Legal News and Appellate Tips

Each week, TVA appellate attorney Tim Kowal reviews several recent decisions out of the appellate courts in California, and elsewhere, and reports about the ones that might help you get an edge in your cases and appeals.

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Tag: Arbitration

Litigating for 13 Months Does Not Waive Arbitration, But Dissent Disagrees

An employer-defendant answered a wrongful-termination complaint, served multiple sets of discovery, and took the employee-plaintiff’s deposition during 13 months’ of litigation, before finally moving to compel arbitration. The trial court refused to compel arbitration, ruling the employer waived arbitration by its unreasonable delay. That seemed unsurprising.

So it seemed surprising that the majority in Quach v. Calif. Commerce Club, Inc. (D2d1 Apr. 14, 2022 no. B310458) 2022 WL 1113998 (nonpub. opn.) found that these facts, as a matter of law, do not waive arbitration. The court noted that the California Supreme Court in *Saint Agnes Medical Center v. PacifiCare of California* (2003) 31 Cal.4th 1187, 1203, had held that mere participation in litigation, and merely driving up court costs and expenses, are not enough to establish waiver of the right to arbitrate.

True, undue delay and waiting until the eve of trial can be grounds for waiver. But the court here found—again, as a matter of law—that “almost seven months before the trial date” is “not on the ‘eve of trial.’”

Good to know.

Writing in dissent, Judge Crandall was persuaded by the employee’s argument in his brief: “Quach's appellate brief hits the nail on the head: “[By now], all benefits of a speedy resolution [Quach] could have obtained through arbitration [have] been lost.”” Judge Crandall thought the court should not “overextend ourselves” to accommodate arbitration under these facts.

Briefing Faux Pas?: The court suggests it is unethical to copy arguments from court opinions without attributions. I don’t know why you wouldn’t give a cite. But I don’t see how this is unethical.

The Upshot: Although arbitration waivers are not supposed to be driven by any single factor, expect that the court will insist on a showing of prejudice or unfair advantage. While delay is relevant, a delay of even 13 months might not suffice. But do not rely on mere participation in litigation or driving up litigation costs.

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Beware Challenging Arbitration Award: $38K Frivolous Appeal Sanctions Because Mere Arbitrator Error Is Not Reversible

Some recent cases have suggested appellate courts might be more receptive to challenges to arbitration awards than in the past. But the Second District Court of Appeal swung hard in the other direction in *McQueen v. Huang* (D2d8 Mar. 4, 2022 no. B304645) 2022 WL 630606. The court sanctioned the appellant and his counsel over $38,000 for challenging an arbitrator’s award for legal error. Mere legal error is not a ground to overturn an arbitration award, so the appeal was doomed from the start. The court also pointed to appellant’s “gamesmanship” in the trial court.

The Upshot: Appellate sanctions usually are a high hurdle, and on the quality of the appellate arguments alone, I would not have rated sanctions remotely likely. The lesson of this opinion, then, is that the appellant’s conduct in the trial court can play an outsized role in the imposition of appellate sanctions. If the appellant’s conduct in the trial court creates an impression that the unsuccessful appeal is part of a pattern of driving up the expense of the litigation, then this can be a grounds for sanctions almost by itself.

Question for #AppellateLinkedIn: Does this opinion suggest that conduct that might not warrant sanctions in the trial court could warrant sanctions in the appellate court? And if so, is this a problem?

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The “Speedy” in Speedy Trial Becomes Relative, and the Limits of Scientology Arbitration: A Review of Jan. 2022 Cases on Ep. 25 of the Cal.App.Law.Pod.

Reviewing some 9th Circuit and California appellate cases of note from early 2022, Jeff Lewis and I discuss these juicy issues:

💡 Can the 6th Amendment right to speedy trial be indefinitely postponed due to Covid? (Yes, if the defendant is not incarcerated, says the 9th Circuit in *United States v. Olsen*.)

💡 Can the statutory right to a timely conservatorship jury trial be waived? (Yes, even if the judge kind of pushes you around, so stiffen up that spine!)

💡 Can the Church of Scientology compel arbitration of a dispute arising after members leave the church and allege Scientologist actor Danny Masterson rapes them? (No, but the Supreme Court had to step in and tell the Court of Appeal to take a little more time with the writ petition.)

💡 Can a pre-litigation demand cross the line into extortion, and thus fail to qualify for protection under Civil Code section 47’s litigation privilege? (Yes, if the attorney threatens to disclose the allegations to blow up the defendant’s potential merger.)

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Preliminary Injunction Is Not Appealable If Issued by an Arbitrator

Nosing out whether an order is appealable can be difficult. But we know injunctions are appealable because they are listed explicitly in Code of Civil Procedure section 904.1, the appealability statute. But a preliminary injunction issued by an arbitrator is not. They are not a final “award,” and thus not appealable. That is the holding of *Kirk v. Ratner* (D2d7 Feb. 10, 2022) --- Cal.Rptr.3d --- (2022 WL 405422).

The parties settled their show business dispute, agreeing to confidentiality. Worried that Kirk would breach confidentiality, the movie executives initiated arbitration. The arbitrator issued a temporary restraining order followed by a preliminary injunction. The movie executive plaintiffs were not required to post a bond for the injunction.

