Appealing an Arbitration Award Without Going to Court 的完整文字稿

rock up a hill trying to trying to 00:05:41.060 --> 00:05:44.100 correct this, just a few grounds that you can 00:05:44.100 --> 00:05:48.199 raise with the Superior Court. The other option 00:05:48.199 --> 00:05:54.850 is to appeal if your arbitration clause expressly 00:05:54.850 --> 00:05:59.600 and clearly provided for this option. Here in 00:05:59.600 --> 00:06:02.319 our hypothetical it says that that wasn't the 00:06:02.319 --> 00:06:04.639 case, that the arbitration clause is standard 00:06:04.639 --> 00:06:08.600 one and that it's been used for decades. Well, 00:06:08.879 --> 00:06:12.860 If it doesn't explicitly provide for an appeal 00:06:12.860 --> 00:06:20.560 to the arbitration providers appellate process, 00:06:20.980 --> 00:06:26.860 then you are out of luck. Can you directly appeal 00:06:26.860 --> 00:06:34.930 to a court? The answer to that is no. As I mentioned, 00:06:35.089 --> 00:06:39.629 you can file a motion to vacate or modify the 00:06:39.629 --> 00:06:42.709 award, the court, whether you're successful or 00:06:42.709 --> 00:06:46.939 not, the court will enter a judgment. And you 00:06:46.939 --> 00:06:51.540 may appeal from that judgment to the appellate 00:06:51.540 --> 00:06:53.959 court, but there's no direct appeals from the 00:06:53.959 --> 00:07:00.949 arbitration award. And as we'll see, the grounds 00:07:00.949 --> 00:07:04.589 that the appellate court will review are just 00:07:04.589 --> 00:07:08.490 procedural, the statutory, they're very narrow. 00:07:08.730 --> 00:07:14.529 Uh, and you almost, uh, it's rare to, um, prevail 00:07:14.529 --> 00:07:19.709 in those grounds. Mike, um, what about an error 00:07:19.709 --> 00:07:25.980 of fact or law? Uh, can, can you raise that in 00:07:25.980 --> 00:07:29.680 a judicial review of the arbitration award or 00:07:29.680 --> 00:07:32.720 the, of the, actually of the judgment from superior 00:07:32.720 --> 00:07:37.649 court? So the answer is no. and statutory review 00:07:37.649 --> 00:07:40.350 under the Federal Arbitration Act and California 00:07:40.350 --> 00:07:44.810 Arbitration Act is notoriously narrow. It is, 00:07:44.930 --> 00:07:47.569 let's say, near impossible. You can't appeal 00:07:47.569 --> 00:07:49.610 a narrow of law. You can't appeal a narrow effect, 00:07:50.009 --> 00:07:54.230 subject to various exceptions. Courts have said 00:07:54.230 --> 00:07:57.660 in the Ritchie case, which is a... a foundational 00:07:57.660 --> 00:08:00.339 California case, the courts cannot review arbitration 00:08:00.339 --> 00:08:02.980 awards for errors of factor law. Even when those 00:08:02.980 --> 00:08:05.180 errors appear on the face of the award or cause 00:08:05.180 --> 00:08:09.420 substantial injustice to the parties, there are 00:08:09.420 --> 00:08:12.120 unending quotes from courts saying even an award 00:08:12.120 --> 00:08:16.199 that is blatantly wrong, that is wrong on its 00:08:16.199 --> 00:08:20.620 face, where the arbitrator found, made credibility 00:08:20.620 --> 00:08:23.500 determinations that are unexplainable on the 00:08:23.500 --> 00:08:26.560 record, those are typically not reviewable, but 00:08:26.560 --> 00:08:29.379 it's a policy choice, right? So parties selected 00:08:29.379 --> 00:08:31.839 arbitration for all of the potential benefits 00:08:31.839 --> 00:08:34.500 that arbitration can bring. For those of