The Critical Case Recap: Week of October 6, 2014

The Critical Case Recap: Week of October 6, 2014

Ybarra v. Apartment Investment and Management Company (California Court of Appeal, Second Appellate District):

What It’s About:  The Court of Appeal vacated and reconsidered its prior order reversing the trial court’s order denying the defendant’s motion to compel arbitration.  In light of Iskanian, the Court of Appeal held that the representative action waiver in the parties’ arbitration agreement was unenforceable as a matter of law.

Why It’s Important:  This decision is a straightforward application of Iskanian suggesting that the recent California Supreme Court decision leaves little room for interpretation.  Expect most of the lower courts to fall in line.  The decision, however, does raise a question left open by Iskanian:  is an individual claim permissible under PAGA?

Network Capital Funding Corp. v. Papke (California Court of Appeal, Fourth District):

What It’s About:  The Court of Appeal held that where an arbitration agreement simply requires the parties to arbitrate “any claim, dispute, and/or controversy,” it is not a clear and unmistakable statement that the parties intended for the arbitrator to decide whether they agreed to class arbitration, nor does it allow for class arbitration.

Why It’s Important:  This decision refused to follow the United State Supreme Court’s plurality opinion in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) and its progeny, which reasoned that whether an arbitration agreement allows for class arbitration is a procedural question to be decided by the arbitrator.  The Court also found that merely agreeing to arbitrate “any claim, dispute, and/or controversy” did not meet the Stolt-Nielsen requirement that the parties affirmatively agree to class arbitration.  That is, the fact that the parties did not explicitly exclude class arbitration from the list of controversies they agreed to arbitrate was not sufficient evidence of intent; the plaintiff would have needed to submit additional extrinsic evidence to demonstrate an agreement to include class arbitration.