One of the frustrations for parties forced to arbitrate their claims rather than pursue them in court is the unavailability of a direct route of appeal from the arbitration award. Generally, the only way to get out from under an adverse award is to petition the superior court to vacate the award (Code Civ. Proc., § 1285 et seq.), and then only on very limited grounds such as fraud, corruption, or misconduct by the arbitrator, generally unrelated to the substantive merits of the decision. If you’re on the other side — i.e., you were the prevailing party in the arbitration — you can take some comfort from the fact that if the…
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The standard of review on appeal regarding enforceability of arbitration clauses
As I’ve mentioned before, the standard of review is not always clear. One sometimes has to “drill down” past the obvious, and the “abuse of discretion” standard is full of nuance. The parties’ briefs may even fight over which is the correct standard of review to apply, or the cases may be split on the issue. Sometimes, where the standard is in dispute, it doesn’t matter, because the outcome is the same under either standard. There is no question as to what standard of review applies in yesterday’s decision in Carlson v. Home Team Pest Defense, Inc., case no. A142219 (1st Dist., August 17, 2015), but the case nonetheless has a lesson in…
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Arbitration appeals part of new AAA rules
Southern California Appellate News reports that the American Arbitration Association has released optional rules that will allow appellate review within the arbitration process for arbitrations conducted under AAA rules. From the AAA press release: AAA President and CEO India Johnson explains that traditionally, an arbitration award is set aside by a court only where narrowly-designed statutory grounds exist. These new rules provide for an appeal within the arbitration process and are consistent with the objective of an expedited, cost-effective and just appellate arbitral process. Ms. Johnson states, “The appellate arbitral panel called for under the new rules applies a standard of review more expansive than that allowed by existing federal…
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Supreme Court denies review in Burlage v. Superior Court
Image via Wikipedia The Supreme Court denied review today in Burlage v. Superior Court, leaving intact the decision that, by speculation of some (including yours truly), will increase the number of legal challenges to arbitration decisions. I won’t go so far as to say that it will “open the floodgates,” but it certainly opens an avenue to judicial review that many would not have tried before the decision was published. Expect to see many challenges that assert, though not in so many words, that the legal error that occurred in their case is grounds for vacating an award if the error led the arbitrator to exclude evidence. The challenge for…
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Arbitration challenges get a big boost — but maybe not for long
If you’re a litigation or appellate lawyer, you’ve probably already read about Burlage v. Superior Court, case no. B211431 (2d Dist. Oct. 20, 2009 [opinion after rehearing]), and you’re probably not surprised to learn that the petitioners filed their petition for review in the California Supreme Court yesterday. The case had petition for review written all over it: a contentious area of the law (arbitration), a split decision, amicus involvement, lots of attention in the legal community, and heavy-hitter appellate counsel (full disclosure: I know and have worked with one of the attorneys, Ventura appellate ace Wendy Lascher, who represents the Burlages). Other bloggers have reported the case in detail…
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A Dilemma for Some Defendants Who Seek to Arbitrate
It’s a long-held rule in California that a defendant sued on a contract may recover attorney fees pursuant to a provision in the contract even if the defendant prevails on a theory that he was not a party to the contract or that the contract is nonexistent, inapplicable, invalid or unenforceable. The rule exists in order to further the purpose of Civil Code section 1717, which is to make unilateral fee provisions reciprocal. If a defendant could not recover fees after successfully defending on these grounds, then the ability to recover fees would be limited to a prevailing plaintiff, which would frustrate the the public policy of mutuality underlying the…
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Federal Judicial Review of Arbitration Decisions
I’m pretty sure that Judge Bea didn’t intend to give me a chuckle in the first paragraph of his opinion in Collins v. D. R. Horton, Inc., case no. 05-15737 (9th Cir. Sept. 24, 2007). But he did. Appellants contend their motion [for summary judgment] should have been granted because the arbitrators manifestly disregarded the law when deciding not to apply offensive non-mutual collateral estoppel because judicial review of an arbitration award under the Federal Arbitration Act (“FAA”) is more limited than judicial review of a district court judgment. We hold the arbitrators did not manifestly disregard the law because no “well defined, explicit, and clearly applicable” law existed to…
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Arbitration Agreement May Be Invoked by Non-Parties Sued as Alter Egos of a Party to the Agreement
A contract contains an arbitration provision. Plaintiff sues you on the contract, even though you are not a party, on the ground that you are an alter ego of the corporation that is a party to the agreement. Can you invoke the arbitration provision even though you are not a party to the contract? Yes, says the Court of Appeal in Rowe v. Exline, case no.A116463 (1st Dist. July 31, 2007). After all, reasons the court, the whole theory behind alter ego liability is that the corporation and the alter ego are one in the same. Since the corporate party is entitled to the benefit of the provision, so must…
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Go Ahead, Challenge that Arbitration Provision!
