THE APPELLATE COURT REVISTS BENJAMIN, WEILL & MAZUR V. KORS

A few months ago or last December (see Arbitration Insight No. 16), I discussed Benjamin, Weill & Mazer v. Kors (2010) 189 Cal.App.4^th 126 (BW&M), which held that part-time lawyer-arbitrators should disclose their legal involvement in business interests that are similar to the facts of the matter to be arbitrated. In BW&M, one of the arbitrators in a mandatory fee arbitration (MFA) failed to advise the aggrieved former client that he was representing a large law firm in a case before the California Supreme Court involving an attorney fee dispute and was also representing another major law firm in an action for attorney malpractice and related torts.

The BM&W decision was inconsistent with Haworth v. Superior Court (2010) 50 Cal.4^th 372 which had held only two months earlier that the appearance-of-partiality standard concerning arbitrator recusal should not be broader than the same standard applicable to judicial recusal. More specifically, Haworth found, in part, that “The arbitrator cannot reasonably be expected to identify and disclose all events in the arbitrator’s past, including those not connected to the parties, the facts, or the issues in controversy, that conceivably might cause a party to prefer another arbitrator.” (At p. 394.)

BW&M distinguished Haworth because, it reasoned, an arbitrator’s non-disclosures of concurrent business interests similar to a party’s interests could never occur in judicial matters, as they do private arbitration. Thus, it held that arbitrators must disclose their ties to the business world “to the extent these relationships are substantial and involve financial considerations creating an impression of possible bias …” What BW&M failed to recognize is that sitting judges, although not practicing law, may also have commercial ties, such as stock or building ownership or an interest in a business, that may be both substantial and factually similar to the cases before them but, under present appearance-of-partiality standards, need not be disclosed. Therefore, upon analysis, BW&M’s stated need for more disclosures in arbitrations than in the courts does not stand up to scrutiny.

Shortly after issuing the above decision, the BW&M court, on its own motion, ordered a rehearing as to two issues: whether the trial court had improperly merged a MFA dispute into a binding California Arbitration Act (CAA) proceeding and whether the disclosure requirements under the CAA are applicable to non-binding MFA arbitrations. The parties’ additional briefing (which concluded in December 2010) gives the appellate court an opportunity to revise its original holding, which surely would have caused the Supreme Court to either depublish it or grant a hearing to review its controversial analysis.

 

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

 

Copyright Michael D. Marcus, February 2011

 

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

 

 

MEDIATION CONFIDENTIALITY OVERVIEW

Because of the recent Cassell v. Superior Court (2011) 51 Cal.4^th 113 decision, it is timely and appropriate to review all of the Supreme Court’s rulings on mediation confidentiality.

Mediators, pursuant to Evidence Code sections 1119 and 1121, may not report attorney misconduct or bad faith to jurists who have the underlying cases on their calendars. (Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4^th 1.) Foxgate was the first of the Court’s cases which held that mediation confidentiality is to be strictly interpreted.

Mediation confidentiality extends to all writings, including exhibits, prepared for mediation. (Rojas v. Superior Court (2003) 33 Cal.4^th 407.) For example, a document made for mediation that summarizes a plaintiff’s damages is protected while a summary of the same damages prepared by a company bookkeeper during the course of the business’s operation is not.

To be enforceable, a mediation settlement must include a “direct statement to the effect that it is enforceable or binding”; in other words, the writing “must directly express the parties’ agreement to be bound by the document they sign.” (Fair v. Bakhtiari (2006) 40 Cal.4^th 189.)

A potential due process violation is the only judicially crafted exception to confidentiality in the absence of legislative action. (Simmons v. Ghaderi (2008) 44 Cal.4^th 570.)

All mediation discussions are confidential; thus, clients cannot sue their attorneys for anything said or done in or pursuant to mediation, even if no one else was present during that communication or act. (Cassel v. Superior Court, supra, 51 Cal.4^th 113.) Again, the Court reminded that only the Legislature can create inroads to mediation confidentiality, the only exception being when strict interpretation would produce an absurd result.

