Arbitration bid sunk in Sprunk

Yes, yes I did write that post title.  In Sprunk v. Prisma LLC (August 23, 2017), the Court of Appeal (Second Appellate District, Division One) considered whether a defendant in a putative class action can waive its right to compel arbitration against absent class members by deciding not to seek arbitration against the named plaintiff.  The Court agreed that it did, holding that Prisma LLC "waived its right to seek arbitration by filing and then withdrawing a motion to compel arbitration against the named plaintiff, Maria Elena Sprunk, and then waiting until after a class had been certified to seek arbitration against class members."  Slip op., at 2.

Some of the less interesting issues in the opinion concern the sufficiency of evidence of arbitration agreements with class members.  The juicy stuff, however, is described as follows:

Plan B [Prisma LLC] also raises a legal issue concerning the status of absent class members. Plan B argues that the trial court erred in considering Plan B’s delay in moving to compel arbitration before the court decided class certification because the unnamed class members were not parties until a class was certified. Because this argument raises an issue of law concerning the time period that the trial court could properly consider in analyzing waiver, we review it de novo. (Sky Sports, Inc. v. Superior Court (2011) 201 Cal.App.4th 1363, 1367 (Sky Sports) [applying the de novo standard to the issue whether a defendant “waived its right to compel arbitration because it did not bring the motion before certification of a class that included parties to the arbitration agreement”].)

Slip op., at 12.  The Court concluded that strategic delay can properly result in waiver:

An attempt to gain a strategic advantage through litigation in court before seeking to compel arbitration is a paradigm of conduct that is inconsistent with the right to arbitrate. For example, Bower was a putative wage and hour class action in which the defendant engaged in discovery and attempted to settle the case on a classwide basis when the class was a modest size. (Bower, supra, 232 Cal.App.4th at pp. 1038–1040.) When the plaintiff sought an amendment that would have expanded the class, the defendant (Inter-Con) moved to compel arbitration. The trial court found waiver, and the appellate court affirmed, concluding that Inter-Con’s decision to delay seeking arbitration “appears to have been tactical.” (Id. at pp. 1045, 1049). Based upon Inter-Con’s litigation conduct, “[o]ne can infer that InterCon chose to conduct discovery, delay arbitration, and seek a classwide settlement because it saw an advantage in pursuing that course of action in the judicial forum.” (Id. at p. 1049.) Such conduct provided substantial evidence to support the finding that “Inter-Con’s actions were inconsistent with a right to arbitrate.” (Id. at p. 1045.)

Slip op., at 18.  The discussion about waiver is extensive (seriously - about 24 pages of the opinion concern waiver).  The Court seems to leave the door open for situations where the trial court believes that there is a bona fide desire to wait for an expected clarification in the law, but it would seem to be a risky bet for a defendant if its actions could just as well be perceived as done for strategic benefit.

I'm somewhat surprised that this hasn't come up more frequently.

Knapp, Petersen & Clarke, André E. Jardini, Gwen Freeman and K. L. Myles successfully represented Plaintiff and Respondent.

Occidental College, my alma mater, vexes me greatly

Hey, so I went to Occidental College.  Just like Mr. Obama (Emily Post says the title of "President" ends with the end of the term of office - yes, I checked).  Two differences stand out between us, I think.  I graduated.  And he's more famous.  Oh, plus I never inhaled.

So I mention Occidental College because I received correspondence from my alma mater today that struck me immediately as insipid and deeply troubling.  Here's what the e-mail said:

To the Occidental Community,

n Charlottesville last weekend, we saw the ugly face of racism and hate, naked and unadorned. White supremacy in all of its manifestations is an assault on the fundamental values of Occidental, the community of scholars of which we are a part, and the kind of country we want to be. Love of knowledge, intellectual rigor and mutual respect are essential in creating the kind of just, inclusive and loving community we all want to be a part of. As we welcome the Class of 2021 to campus next week, and throughout the coming months, let’s embrace these values as we continue our effort to create such a community here at Oxy.