Kirk petitioned the superior court to vacate the injunction. The court dismissed the petition on grounds it lacked jurisdiction because the preliminary injunction was not an “award” under Code of Civil Procedure section 1283.4.

The Court of Appeal dismissed Kirk’s appeal, holding both that the preliminary injunction was not an “award” subject to a petition to vacate, and the order dismissing the petition was not appealable for the same reason.

This holding makes preliminary injunctions in arbitration all the more devastating. Not only are the beyond review, but the losing party loses the only statutory safeguard — a bond.

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The Trend Toward Reviewability of Arbitration Awards

Appellate attorney Anne Grignon suggests the California appellate courts seem to be more willing to review arbitration awards lately. Anne discusses with Tim Kowal and Jeff Lewis how questions concerning whether the case should be arbitrated, and questions involving important policy interests, may be more likely to receive appellate review. If you are in arbitration, these are important things to consider, whether you are looking to get appellate review or avoid it.

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Evolving Law on Arbitrability in CA

Who decides whether a dispute must be arbitrated? The court, or the arbitrator?

By a vote of 3 appellate attorneys, the court should decide.

Appellate attorney Anne Grignon explains the takeaway from Banc of California v. Superior Court when attorney see an arbitration agreement incorporating the AAA rules – which purport to empower the arbitrator to determine the question of arbitrability. Anne explains to appellate specialists Tim Kowal and Jeff Lewis the arguments that led the Court of Appeal to hold arbitrability must be decided by the trial court, not the arbitrator.

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Increase Your Chances of Success on a Writ

Appellate attorney Anne Grignon explains how difficult it is to decide to take the risk of filing a writ petition...even a writ petition that proved meritorious. Banc of California v. Superior Court resulted in a published opinion reversing an order sending a case to arbitration, and continuing a trend of opinions skeptical of private judging. But there are always reservations in taking a writ. Anne shares some of those reservations with Jeff Lewis and me.

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Order Denying Arbitration Reversed, Trial Court Must Decide Existence of Arbitration Agreement First — But a Strong Dissent Disagrees

This will surprise appellate attorneys. The Court of Appeal in Pettie v. Amazon.com, Inc. (D4d2 Sep. 21, 2021) 2021 WL 4270631 (no. E074241) (nonpub. opn.) recently reversed an order denying a motion to compel arbitration — but not because the trial court did not cite valid grounds to deny the motion. Instead, the majority reversed because the trial court failed to determine the threshold factual issue whether there existed an agreement to arbitrate. In a forceful dissent, Justice Slough noted: this was a denial of a motion. A denial of a motion must be affirmed on any available grounds.

Justice Slough went on to provide some useful appellate standards that practitioners will want to clip-and-save. Justice Slough seems to me correct, and clearly so, on all points. The majority's opinion is baffling.

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Appellate Tips Involving Waiver, Arbitration, and Satan: California Appellate Law Podcast Episode 11

In episode 11 of the California Appellate Law Podcast, TVA appellate attorney Tim Kowal discusses some recent cases with co-host Jeff Lewis in which state and federal appellate courts have found waivers and other errors made by attorneys and parties in the trial court. Like reading a high school yearbook, appellate decisions often capture attorneys making themselves unintentionally conspicuous.
Some of the cases discussed involving "bad yearbook photos" include waiving the right to arbitration by failing to reference it in CMC statements; waiving issues by failing to include them in pretrial statements, trial motions, and posttrial motions; and failing to preserve evidentiary objections.

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Split Appellate Court Finds Arbitration Waived (But Dissent Has the Better Argument)

In this appeal of a relatively rare denial of a petition to compel arbitration, Presiding Justice Gilbert and Justice Tangeman each authored an opinion. After you read Gilbert's opinion, you will surely agree with it. But then read Tangeman's opinion, and tell me you haven't changed your mind.

The Upshot: If you decide to litigate despite having a right to arbitrate, consider raising a reservation of the right to arbitrate should new arbitrable claims or defenses be raised. Answers and CMC statements may be a good place to leave these breadcrumbs.

Be prepared for litigation to change shape. Retaining appellate counsel early is a good way be prepared for unexpected turns.

Wells Fargo Bank, N.A. v. Agak (Apr. 12, 2021) no. B300635 (unpublished).

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Appellate Challenges to Arbitration Award: Close, but Affirmed

After the 2020 reversal of an arbitrator's award in Brown v. TGS Mgm't Co., LLC, I noted that it may be hasty to conclude arbitration awards are not worth appealing. Reversal is possible where the arbitrator's error "violates a party's unwaivable statutory rights or that contravenes an explicit legislative expression of public policy."

But the recent published opinion in Bacall v. Shumway (D2d8 Feb. 18, 2021) No. B302787 illustrates the limits of review of arbitration awards. Appellant raised some decent legal challenges, apparently hoping to get the same result as in Brown. But fell short.

So while it is possible to get meaningful relief on appeal after arbitration, it is still tough going.

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Rare Reversal of a $3.4MM Arbitration Award: Overbroad Employee Confidentiality Ruled a De Facto Noncompete and Thus Void

I tell clients arbitration awards are virtually unassailable on appeal. After this $3.4 million award in an employment dispute was reversed on appeal in Brown v. TGS Mgm't Co., LLC (D4d3 Nov. […]

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