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

 

Copyright Michael D. Marcus, May 2011

 

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

 

 

 

FACEBOOK AND FEDERAL MEDIATION CONFIDENTIALITY

If you saw “The Social Network,” skip this introduction; if not, and you’ve been hiding in a cave for the last few years, be advised that the Winklevoss twins and a third party sued Mark Zuckerberg, the Facebook founder, for allegedly stealing the concept from them. In turn, Facebook sued the Winklevosses. A California Northern District Court judge ordered everyone into mediation, during which the participants signed a confidentiality agreement stipulating that all statements made during the process were privileged, non-discoverable and inadmissible “in any arbitral, judicial, or other proceeding.” During that mediation, the parties entered into a settlement with the Winklevosses agreeing to give up their competing company for cash and a piece of Facebook. Facebook filed a motion seeking to enforce the settlement after negotiations over the form of the final deal documents fell apart. The Winklevosses argued that the settlement agreement was unenforceable because it lacked certain material terms and had been procured by fraud.

The district court found the settlement agreement enforceable, in part, because what was said and not said during the mediation was excluded under the Northern District Court’s Alternative Dispute Resolution local rule 6-11, which it read to create a “privilege” for “evidence regarding the details of the parties’ negotiations in their mediation.” The resulting appeal in Facebook v. Winklevoss (9th Cir. 2011) nos. 08-16745, 08-16873, 09-15021, 2011 U.S. App. LEXIS 7430 provides an opportunity to compare the status of mediation confidentiality in California’s state courts and the Ninth Circuit.

Chief Judge Alex Kozinski, writing for the unanimous court in Facebook, affirmed the exclusion of the alleged mediation misrepresentations but with reasoning that differs from the California Supreme Court’s approach to the situation. Because there are no federal rules or statutes concerning mediation confidentiality, each of California’s four district courts have adopted their own approaches to the matter. Facebook undercuts the effectiveness of those rules by finding “It’s doubtful that a district court can augment the list of (federally created) privileges by local rule.” Having created this ambiguity, the Court then sidestepped the issue it had just created and held, in any event, that the local rules did not apply because a private mediator had been used.

Facebook then found that the district court had been right to exclude the proffered evidence because the parties’ confidentiality agreement provided that all statements made during the course of the mediation were privileged settlement discussions and inadmissible for any purpose, including in any legal proceeding. Accordingly, Facebook affirmed that the Winklevosses had been properly prohibited from introducing evidence of any alleged mediation misrepresentations.

Facebook unambiguously holds that parties in federal proceedings, when involved in private mediations, can negotiate for the total confidentiality of mediation communications. Less clear is the status of confidentiality where the mediation has been conducted by a court-appointed person. Added to this confusion is that each of California’s four district courts has its own approach to confidentiality. (For example, in commentary 6-12 to its local rules, the Northern federal district court notes that absolute confidentiality, regardless of the circumstances, may be excused in “limited circumstances in which the need for disclosure outweighs the confidentiality of a mediation,” such as threats of death or substantial bodily injury; use of the mediation to commit a felony and the right to cross-examination in a quasi-criminal proceeding.) In contrast,  the mediation communications in Facebook would be absolutely confidential in a California state court whether the mediator had been privately retained or court appointed and whether or not the parties had agreed in writing to apply confidentiality to all court proceedings. For the moment, therefore, the California courts are well ahead of their federal counterparts.

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.

1900 Avenue of the Stars, Suite 250

Los Angeles, California 90067

(310) 201-0010

 

Copyright Michael D. Marcus, April 2011

 

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

BE CAREFUL WHAT YOU PLEAD

This month’s Mediation Message is about the conclusive effect of statements in pleadings, which is relevant to mediations because the consequences of careless language in complaints and answers can have an impact on settlement discussions.

The well-recognized concept of judicial admissions was raised anew in Dang v. Smith (2010) 190 Cal.App.4th 646 which reminded that “statements in a pleading are always admissible against the pleader to prove the matter asserted—as is any other statement by a party.” Such statements are “‘a conclusive concession of the truth of [that] matter,’ thereby ‘removing it from the issues.’ (Citation.) In other words, a pleaded fact is conclusively deemed true as against the pleader.” (Id. at p. 657.)

