Opinion ID: 2588288
Heading Depth: 2
Heading Rank: 4

Heading: cftc

Text: In CFTC, the United States Supreme Court addressed whether the Commodity Futures Trading Commission's authority to adjudicate common law counterclaims to complaints brought before it violated the judicial powers clause, article III, section 1, of the federal Constitution. (CFTC, supra, 478 U.S. at p. 847, 106 S.Ct. 3245.) The high court identified two distinct aspects of article III:(1) providing the guarantee of an independent and impartial adjudication by the federal judiciary of matters within the judicial power of the United States (CFTC, supra, 478 U.S. at p. 848, 106 S.Ct. 3245), and (2) safeguarding] the role of the Judicial Branch in our tripartite system by barring congressional attempts `to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating' constitutional courts [citation], and thereby preventing `the encroachment or aggrandizement of one branch at the expense of the other.' [Citations.] (Id. at p. 850, 106 S.Ct. 3245.) While the former aspect constitutes a personal right and is thus subject to waiver (id. at p. 848, 106 S.Ct. 3245), the latter implicates a structural principle for which notions of consent and waiver cannot be dispositive. (Id. at pp. 850-851, 106 S.Ct. 3245.) As relevant here, the high court held that the structural principle of the judicial powers clause was not violated, because the Commodity Futures Trading Commission's jurisdiction over a narrow class of common law claims as an incident to the [Commodity Futures Trading Commission's] primary, and unchallenged, adjudicative function does not create a substantial threat to the separation of powers. (CFTC, supra, 478 U.S. at p. 854, 106 S.Ct. 3245.) In reaching this conclusion, the high court found significant that the respondentwho objected to the Commodity Futures Trading Commission's jurisdiction over the counterclaimhad the choice of filing a complaint in federal court or commencing a reparations proceeding before the Commodity Futures Trading Commission. (Id. at p. 855, 106 S.Ct. 3245.) The high court observed that Congress gave the [Commodity Futures Trading Commission] the authority to adjudicate such matters, but the decision to invoke this forum is left entirely to the parties and the power of the federal judiciary to take jurisdiction of these matters is unaffected. In such circumstances, separation of powers concerns are diminished, for it seems self-evident that just as Congress may encourage parties to settle a dispute out of court or resort to arbitration without impermissible incursions on the separation of powers, Congress may make available a quasi-judicial mechanism through which willing parties may, at their option, elect to resolve their differences. (Ibid.) Similarly here, the Commission, in housing discrimination cases, deals with a narrow and particularized area of law, i.e., the elimination of discriminatory practices in housing accommodations that are against public policy. (§ 12920.) Like the Commodity Futures Trading Commission, the Commission's orders are enforceable only by judgment and order of the superior court (§§ 12987.1, subd. (d), 12973, subd. (b)), and are subject to judicial review by way of administrative mandate procedures (§ 12987.1, subd. (a)). [5] (CFTC, supra, 478 U.S. at p. 853, 106 S.Ct. 3245; see Walnut Creek Manor, supra, 54 Cal.3d at p. 265, 284 Cal.Rptr. 718, 814 P.2d 704 [satisfying the procedural prong of the McHugh standard].) In one respect, this case presents an easier question than CFTC. Unlike the Commodity Futures Trading Commission, the Commission does not have jurisdiction over common law counterclaims, which are traditionally reserved to the courts. (CFTC, supra, 478 U.S. at p. 851, 106 S.Ct. 3245.) The Commission's jurisdiction is limited to statutory housing discrimination claims brought under the FEHA, and these claims are amenable to adjudicative resolution. (See West v. Gibson (1999) 527 U.S. 212, 219-223, 119 S.Ct. 1906, 144 L.Ed.2d 196 [Equal Employment Opportunity Commission's statutory authority to award compensatory damages].) As emphasized in CFTC, the parties' ability to choose between quasi-judicial and judicial proceedings highlights an important aspect of the constitutional analysis. (CFTC, supra, 478 U.S. at p. 855, 106 S.Ct. 3245.) Because both complainants and respondents have the option of adjudicating an FEHA claim in state court (§ 12989, subd. (a)), the decision to invoke [the administrative proceeding before the Commission] is left entirely to the parties and the power of the [state] judiciary to take jurisdiction of these matters is unaffected. ( CFTC, supra, 