Best,

President Veitch

A few questions came to mind immediately.  The first thing I asked myself was whether the current crop of incoming students needs to be told that white supremacists are bad.  It never came up when I was there, but I'm really confident that had I conducted a poll, 100% of my classmates would have, without hesitation, said, "Bad."  (A few might have first asked if it was some sort of trick.)  This would have been the easiest quiz, with the highest average score in the history of Occidental.

But, today, not so much.  The school has to tell them it's bad.  Here's my first tip to the admissions committee at Occidental:  if you think you need to tell incoming freshmen this, raise your standards. You are diluting the value of my degree.  Maybe there's a class action there.  Kidding. Probably.  No, kidding for sure.

The second thing I asked myself was why the President of Occidental didn't think to make any mention of the fact that Occidental also abhors the use of violence to silence even reprehensible hate speech.  I've heard quite a few political commentators in recent months suggesting that the First Amendment doesn't protect "hate speech."  Go check with a colleague that practices First Amendment law and see if they concur.  Surely it must be the case that as much as hateful viewpoints like white supremacy, misogyny, or other bigoted beliefs are contrary to fundamental values of Occidental, so, too, are any attempts to forcibly silence even unpleasant ideas.  However, as I am sure that President Veitch did not issue this letter without substantial thought and input, I have to wonder whether the omission of any warning to new students that violent suppression of speech will not be tolerated was intentional.

I can't say it isn't tempting to be sympathetic, for a moment, when a nutter white supremacist is receiving a beat down with a club.  But I would caution everyone to remember Neimoller's words:

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

You can't send a message that criticizes what is, fortunately, a viewpoint considered by a vast majority of Americans as reprehensible while tacitly condoning vigilantism to silence that idea (if you actually doubt that, consider that a little more than 100 years ago, the KKK had membership in the millions, but a century later the membership was believed to be under 10,000). Violent repression of speech won't stop at the white supremacists.  It's already moved past that. Recall riots at Berkley, the birthplace of contrary viewpoint expression, to silence a speaker.  If thuggish retaliation against speech is allowed to build up a head of steam, it will be hard to stop.

Occidental's alumni should be very disappointed by the absence of a strong message renouncing violence to limit speech and encouraging civil dialog between members of the Occidental community at all times (with at least an implied reminder that anyone acting contrary to that principle will need to find themselves a new college to attend in short order).

I would note, in closing, that Occidental's website does a far better job of recognizing that dialog can often be challenging, but open discussion and critical thinking are central to the educational mission.  Why doesn't the President of Occidental know that?

Further nuances to PAGA and arbitration clauses in Esparza v. KS Industries, L.P.

Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) held that PAGA representative claims for civil penalties are not subject to arbitration.  In Esparza v. KS Industries, L.P. (August 2, 2017), the Court of Appeal (Fifth Appellate District) tackled the question of whether any claims asserted under PAGA can be "individual" claims, and, if so, how are they treated for purposes of arbitration agreements. The issue arose, in particular, because it appeared that the plaintiff asserted, within the PAGA claim, a claim to recover wages under Labor Code section 558, which, unlike the other PAGA penalties (in the sense of the word meaning something akin to a fine) sought, would result in the recovery of the underlying wages owed, with no portion going to the State from the recovered wages.  The Court directed the plaintiff on remand to declare unequivocally whether only penalties would be sought or whether, in addition, individual recovery claims would be pursued.  The Court concluded that such individual recovery claims would be severed and arbitrated.

Don't see the Fifth Appellate District having to wade into these issues regularly, so hat tip to that District for getting into the PAGA mix.

The trial court was technically affirmed, but the holding and directions on remand make this one a win for defendant/respondent, who was represented by Call & Jensen, John T. Egley and Jamin S. Soderstrom.