The earlier case of Valerio v. Youngquist Construction (2002) 103 Cal.App.4th 1264 noted that an admission in a pleading (in that instance, an answer) is not evidence; instead “It is a waiver of proof of a fact by conceding its truth, and it has the effect of removing the matter from the issues. Under the doctrine of ‘conclusiveness of pleadings,’ a pleader is bound by well pleaded material allegations or by failure to deny well pleaded material allegations. (Citations.)” ¶ (In the case of a judicial admission) “’the facts alleged must be assumed to exist. Any finding adverse to the admitted facts drops from the record, and any legal conclusion which is not upheld by the admitted facts is erroneous. (Citations.)’ ‘When allegations in a complaint are admitted by the answer (a) no evidence need be offered in their support; (b) evidence is not admissible to prove their untruth; (c) no finding thereon is necessary; (d) a finding contrary thereto is error.’” (Id. at p. 1271; see also Walker v. Dorn (1966) 240 Cal.App.2d 118, 120 which discussies the distinction between evidentiary and judicial admissions.)

Judicial admissions can be contradicted by amendment “provided the request to do so is supported by a ‘showing … of mistake or other excuse for changing the allegations of fact.’” (Dang v. Smith, supra, at p. 659, fn. 8.)

Dang and its predecessors remind litigators to be careful what they allege in their pleadings because careless wording can come back to haunt the unwary.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, March 2011

Please visit my website at www.marcusmediation.com for information about my mediation and arbitration background and experience. Copies of my previous Mediation Messages and Arbitration Insights are available by going to the articles link on the website.

THE COURT STAYS THE COURSE ON MEDIATION CONFIDENTIALITY

In Cassel v. Superior Court (2011) S178914, 2011 DJDAR 658, the California Supreme Court was faced with two clear options – continue to hold that mediation confidentiality is to be liberally construed despite the surrounding circumstances or find that confidentiality should not be used to shield negligent attorneys from malpractice suits. The Court chose to stay the course and held that mediation confidentiality has few exceptions.

In Cassel, the petitioner filed a complaint against his former attorneys for breaching their professional, fiduciary and contractual duties because they had used allegedly bad advice, deception and coercion at a mediation to force him to settle the case. Petitioner wanted to use his conversations with the attorneys immediately preceding and at the mediation to prove his case. The trial court ruled that discussions between petitioner and the lawyers two days and one day before the mediation, in which mediation strategy and settlement amounts had been discussed, and all communications and conduct at the mediation between petitioner and the lawyers, were inadmissible. A majority of the Court of Appeal granted mandamus relief, reasoning that mediation confidentiality statutes are not intended to prevent a client from using communications with his or her lawyer outside the presence of all other mediation participants in a legal malpractice case against that lawyer.

Cassel began with a reminder that the Legislature had provided only express waiver by the participants as an exception to mediation confidentiality and that the only judicially crafted exceptions were where “due process is implicated” and “literal construction would produce absurd results, thus clearly violating the legislature’s presumed intent.” The Court also reviewed Foxgate Homeowners’ Association, Inc. v. Bramalea California, Inc. (2001) 26 Cal.4^th 1; Rojas v. Superior Court (2003) 33 Cal.4^th 407; Fair v. Bakhtiari (2006) 40 Cal.4^th 189 and Simmons v. Ghaderi (2008) 44 Cal.4^th 570 which held, in their entirety, that confidentiality  has been broadly applied.

With Foxgate, Rojas, Fair and Simmons as a foundation, Cassel held that the purpose of Evidence Code section 1119, subdivision (a), which provides that “[n]o evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation … is admissible or subject to discovery …” extends to all oral communications at a mediation, even if they only take place between parties and their own attorneys.

