Court Opinion

ID: 9558669
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:15:11.302648+00
Date Added: 2024-06-11T09:09:30.599350
License: Public Domain

KENNARD, J., Dissenting.
In this case, defendant Cigna Healthplans of California sought arbitration of plaintiffs’ claims against it, including a statutory claim under the Consumers Legal Remedies Act (CLRA; Civ. Code, § 1750 et seq.). Defendant, however, failed to produce any competent evidence to meet its burden of establishing the existence of an agreement to arbitrate plaintiffs’ claims. Accordingly, the trial court should have denied defendant’s petition for arbitration.
Because defendant failed to prove the existence of an arbitration agreement, it is impossible to know the scope of the alleged arbitration agreement and whether it was intended to include plaintiffs’ CLRA claim. The majority nonetheless decides the arbitrability of CLRA claims, concluding that such claims are arbitrable to the extent they seek damages but not to the extent *1104they seek injunctive relief. I do not join the majority’s advisory opinion on the question. Instead, I would await a case in which the question is clearly presented on the record.
The majority also appears to suggest that parties to an arbitration agreement may not use a choice of law provision to restrict the scope of arbitrable claims. I disagree. Rather than let the majority’s suggestion go unquestioned and potentially mislead courts in the future, I explain the basis of my disagreement below.
I
Plaintiffs are a mother and son who are Medi-Cal members. Defendant Cigna Healthplans of California (Cigna) offers HMO-type medical insurance plans to Medi-Cal members, for which Medi-Cal pays the cost. It appears that plaintiff mother joined Cigna’s plan in 1991. Her son was injured during birth in December 1993. Plaintiffs brought this action against Cigna, the hospital, and the son’s doctors, alleging medical malpractice and seeking damages. Plaintiffs also allege that Cigna violated the CLRA by making false and misleading statements concerning the quality of medical care Cigna provides to Medi-Cal members; they seek damages and injunctive relief for this alleged CLRA violation. Cigna petitioned for arbitration, claiming there was an arbitration provision in the contract between it and the State of California governing the Medi-Cal health plan to which plaintiffs belonged.
Cigna never produced a copy of the alleged arbitration agreement, however. Instead, it initially submitted with its arbitration petition, without any foundational or authenticating testimony, a copy of an “Evidence of Coverage and Disclosure Form” for employees (not Medi-Cal recipients) covered by employee group health insurance plans it offers. That document describes a procedure for arbitrating disputes relating to employee health benefits, but it also notes in bold face: “This Combined Evidence of Coverage and Disclosure Form constitutes only a summary of the Agreement. The Group Services Agreement must be consulted to determine the exact terms and conditions of coverage.” Cigna also submitted both a 1985 Medicare (not Medi-Cal) Supplement plan brochure with a similar arbitration description and an undated “Cigna Healthplan Disclosure Form” for employee group health plans describing a provision for arbitration.
In the trial court, Cigna later submitted with its reply in support of arbitration, but again without any foundational or authenticating testimony, two versions of a summary of benefits for Medi-Cal patients that were included in documents produced by plaintiffs. The summaries themselves are undated, but other documents and certain notations suggest that one was *1105given to plaintiff mother in January 1994 and the other in December 1994. The January 1994 summary makes no mention of arbitration. The December 1994 summary states that arbitration applies only to “any controversy . . . arising from a medical practice claim,” apparently thereby excluding from arbitration CLRA claims that, like plaintiffs’, are based on false advertising. It also states that the arbitration shall be “governed by the provisions of the California Code of Civil procedure [szc].” Cigna never produced the underlying agreements between it and the State of California that these documents purported to summarize.
The trial court ordered arbitration of plaintiffs’ malpractice claim but not their CLRA claim. The Court of Appeal affirmed, holding that the CLRA claim was not arbitrable because an arbitrator lacks authority to grant and enforce injunctive relief intended to benefit the general public. The majority agrees that plaintiffs’ CLRA claim is not arbitrable to the extent it seeks injunctive relief but concludes that it is arbitrable to the extent it seeks damages.