you 00:08:34.500 --> 00:08:37.039 who have done arbitrations, you've probably experienced 00:08:37.039 --> 00:08:39.539 many of them. There's the potential for speed, 00:08:39.860 --> 00:08:43.200 for expediency, to lower cost. And sure, while 00:08:43.200 --> 00:08:46.179 you may have to pay for an arbitration, the efficiency 00:08:46.179 --> 00:08:49.379 of it could certainly lower attorney's fees, 00:08:50.559 --> 00:08:54.059 lower the cost of counsel to actually end up 00:08:54.059 --> 00:08:56.620 in cost savings to the client. There is privacy, 00:08:57.039 --> 00:08:59.740 confidentiality. You can select your arbitrator, 00:08:59.960 --> 00:09:01.659 obviously with the other side, in a way that 00:09:01.659 --> 00:09:04.299 you can't select your judge. And you get finality, 00:09:04.559 --> 00:09:07.100 that certainty to your client. And the limited 00:09:07.100 --> 00:09:10.200 review under these statutes preserves those advantages 00:09:10.200 --> 00:09:14.870 basically by not allowing for a second round 00:09:14.870 --> 00:09:20.929 of litigation. So the courts have tried to preserve 00:09:20.929 --> 00:09:23.370 that first layer without adding that second. 00:09:23.610 --> 00:09:26.230 And it's a trade -off. And I'm sure you saw that 00:09:26.230 --> 00:09:28.429 on the Court of Appeals when you were reviewing 00:09:28.429 --> 00:09:36.929 petitions to vacate all the time. And let's go 00:09:36.929 --> 00:09:42.210 on to the exclusive grounds for literature. And 00:09:42.210 --> 00:09:44.909 so as I mentioned, there are statutes like Dublin, 00:09:45.269 --> 00:09:48.090 meaning petitions to vacate an arbitration award. 00:09:48.269 --> 00:09:50.730 There is no direct appeal of the award. There 00:09:50.730 --> 00:09:53.059 is the Federal Arbitration Act. There is the 00:09:53.059 --> 00:09:55.320 California Arbitration Act. Whatever you can 00:09:55.320 --> 00:09:58.340 fit under, the Federal Arbitration Act does not 00:09:58.340 --> 00:10:01.059 bestow jurisdiction on a federal court. So you 00:10:01.059 --> 00:10:03.120 need to fit into one of these, typically during 00:10:03.120 --> 00:10:06.519 the arbitration. The parties will agree if it's 00:10:06.519 --> 00:10:08.399 not in their arbitration agreement, which one 00:10:08.399 --> 00:10:12.200 applies. But under the FAA, corruption, fraud, 00:10:12.700 --> 00:10:15.879 undue means, partiality, corruption, misconduct, 00:10:16.299 --> 00:10:20.480 exceeding powers, by not entering a final award, 00:10:20.500 --> 00:10:22.759 by refusing to hear material evidence, basically 00:10:22.759 -->

00:10:26.000 just excluding it without even hearing it, those 00:10:26.000 --> 00:10:29.500 are very narrow grounds. And they all have a 00:10:29.500 --> 00:10:32.559 bang towards procedural problems, not substantive. 00:10:34.200 --> 00:10:37.519 And courts ultimately ask, if you were to summarize 00:10:37.519 --> 00:10:39.620 these, was it a fundamentally fair proceeding? 00:10:40.139 --> 00:10:42.039 And that's how I read the cases and some have 00:10:42.039 --> 00:10:45.080 as well. Rich, let me throw it to you for California. 