Cassel further holds that petitioner’s discussions with his attorneys before the mediation concerning mediation strategy and settlement were confidential because section 1119, subds. (a) and (b) apply to all utterances and writings  “for the purpose of, in the course of, or pursuant to, a mediation.” Instead of attempting to create a bright line test for establishing when a pre or post-mediation utterance or writing is mediation related, and thus confidential, Cassel simply found that petitioner’s discussions with his attorneys came within the statute because they “concerned the settlement strategy to be pursued at an immediately pending mediation … (and) were closely related to the mediation in time, context, and subject matter …”

Cassel noted that the mediation confidentiality statutes, unlike Evidence Code section 958, which eliminates confidentiality protections otherwise afforded by the attorney-client privilege in suits between clients and their lawyers, have no exception for legal malpractice actions. The Court reasoned that the attorney-client and mediation confidentiality statutes achieve separate and unrelated purposes; the former “allows the client to consult frankly with counsel on any matter, without fear that others” may use these confidences whereas the latter “serve[s] the public policy of encouraging the resolution of disputes by means short of litigation.”

The Supreme Court then discussed the non-applicability of the two judicially crafted exceptions to mediation confidentiality to the instant facts. Due process was not a factor because “the mere loss of evidence” in a lawsuit for civil damages does not implicate a fundamental interest. Nor did the result produced by applying the plain terms of the statutes to the facts of the case create a result that was absurd or clearly contrary to legislative intent.

In sum, Cassel reversed the Appellate Court judgment and left petitioner with the inability to introduce evidence of his attorneys’ alleged misconduct immediately prior to and at the mediation. For the short term, Cassell’s extensive analysis of mediation confidentiality should foreclose further lower court attempts to carve exceptions to such confidentiality. Its impact, however, may not be lengthy because, while the Court chose not to take the fork in the road that would allow clients to use communications with their attorneys at mediations in subsequent malpractice actions, it unambiguously invited the Legislature to reconsider that issue. “Of course, the Legislature is free to reconsider whether the mediation confidentiality statutes should preclude the use of mediation-related attorney-client discussions to support a client’s civil claims of malpractice against his or her attorneys.” The Court’s less than subtle invitation may be hard for the Legislature to ignore; especially, if it also considers Justice Ming Chin’s reluctant concurrence that shielding attorneys from being held accountable for their incompetent or fraudulent actions during mediation “is a high price to pay to preserve total confidentiality in the mediation process.”

Judge Michael D. Marcus (Ret.)

ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, January 2011

A YEAR-END REVIEW

I thought it would be timely to summarize the mediation topics in alphabetical order that I’ve written about this year and also provide a heads up about an important development in mediation confidentiality that will take place early in 2011. Before discussing them, thank you for your support in helping me be honored by the Daily Journal for the third time in the last four years as a Top California Mediator-Arbitrator.

Compelling mediator testimony at a subsequent proceeding – Rinaker v. Superior Court (1998) 62 Cal.App.4th 155 holds that a mediator can be compelled to testify about a witness’s statements at mediation who has testified inconsistently against a juvenile in a subsequent proceeding. The federal counterpart to Rinaker is Olam v. Congress Mortgage Company (N.D. Cal. 1999) 68 F.Supp.2d 1110 which holds that a mediator’s testimony can be compelled in a civil proceeding to establish whether a defaulting party was competent to enter into a settlement at the mediation that the opposing party is now seeking to enforce. (Mediation Message no. 56, January 2010)

Enforcing mediation settlements and the use of mediator declarations – Radford v. Shehorn (2010) 187 Cal.App.4th 852, 857 holds that a party cannot use a mediator’s declaration, which the opposing party had not agreed to, in a dispute about the contents of a written settlement agreement because that declaration violates “mediation confidentiality statutes.” (Mediation Message no. 63, September 2010.)

Enforcing mediation settlements and the waiver of mediation confidentiality – To enforce a settlement achieved through mediation, the parties must have waived mediation confidentiality in the settlement. The effective, operative wording for that waiver should read, “It is the intent of the parties, pursuant to Evidence Code sections 1122(a)(1) and 1123(b) and Code of Civil Procedure section 664.6, that all of the terms of this agreement may be disclosed to a court of law and shall be enforceable and binding upon them in a court of law.” (Mediation Message no. 62, August 2010.)

Essential documents at mediation – Besides bringing to mediations your wits, clients and people with authority to settle the case, attorneys are strongly advised to bring the entire file and a long form settlement agreement. (Mediation Message no. 58, March 2010.)

Expedited Jury Trial Act – The provisions of the Expedited Jury Trial Act (Code of Civil Procedure §§ 630.01 – 630.10) and the enabling Rules of Court (Rules 3.1545 et seq.), which go into effect on January 1, 2011, are summarized. (Mediation Message no. 64, November 2010.)