The arbitration provision of yet another giant is struck down. See this How Appealing post for relevant links and a summary of a Washington Supreme Court decision voiding Cingular’s arbitration provision in its subscriber agreement. After recent decisions in the Ninth Circuit and California’s First District Court of Appeal voiding arbitration provisions, which I blogged about here, I suspect there may be a few lawyers scattered around the West pulling late nights poring over their clients’ arbitration provisions . . . and perhaps a few plaintiffs’ lawyers tearing up their arbitration demands and drafting complaints.
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American Express Waives Arbitration through Settlement Misrepresentations
Remember that case in contracts class about whether promising to do something you were already going to do constituted consideration for a promise? The lawyers for American Express in the First District Court of Appeal case of Aviation Data, Inc. v. American Express Travel Related Services Co., Inc., case no. A111602 (July 6, 2007) apparently didn’t remember that day in contracts class. So they promised during class action settlement negotiations to implement a computer program in exchange for a release of claims . . . even though AmEx had already been using the program for two years. Then, as part of proceedings for court approval of the settlement, AmEx made…
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An Arbitrator with Chutzpah
It takes some cheek for an arbitrator to reform a collective bargaining memorandum of understanding (“MOU”) between a state agency and an employee bargaining unit when the MOU has already been approved by the legislature pursuant to the Dills Act. And its reversible error, of course. In Dept. of Personnel Administration v. Calif. Correctional Peace Officers Assn., case no. C051636 (June 29, 2007), the Third District Court of Appeal affirms the trial court’s order vacating the arbitration award. Such employment agreements must be submitted to and approved by the legislature. By reforming the agreement to conform to her findings regarding the parties’ intent, thus changing the provisions approved by the…
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Waiving Issues in Arbitration
Keep a close watch on those arbitration arguments, especially as they relate to the scope of the arbitrator’s power as defined by the arbitration agreement. That’s the lesson of J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc., case no. B194926 (June 29, 2007), in which the Second District Court of Appeal holds that Nippon waived the contractual limitation on the power of the arbitrator by its conduct during the arbitration, and thus may not petition to vacate the award on the ground the arbitrator exceeded his powers. The agreement stated that the arbitrator “shall not have the power to change, alter or modify” any term of the parties’ agreement. …
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Great Lawyers Can Write Unenforceable Arbitration Agreements
I’m beginning to wonder if writing the perfect arbitration provision is something like understanding the rule against perpetuities. You all remember that case from torts class, don’t you? The court holds that an attorney can’t be liable for malpractice related to the rule against perpetuities because no one understands the rule against perpetuities. Hence, the attorney could not have violated the standard of care. A little over a month ago, the Ninth Circuit ruled in Davis v. O’Melveny & Myers, case no. 04-56039 (9th Cir. May 14, 2007) that the arbitration provision in the employment contract of a prominent, powerful L.A.-based law firm was unenforceable. Not just unenforceable, but “shock…