00:10:46.360 --> 00:10:52.779 Yeah, as you can see, 1286 .2 tends to mirror 00:10:52.779 --> 00:10:55.820 the federal statute, but it does add a couple 00:10:55.820 --> 00:11:01.779 of things. One is refusing to postpone upon a 00:11:01.779 --> 00:11:07.379 showing of good cause, the hearing. So it's abuse 00:11:07.379 --> 00:11:11.279 of discretion and denying a continuance. And 00:11:11.279 --> 00:11:13.740 so there is some action there. In fact, where 00:11:13.740 --> 00:11:18.259 the action is, if there is going to be any, is 00:11:19.210 --> 00:11:22.929 Numbers four and five the other ones the corruption 00:11:22.929 --> 00:11:25.690 failure to disclose grounds for disqualification 00:11:25.690 --> 00:11:31.110 that's going to be pretty rare. Over the years 00:11:31.110 --> 00:11:35.029 we've pellet decisions have kind of ironed out 00:11:35.029 --> 00:11:41.110 what's involved. I know in jams. I both Mike 00:11:41.110 --> 00:11:45.309 and I fill out a very involved and detailed disclosure 00:11:45.309 --> 00:11:49.629 report. So. You probably won't get too much traction 00:11:49.629 --> 00:11:54.830 looking at those sections for relief, subsections 00:11:54.830 --> 00:11:58.549 for relief. Exceeding powers, refusing to postpone 00:11:58.549 --> 00:12:00.909 the hearing or hearing material evidence. That's 00:12:00.909 --> 00:12:06.309 where you might have some grounds for raising 00:12:06.309 --> 00:12:13.070 and maybe modifying the arbitration award. But 00:12:13.970 --> 00:12:18.210 I want to caution you, it doesn't mean... If 00:12:18.210 --> 00:12:25.110 the arbitrator denies admission of what you consider 00:12:25.110 --> 00:12:29.450 to be material relevant evidence, that's not 00:12:29.450 --> 00:12:35.070 grounds for relief. That's just a mistake of 00:12:35.070 --> 00:12:40.149 law. And the arbitrators, the courts will not 00:12:40.149 --> 00:12:45.789 review, as Mike mentioned, errors of law or... 00:12:49.039 --> 00:12:53.919 mistaken decisions on the facts. So what does 00:12:53.919 --> 00:12:56.919 that mean not to hear material evidence? That's 00:12:56.919 --> 00:13:02.539 not a decision about whether you get to admit 00:13:02.539 --> 00:13:05.639 relevant evidence, whether the arbitrator rules 00:13:05.639 --> 00:13:11.700 it, excludes it. It only has to do with the opportunity 00:13:11.700 --> 00:13:15.940 to present evidence. So if an arbitrator refuses 00:13:16.379 --> 00:13:21.639 to hear material evidence that doesn't consider 00:13:21.639 --> 00:13:25.419 it at all, but just refuses to hear it for whatever 00:13:25.419 --> 00:13:33.000 reason, then that potentially could be grounds 00:13:33.000 --> 00:13:36.360 for relief. There's a very fine line here. And 00:13:36.360 --> 00:13:39.480 maybe there's a case that I found pretty interesting 00:13:39.480 --> 00:13:44.259 in preparing for today's talk. A number of years 00:13:44.259 --> 00:13:53.419 ago, There was a case that involved the arbitrator 00:13:53.419 --> 00:13:55.940 deciding in a real estate deal where the seller 00:13:55.940 --> 00:14:00.100 sold some property residents to the buyer and 00:14:00.100 --> 00:14:02.899 the buyer discovered later that the lot line 00:14:02.899 --> 00:14:09.279 had been incorrectly described and therefore 00:14:09.279 --> 00:14:13.679 sued the buyer. The arbitrator concluded that 00:14:13.679 --> 00:14:21.460 any damages for a lot line discrepancy stem from 00:14:21.460 --> 00:14:24.899 the breach at the time of the sale. And the arbitrator 00:14:24.899 --> 00:14:31.620 decided that he would not hear any evidence occurring 00:14:31.620 --> 00:14:36.740 after the breach of that sale. Well, what happened 00:14:36.740 --> 00:14:40.460 afterwards into the arbitration a