ADR Case Updates
Attorneys Must Give New Mediation Disclosure To Clients; Secret Settlements In Sexual Harassment Cases Banned; and More, 12/05/2018
Evidence Code §1129 Now Requires Attorneys To Give To Clients A Printed Disclosure Form Explaining Mediation Confidentiality Before The Client Agrees To Participate In Mediation
Governor Brown signed SB 954 into law on September 11, 2018, regarding a required mediation confidentiality disclosure by attorneys to their clients in advance of any mediation. The bill amended Evidence Code §1122 and added Evidence Code §1129. It becomes effective Jan. 1, 2019.
Section 1129, except in the case of a class or representative action, requires an attorney representing a person participating in a mediation or a mediation consultation to provide his or her client, as soon as reasonably possible before the client agrees to participate in the mediation or mediation consultation, with a printed disclosure, as specified, containing the confidentiality restrictions related to mediation, and to obtain a printed acknowledgment signed by that client stating that he or she has read and understands the confidentiality restrictions. If an attorney is retained after an individual agrees to participate in a mediation or mediation consultation, the attorney is required to comply with the printed disclosure and acknowledgment requirements as soon as reasonably possible after being retained.
Section 1129 sets forth the required language. The failure of an attorney to comply with these disclosure requirements does not invalidate an agreement prepared in the course of, or pursuant to, a mediation. A communication, document, or writing related to an attorney's compliance with the disclosure requirements is not confidential and may be used in an attorney disciplinary proceeding if the communication, document, or writing does not disclose anything said or done or any admission made in the course of the mediation.
New Section 1001 To Code of Civil Procedure Bans Secret Settlements In Sexual Harassment Cases
Governor Brown signed SB 820 into law on September 30, 2018, banning confidentiality provisions in settlement agreements entered into on or after January 1, 2019. The bill added Section 1001 to the Code of Civil Procedure, and prohibits a provision in a settlement agreement that prevents the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or harassment or discrimination based on sex, that are filed in a civil or administrative action. Such nondisclosure provisions are void as a matter of law and against public policy. The bill creates an exception, not applicable if a party is a government agency or public official, for a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, if the provision is included within the settlement agreement at the request of the claimant.
Arbitration Agreement Between "Income Partner" and Law Firm Unconscionable By Limiting Remedies and Requiring Her To Pay Half The Costs
In Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, Constance Ramos was hired as an "Income Partner" at the law firm Winston & Strawn, LLP (Winston). She sued Winston asserting various causes of action under state law for discrimination, retaliation, wrongful termination, and anti-fair-pay practices. Winston moved to compel arbitration pursuant to the partnership agreement Ramos signed. The trial court found Ramos was "in a partnership relationship," severed provisions of the arbitration agreement related to venue and cost-sharing, and granted Winston's motion. Ramos sought a writ of mandate.
Writ Granted: Under the framework set forth by the California Supreme Court in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, the arbitration agreement was unconscionable. Claims brought under the California Fair Employment and Housing Act (Gov. Code §12900 et seq.) must meet certain minimum requirements to ensure the preservation of statutory rights in an arbitral forum: (1) the agreement must provide for neutral arbitrators, (2) the agreement may not limit remedies provided under the statute, (3) there must be sufficient discovery to adequately arbitrate the employee's statutory claim, (4) there must be a written arbitration decision and judicial review sufficient to ensure the arbitrator complied with the statutory requirements, and (5) the employer must pay all costs unique to arbitration.
Here, the arbitration agreement required Ramos to pay half the costs of arbitration, pay her own attorney fees, restricted the ability of the panel of arbitrators to "override" or "substitute its judgment" for that of the partnership, and contained a confidentiality clause. Therefore, the agreement was unconscionable and unenforceable.
Question Of Arbitrability Must Be Determined By Arbitrator (Not Court) Pursuant To Arbitration Clause In Agreement Between Parties (9th Cir.)
In O'Connor v. Uber Technologies, Inc., 904 F.3d 1087 (9th Cir. 2018), several current and former Uber drivers brought putative class actions alleging violations of various federal and state statutes arising from Uber's classification of drivers as independent contractors rather than employees. Uber brought a motion to compel arbitration pursuant to an arbitration provision in the agreements between the drivers and Uber. The district court denied the motion.
Reversed: In Mohamed v. Uber Technologies, Inc., 848 F.3d 1201, 1206 (9th Cir. 2016), the 9th Circuit previously considered and reversed the district court's orders denying Uber's motion to compel arbitration. The panel rejected plaintiffs' additional arguments in this current appeal alleging that the arbitration agreements were unenforceable. The question whether those agreements were enforceable was not properly for the district court to answer because the question of arbitrability was designated to the arbitrator pursuant to the delegation clause in the arbitration agreement.
Department Of Labor Investigations Do Not Subject Investigated Party To The Waiver Of Any Arbitration Right It Has Regarding The Investigated Claims (9th Cir.)
In American Airlines v. Mawhinney, 904 F. 3d 1114 (9th Cir. 2018), Robert Steven Mawhinney, a former American Airlines maintenance technician, was fired in 2001. He filed a complaint with the Department of Labor ("DOL"), invoking the whistleblower protections of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century ("AIR21"), 49 U.S.C. §42121. AIR21 bars air carriers from firing or otherwise penalizing workers for alerting the air carrier or federal agencies of safety violations. Employees who believe they have been improperly discharged may file a complaint with the DOL, which must then issue a final order granting relief or denying the employee's complaint. In December 2002, Mawhinney reached a settlement agreement ("the Agreement") with the Airline on his retaliation complaint. DOL issued an order formally approving the Agreement. The Agreement reinstated Mawhinney to his former position and included an arbitration clause. Mawhinney was later terminated (in 2011) for disciplinary reasons. He initiated another claim for retaliation against the airline, which moved to compel arbitration. The district granted the motion and Mawhinney timely appealed.
Affirmed: The Airline did not waive its right to arbitrate by waiting to move to compel until after the DOL investigation into its conduct was complete, nor is there reason to believe private AIR21 retaliation claims are inherently nonarbitrable.
California opinions are posted at: click here, and the Ninth Circuit opinion at: click here.
Steve Kruis sends periodic case updates by e-mail that summarize recent developments in the Alternative Dispute Resolution area. If you would like to be included on our distribution list, please send us an e-mail or call 619.233.1323.