II
Arbitration is a creature of contract. “[Ajrbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration.” (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 943 [115 S.Ct. 1920, 1924, 131 L.Ed.2d 985].) “ ‘In cases involving private arbitration, “[t]he scope of arbitration is . . .a matter of agreement between the parties” [citation], and “ ‘[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.’ ” [Citations.]’ ” (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 830 [88 Cal.Rptr.2d 366, 982 P.2d 229].)
Accordingly, the question of whether the parties have agreed to arbitrate, the scope of the claims they have agreed to arbitrate, the methods by which the arbitration is to be conducted, and the remedies available to the arbitrator all depend upon the terms of the agreement between the parties. Without knowing the content of the agreement between the parties, it is impossible to answer the question of whether the parties have agreed to arbitrate a particular claim.
Here, the record before us contains no substantial evidence of any arbitration agreement between the parties. Cigna, while insisting on its alleged right to arbitrate plaintiffs’ claims, never produced any competent evidence of the alleged arbitration agreement. It failed to produce its alleged agreement with the State of California establishing its medical plan for Medi-Cal members. Some of the various benefits summaries it produced do not *1106describe Medi-Cal plans; of the two that do, one makes no mention of any arbitration agreement and the other describes an arbitration agreement excluding entirely CLRA claims like those of plaintiffs. All of the summaries were produced without any foundational or authenticating testimony stating that the summaries accurately described the terms of an arbitration agreement to which plaintiffs are subject or stating the effective date of any such arbitration agreement.
Cigna’s evidentiary failure alone should have doomed its petition for arbitration. A court may not order arbitration where, as here, there is no substantial evidence of the existence of a valid written agreement to arbitrate. (Code Civ. Proc., § 1281.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 406, 409 [58 Cal.Rptr.2d 875, 926 P.2d 1061].)
The majority does not dispute the absence of any arbitration agreement between the parties. It nonetheless decides the abstract and hypothetical question of whether, if two parties agree to arbitrate CLRA claims and the agreement is subject to the United States Arbitration Act (USAA; 9 U.S.C. § 1 et seq.), the USAA allows California to forbid arbitration of CLRA claims. In doing so, the majority renders an advisory opinion. Although its decision that claims for injunctive relief under the CLRA are nonarbitrable may be correct, I would decide the question only in a case where it is present on the record before us.
Ill
In the course of its decision, the majority appears to suggest that parties to an arbitration agreement may not use a choice of law provision to restrict the scope of arbitrable claims. I disagree.
Arbitration is a matter of contract. Accordingly, the only claims that may be arbitrated are those the parties have identified in their arbitration agreement. In turn, there are many methods by which the parties can identify the claims they have agreed to arbitrate. For example, they may specify the arbitrable claims directly as those arising out of a particular transaction or event, those arising within a particular time period, or those based on a particular legal theory. Or the parties may identify the arbitrable claims indirectly by choosing a body of private arbitration rules that specifies the scope of arbitrable claims. In doing so, they incorporate by reference the claims limitations determined by those rules. The parties may also indirectly specify the scope of arbitrable claims by including a choice of law provision that selects a body of law limiting the arbitrability of certain claims. Such a choice of law provision, if the parties so intend, incorporates by reference whatever limits on the scope of arbitrability are established by the chosen body of law. (See generally, Mastrobuono v. Shearson Lehman Hutton, Inc. *1107(1995) 514 U.S. 52 [115 S.Ct. 1212, 131 L.Ed.2d 76] [examining an arbitration agreement’s choice of law provision and its provision adopting a body of private arbitration rules to determine whether parties intended to exclude a particular form of remedy from the arbitration].)