478 U.S. at p. 855, 106 S.Ct. 3245.) Moreover, we find significant the high court's comparison between arbitration and administrative proceedings in this context. (CFTC, supra, 478 U.S. at p. 855, 106 S.Ct. 3245.) Since our decision in Walnut Creek Manor in 1991, we have had several opportunities to affirm or reaffirm arbitrators' broad discretion to resolve cases and fashion relief free from judicial review. (See, e.g., Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782, 788, 94 Cal.Rptr.2d 603, 996 P.2d 706; Moshonov v. Walsh (2000) 22 Cal.4th 771, 776, 94 Cal.Rptr.2d 597, 996 P.2d 699; Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 372-376, 36 Cal. Rptr.2d 581, 885 P.2d 994; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 Cal. Rptr.2d 183, 832 P.2d 899.) Courts generally may not correct arbitration awards, which are both binding and final, even if an award is based on an arbitrator's factual or legal error. ( Moncharsh v. Heily & Blase, supra, 3 Cal.4th at pp. 8-13, 10 Cal. Rptr.2d 183, 832 P.2d 899; but see Code Civ. Proa, §§ 1286.2, 1286.6 [statutory grounds for vacating or correcting arbitration awards].) In contrast, the Commission's awards, as noted, are subject to judicial review and are enforceable only by a court judgment and order. (See ante, 123 Cal.Rptr.2d at p. 8, 50 P.3d at p. 724.) Were we to hold that the Commission's authority to award emotional distress damages violated the judicial powers clause in light of the judicial option provision (Gov.Code, § 12989), which effectively requires the parties' agreement to resolve the issue either judicially or administratively [6] we would create an unjustified distinction between the authority of arbitrators and that of administrative adjudicators. The Court of Appeal below, however, distinguished CFTC and declined to apply its rationale to this action. The court concluded that deciding the common law counterclaim at issue in CFTC, which the high court deemed an incident to the [Commodity Futures Trading Commission's] primary, and unchallenged, adjudicative function (CFTC, supra, 478 U.S. at p. 854, 106 S.Ct. 3245), was fundamentally different from adjudicating a claim for emotional distress damages, which we held was neither necessary to [the Commission's regulatory] purpose nor merely incidental thereto. ( Walnut Creek Manor, supra, 54 Cal.3d at p. 264, 284 Cal.Rptr. 718, 814 P.2d 704.) In distinguishing CFTC, the Court of Appeal relied, in part, on the high court's observation that the parties cannot by consent cure the constitutional difficulty when a structural principle is implicated. (CFTC, supra, 478 U.S. at p. 851, 106 S.Ct. 3245.) Unlike the dissent (dis. opn., post, 123 Cal.Rptr.2d at pp. 17-18, 50 P.3d at pp. 731-732), we find that the Court of Appeal's interpretation of Walnut Creek Manor was misguided and that its attempt to distinguish CFTC is not persuasive. First, the Court of Appeal failed to give due consideration to the fact that we decided Walnut Creek Manor prior to section 12989's enactment. [7] Thus, comparing Walnut Creek Manor with CFTC, which we find pertinent to the issue of the judicial option provision (§ 12989), is of limited value. Second, although we have discussed CFTC and the significance of a judicial option in administrative proceedings ( McHugh, supra, 49 Cal.3d at pp. 385-386, fn. 58, 261 Cal.Rptr. 318, 777 P.2d 91), the Court of Appeal misconstrues the import of that discussion. When we distinguished CFTC based on the fact that it dealt with a private common law counterclaim rather than a public excess rents claim ( McHugh, supra, 49 Cal.3d at p. 385, fn. 58, 261 Cal.Rptr. 318, 777 P.2d 91), we did not suggest that the parties' consent to resolve the claim administratively would be meaningless for purposes of the judicial powers clause. (Ibid.) Rather, we noted that had the CFTC parties not consented to resolve administratively the common law counterclaim, which is a claim typically reserved for federal article III courts (as opposed to a reparations claim), the Commodity Futures Trading Commission's resolution of the matter would have violated the federal judicial powers clause. ( McHugh, supra, 49 Cal.3d at p. 385, fn. 58, 261 Cal.Rptr. 318, 777 P.2d 91.) Moreover, the Court of Appeal's emphasis on the statement that the parties cannot by consent cure the constitutional difficulty when a structural principle is implicated (CFTC, supra, 478 U.S. at p. 851,106 S.Ct. 3245) is somewhat misleading. The high court did not state that the parties' consent was irrelevant; rather, it observed that in that context, notions of consent and waiver cannot be dispositive. (Ibid., italics added.)