Federal mediation rules regarding confidentiality – Each of the federal districts in California have their own rules regarding mediation confidentiality, with the Northern District’s being the most elaborate. (Mediation Message no. 55, December 2009.)

Supreme Court may shake up mediation confidentiality – The Court heard argument in November 2010 in two consolidated cases (Cassel v. Superior Court (2009) 179 Cal.App.4th 152 and Porter v. Wyner (2010) 183 Cal.App.4th 949) regarding the scope of mediation confidentiality where parties at mediations want to use communications with their attorneys in those proceedings in subsequent litigation against the same attorneys for claims of legal malpractice and breach of fiduciary duty. The decision, which will be issued early in 2011, must resolve the conflict between a strict application of mediation confidentiality and the potentially negative impact of such an application on consumer protection. (Mediation Message nos. 57 and 60, February and May 2010.)

Timing of a mediation is critical – The factors to be considered in deciding when to conduct a mediation are analyzed. (Mediation Message no. 59, April 2010.)

Trial courts have limited power to order mediations – State trial courts only have the power to order parties to mediation where the amount in controversy does not exceed $50,000 for each plaintiff. (Rule of Court 3.891, subdivision (a)(1).) (Mediation Message no. 61, July 2010.)

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, December 2010

APPEARANCE-OF-PARTIALITY DISCLOSURES BY ARBITRATORS

Two very recent cases discuss the parameters of an arbitrator’s obligation to disclose “matters that could cause a person aware of the facts to reasonably entertain a doubt that the … neutral arbitrator would be able to be impartial.” (Code of Civil Procedure section 1281.9, subdivision (a).) Haworth v. Superior Court (2010) 50 Cal.4^th 372 is important because it holds that the above appearance-of-partiality standard concerning arbitrator recusal should not be broader than the same standard applicable to judicial recusal. Benjamin, Weill & Mazer v. Kors (2010) A125732 (BW&M), decided just last week, is more fact specific, holding that part-time lawyer-arbitrators should disclose their legal involvement in business interests that are similar to the facts of the matter to be arbitrated.

In Haworth, the trial court vacated an arbitration award for a doctor involving  a female patient’s claim that the doctor had been negligent in performing plastic surgery to her lip because the arbitrator, a retired judge, had failed to disclose that, 10 years earlier, he had been publicly censured for making statements to court employees, which created “an overall courtroom environment where discussion of sex and improper ethnic and racial comments were customary.” The Supreme Court held that the arbitrator was not required to disclose the censure because nothing in its background facts would suggest to a reasonable person that the retired judge could not be fair to female litigants. Moreover, “None of the conduct or comments for which (the) judge … was censured involved litigants or occurred in the courtroom while court was in session.” (Id. at p. 390.) And, “Unlike cases in which evidence of gender bias has required disqualification of a judge, the subject matter of this arbitration was not such that the circumstance of gender was material, or that gender stereotyping was likely to enter into the decision made by the arbitrators.” (Id. at p. 391.)

In finding that a reasonable person would not entertain a doubt about the former judge’s impartiality as an arbitrator, Haworth acknowledged that, while some of the policies applicable to judicial disclosure may differ from those applicable to arbitrator disclosure, “we find no reason to interpret the appearance-of-partiality rule more broadly in the context of arbitrator disclosure than in the context of judicial recusal … It may be appropriate for an arbitrator to resolve doubts in favor of disclosure, but the arbitrator has no legal duty to do so.” (Id. at p. 393.) “The disclosure requirements … are intended only to ensure the impartiality of the neutral arbitrator. (Citation.) They are not intended to mandate disclosure of all matters that a party might wish to consider in deciding whether to oppose or accept the selection of an arbitrator.” (Ibid.)

Presciently, Haworth also provided that “The arbitrator cannot reasonably be expected to identify and disclose all events in the arbitrator’s past, including those not connected to the parties, the facts, or the issues in controversy, that conceivably might cause a party to prefer another arbitrator. Such a broad interpretation of the appearance-of-partiality rule could subject arbitration awards to after-the-fact attacks by losing parties searching for potential disqualifying information only after an adverse decision has been made. …. Such a result would undermine the finality of arbitrations without contributing to the fairness of arbitration proceedings.” (Id. at pp. 394-395.)

