Prof. Alexander J.S. Colvin of the Cornell University School of Industrial and Labor Relations. Among other things, Colvin writes: "This study finds that since the early 2000s, the share of workers subject to mandatory arbitration has more than doubled and now exceeds 55 percent. This trend has weakened the position of workers whose rights are violated, barring access to the courts for all types of legal claims, including those based on Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act."
The Current Rules Of Professional Conduct Became Effective On November 1, 2018.
Rule 2.4.1 Lawyer as Temporary Judge, Referee, or Court-Appointed Arbitrator.
Rule 1.12(a) provides that lawyers shall not represent anyone in connection with a matter in which the lawyer "participated personally and substantially" as a judge, arbitrator, mediator, or other third-party neutrals, "unless all parties to the proceeding give informed written consent," and except as stated in paragraph (d).
Whereas Rule 1.12(a) applies to representation, Rule 1.12(b) applies to employment. If the lawyer participates "personally and substantially" as a judge, arbitrator, mediator, or other third-party neutral, the lawyer can't seek employment from any person involved as a party or as a lawyer for a party. However, judicial staff attorneys and law clerks can seek such employment, but only with the permission of the court.
(3) written notice is promptly given to the parties and any appropriate tribunal to enable them to ascertain compliance with the provisions of this rule."
Rule 1.12(d) provides that an arbitrator "selected as a partisan of a party in a multimember arbitration panel is not prohibited from subsequently representing that party." Evidently the partisan arbitrator is expected to remain partisan.
A Comment to Rule 1.12 points out that "[o]ther law or codes of ethics governing third-arty neutrals may impose more stringent standards of personal or imputed disqualification. (See rule 2.4.)."
. . . which brings us to Rule 2.4, "Lawyer as a Third-Party Neutral." The lawyer serving as a third-party neutral must inform unrepresented parties that he is not representing them, and if the lawyer believes the unrepresented party does not understand the lawyer's role, then the lawyer must explain the difference between the lawyer as a third-party neutral and as an advocate.
Rule 2.4.1 provides that the lawyer acting as temporary judge, referee, or court-appointed arbitrator is subject to canon 6D of the California Code of Judicial Ethics, allowing the State Bar to discipline lawyers who violate the Code of Judicial Ethics while acting in a judicial capacity.
The distinction between 2.4 and 2.4.1 is that the first rule applies to the lawyer acting in a non-judicial functions whereas rule 2.4.1 refers to the lawyer acting in a judicial function. Thus, Rule 2.4 pertains to lawyers serving as third-party neutrals in a mediation, settlement conference, or arbitration pursuant to an arbitration agreement, whereas Rule 2.4.1 applies to judges, referees or court-appointed arbitrators.

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