Thus, in this case, if an arbitration agreement does exist between the parties, determining whether plaintiffs’ CLRA claims are arbitrable would involve the following inquiry: Does the parties’ arbitration agreement include CLRA claims within the scope of an express specification of the claims subject to arbitration? Have the parties incorporated by reference in their agreement an arbitration rule authorizing or limiting arbitration of CLRA claims? Have the parties incorporated by reference a body of law restricting arbitration of CLRA claims and, if so, did the parties thereby intend to exclude CLRA claims from arbitration?
Only after it is determined that the parties have in some manner authorized arbitration of CLRA claims and have not chosen a body of law restricting arbitration of those claims would it be necessary to reach the further questions addressed by the majority: Whether California law restricts or prohibits arbitration of CLRA claims notwithstanding the intent of the parties to arbitrate those claims and, if so, whether the USAA permits California to do so.
The majority appears to take a somewhat different view of the use of a choice of law provision to shape the contours of an arbitration agreement. The majority opinion may be read to suggest that section 2 of the USAA, which provides as a matter of federal law that arbitration agreements are generally enforceable according to their terms notwithstanding any contrary provision of state law, forbids the parties from using a choice of law provision to limit the scope of an arbitration agreement. (Maj. opn., ante, at pp. 1077-1078.) The two United States Supreme Court decisions the majority cites, Doctor’s Associates, Inc. v. Casarotto (1996) 517 U.S. 681 [116 S.Ct. 1652, 134 L.Ed.2d 902] and Volt Info. Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468 [109 S.Ct. 1248, 103 L.Ed.2d 488], do not support this proposition. At issue in Doctor’s Associates was a state law applying only to arbitration agreements that would have precluded enforcement of the parties’ arbitration clause, contrary to the intent of the parties to arbitrate their disputes. The high court held that section 2 of the USAA preempted that state law. No choice of law provision was at issue. (Doctor’s Associates, Inc. v. Casarotto, supra, 517 U.S. at pp. 687-688 [116 S.Ct. 1652, 1656-1657].) In Volt, the parties to an arbitration agreement had agreed that California law, rather than the federal law of the USAA, should govern their arbitration procedure. The high court held that the USAA did not preclude the parties from choosing to have their arbitration governed by California’s *1108arbitration law rather than by the procedures of the USAA. (Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at pp. 476-479 [109 S.Ct. at pp. 1254-1256].)
These two cases stand only for the proposition that the USAA preempts state law from restricting the scope of arbitrable claims contrary to the intent of the parties as manifested in the arbitration agreement. Both those cases acknowledge that the purpose of the USAA is only to “ ‘ensur[e] that private agreements to arbitrate are enforced according to their terms.’ ” (Doctor’s Associates, Inc. v. Casarotto, supra, 517 U.S. 681, 688 [116 S.Ct. 1652, 1657], quoting Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. 468, 479 [109 S.Ct. 1248, 1256].) “[P]arties are generally free to structure their arbitration agreements as they see fit.” (Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at p. 479 [109 S.Ct. at p. 1256].) “[T]he [USAA] does not . . . prevent parties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement [citations]. It simply requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms.” (Id. at p. 478 [109 S.Ct. at p. 1255].)
Accordingly, when a procedural or substantive limitation on arbitration is voluntarily adopted by the parties through a choice of law provision, and is not imposed unwillingly on them by a state, judicial enforcement of the parties’ freely chosen limitation is fully consistent with the USAA. In that situation, a court is merely enforcing the arbitration agreement “according to [its] terms.” (Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. 468, 479 [109 S.Ct. 1248, 1256].) Otherwise stated, under the USAA parties seeking to exclude a particular class of claims from arbitration under their arbitration agreement are free to do so either by expressly describing those claims in the arbitration agreement or by using a choice of law clause to incorporate by reference a law prohibiting arbitration of those claims.
Conclusion
Because the record contains no arbitration agreement between the parties, I would reverse the judgment of the Court of Appeal and instruct it to vacate the trial court’s partial order of arbitration and to remand for further proceedings.