Two months later, BW&M attempts to carve out an exception to Haworth’s holding that arbitrator disclosures need not include facts not connected to the parties or the issues in controversy. In BW&M, the chief arbitrator in a three-person panel, which awarded a law firm its legal fees against a former client, had not disclosed that he was representing a large law firm in a case before the California Supreme Court involving an attorney fee dispute and was representing another major law firm in an action for attorney malpractice and related torts. The appellate court reversed the trial court’s order confirming the award and ordered that it be vacated because these non-disclosures concerned “matters that could cause a person aware of the facts to reasonably entertain a doubt that [the arbitrator] would be able to be impartial.”

BW&M distinguished Haworth because, it reasoned, the arbitrator’s non-disclosures of concurrent business interests similar to the parties’ interests could never occur in judicial matters, as they do private arbitration. Thus, it held that arbitrators must disclose their ties to the business world “to the extent these relationships are substantial and involve financial considerations creating an impression of possible bias …” What BW&M fails to recognize is that sitting judges, although not practicing law, may also have commercial ties, such as stock ownership or an interest in a business, that may be both substantial and factually similar to the cases before them but, under present appearance-of-partiality standards, need not be disclosed. Therefore, upon analysis, BW&M’s stated need for more disclosures in arbitrations than in the courts does not stand up to scrutiny.  

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, October 2010

MONCHARSH, ARMENDARIZ AND, NOW, PEARSON DENTAL SUPPLIES

Eighteen years ago, Moncharsh v. Heily & Blase (1992) 3 Cal.4^th 1 held that an arbitration award cannot be vacated because of errors of law. Moncharsh recognized, however, “that there may be some limited and exceptional circumstances justifying judicial review of an arbitrator’s decision” such as when “granting finality to an arbitrator’s decision would be inconsistent with the protection of a party’s statutory rights.” (Id at p. 32.) Because that issue did not arise in that case, Moncharsh did not develop the exception.

Eight years after Moncharsh, and consistent with the dicta in that case, the Supreme Court indicated that the scope of judicial review may be somewhat greater in the case of a mandatory employment arbitration agreement that encompasses an employee’s unwaivable statutory rights. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106–107.) Then, two years ago, the Court held that parties could expressly provide in an arbitration agreement for expanded judicial review. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4^th 1334, 1340.)

In April of this year, in Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4^th 665, the Court made another inroad into the concept of limited judicial review of arbitration awards, holding that an error of law by an arbitrator in a FEHA case, where the employee was subject to a mandatory arbitration agreement, can be reviewed by the trial court.

In Pearson, the employer-employee relationship included a written agreement which provided that any covered dispute “must be submitted to binding arbitration within one year from the date the dispute arose or the employee or Pearson first became aware of the facts giving rise to the dispute.” At the subsequent arbitration, the arbitrator, without explaining his reasoning, granted the employer’s motion for summary judgment because of the plaintiff’s failure to timely submit his claim to binding arbitration. The trial court vacated the award, concluding that the arbitrator had misapplied the relevant tolling statute. The Court of Appeal, while agreeing with the trial court that the arbitrator had erred, held nonetheless that such error was not a valid basis for vacating an arbitration award and reversed the trial court.

The Supreme Court held both that the arbitrator had erred in ruling that the employee’s claim was time-barred and that the error, where the employee was subject to a  mandatory arbitration agreement, deprived the employee of a hearing on the merits of an unwaivable statutory employment claim. (Id. at pp. 669-670.)

Pearson also held that, for “such judicial review to be successfully accomplished, an arbitrator in a FEHA case must issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based.” (Id. at p. 678.)

In summary, Pearson holds, in part, that (1) arbitrators in FEHA cases must issue awards which reveal “the essential findings and conclusions on which the award is based” and (2) that such awards, where the employee is subject to a mandatory arbitration agreement, can be reviewed by the trial court for legal error. However, in a non-FEHA arbitration, Moncharsh still applies except where the parties have expressly provided for expanded judicial review.

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
(310) 201-0010

Copyright Michael D. Marcus, June 2010

THE EXPEDITED JURY TRIAL ACT

Since the Expedited Jury Trial Act (Act; Code of Civil Procedure §§ 630.01 – 630.10) goes into effect on January 1, 2011, and the Judicial Council has recently created enabling procedures (Rules 3.1545 et seq.) which may have been underpublicized, I thought it would be helpful to summarize some of the Act’s provisions for those who may want to risk the uncertainty of trial, albeit now in a truncated form:

• Assignment of judges is at the discretion of the presiding judge and precludes temporary judges requested by the parties. (Rule 3.1546.)

• A consent order consisting of a waiver of right to appeal and post-trial jury motions (e.g., directed verdict; set aside the verdict; inadequate or excessive damages) shall be submitted by the parties to the court at least 30 days before the scheduled trial date. (CCP § 630.08; Rule 3.1547(a)(1).) The order, which shall be signed by all parties and their counsel, includes representations that the parties and their insurers have been informed of the applicable rules and procedures. (CCP § 630.03(a),(e).) Rule 3.1546(b) provides for optional contents of the consent order.

The consent order is binding on the parties absent a later stipulation of all of the parties or a court order that good cause exists for the action not to proceed as an expedited jury trial. (CCP § 630.03(b),(f).)

• Modifications of the Act’s provisions are permitted if agreed to by all parties and the court. (CCP § 630.02(a); Rule 3.1547(b).) The only provisions of the Act that are mandatory, and cannot be modified by agreement of the parties, are waiver of both the right to appeal and certain post-trial motions; a smaller jury; fewer peremptory challenges and three hours per side for the presentation of the case. (Rule 3.1547(b).)

• Exchange 25 days before trial witness lists, exhibits (excluding witnesses and exhibits for impeachment or rebuttal), copies of recorded materials, lists of depositions, motions in limine, proposed instructions, proposed jury verdict forms and juror questionnaires. (Rule 3.1548(b).) Failure to serve the exhibits in advance is grounds for their preclusion at trial unless good cause can be shown for the failure. (Rule 3.1548(e).)

• Motions in limine shall be filed 20 days before trial. (Rule 3.1548(d).)

• A pretrial conference will be held 15 days before trial. (Rule 3.1548(f).) Matters to be addressed include objections to previously submitted documentary, jury questionnaires, jury instructions, special verdict forms and the allocation of time for each party’s case.

• High/low agreements governing damages, which are not disclosed to the jury, are permitted but not required. (CCP § 630.01(b); Rule 3.1547(a)(2).)

• Voir dire is limited to one hour, with 15 minutes for the judicial officer and 15 minutes for each side. (Rule 3.1549.) Each side has three peremptory challenges, with the possibility that one additional challenge may be granted to each side in multiparty cases. (CCP § 630.04(b).)

• The jury is composed of eight persons, unless the parties agree to fewer jurors. There are no alternates. (CCP § 630.04(a).)

• Presentation of the case is limited to three hours per side, including opening statement, cross-examination and closing argument, unless the court finds good cause for additional time. (Rule of Court 3.1550.) The use of stipulations and evidentiary summaries are encouraged. (Rules 3.1551(a), (c); 3.1552(a).)

• Traditional rules of evidence apply unless the parties stipulate otherwise. (CCP § 630.06(a).) Privileges affecting confidentiality cannot be limited by stipulations. (CCP § 630.06(b).)

• The jury verdict is binding, subject to any written high/low agreement or other stipulations between the parties. (CCP § 630.07(a).) A vote of six of the eight jurors is required, unless the parties stipulate otherwise. (CCP § 630.07(b).) A jury may deliberate as long as needed. (CCP § 630.05.)

• Post-trial motions and appeals are limited to those to correct a judgment for clerical error, to enforce a judgment and for costs and attorney’s fees (CCP § 630.09(c)) or for a new trial because of alleged misconduct of the judicial officer or jury or corruption , fraud or other undue means employed in the proceedings. (CCP § 630.09.)

Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
Landline (310) 201-0010
Cell (310) 433-4155

Copyright Michael D. Marcus, November 2010