couple years 00:14:40.460 --> 00:14:43.279 into the arbitration, the title company settled 00:14:43.279 --> 00:14:49.289 with the adjoining property owner. And essentially, 00:14:50.029 --> 00:14:53.110 that meant that there would be no damages. And 00:14:53.110 --> 00:14:56.149 as odd as it seems, the arbitrator nevertheless 00:14:56.149 --> 00:14:59.009 refused to consider that evidence. And the reason 00:14:59.009 --> 00:15:02.210 the arbitrator didn't is because it stemmed from 00:15:02.210 --> 00:15:06.740 his legal decision. The court of appeal overturned 00:15:06.740 --> 00:15:09.059 that, said the arbitrator refused to consider 00:15:09.059 --> 00:15:12.899 the evidence. Therefore, there were grounds to 00:15:12.899 --> 00:15:16.490 overturn that. The Supreme Court disapproved 00:15:16.490 --> 00:15:21.980 of that decision a few years later, because where 00:15:21.980 --> 00:15:27.070 the legal decision, even if erroneous, leads 00:15:27.070 --> 00:15:29.950 to the exclusion of certain evidence, and a lot 00:15:29.950 --> 00:15:33.309 of legal decisions result in the exclusion of 00:15:33.309 --> 00:15:36.590 evidence, then that's just a mistake of law. 00:15:37.690 --> 00:15:39.929 And there you have it. This sort of illustrates 00:15:39.929 --> 00:15:44.590 how difficult it is to to get over this hurdle. 00:15:47.460 --> 00:15:51.820 And we all talk about exceeding powers as a result, 00:15:52.139 --> 00:15:54.200 or a little bit later on in the presentation. 00:15:55.240 --> 00:15:57.039 George, before we move on to the next slide, 00:15:57.080 --> 00:15:58.940 I was going to add in, there is a concept floating 00:15:58.940 --> 00:16:01.919 around of manifest disregard

for the law. You 00:16:01.919 --> 00:16:04.820 may have heard that as a ground to vacate. Under 00:16:04.820 --> 00:16:07.580 the Federal Arbitration Act, these grounds are 00:16:07.580 --> 00:16:09.779 exclusive. The Supreme Court has made that clear. 00:16:10.100 --> 00:16:11.820 Nonetheless, there are circuits where you can 00:16:11.820 --> 00:16:14.940 bring that argument and the court will entertain 00:16:14.940 --> 00:16:18.700 it. The Supreme Court has not decided the issue 00:16:18.700 --> 00:16:23.299 directly. It is a shaky ground. It's one that 00:16:23.299 --> 00:16:25.480 seems to be going away. It's where the arbitrator 00:16:25.480 --> 00:16:28.139 knows what the law is and decides not to apply 00:16:28.139 --> 00:16:29.899 it. There's an old case where the arbitrator 00:16:29.899 --> 00:16:32.620 says the FLSA applies, but I'm not going to apply 00:16:32.620 --> 00:16:36.279 it. And the court vacates. So be aware of that. 00:16:36.559 --> 00:16:40.759 It probably fits into exceeding powers. But nonetheless, 00:16:40.899 --> 00:16:44.480 it floats around. It's very difficult to show 00:16:44.480 --> 00:16:48.200 that. You have to show that the arbitrator knew 00:16:48.200 --> 00:16:52.100 and understood the law and made a conscious decision 00:16:52.100 --> 00:16:56.600 that he or she wasn't going to follow the law. 00:16:58.700 --> 00:17:04.619 There are very few opinions that find manifest 00:17:04.619 --> 00:17:07.759 disregard of the law. And as you pointed out, 00:17:07.940 --> 00:17:10.000 Mike, I know that A number of circuits don't 00:17:10.000 --> 00:17:18.079 even entertain this issue. So let's see, where 00:17:18.079 --> 00:17:21.359 are we next? So slide seven, Rich, I turn it 00:17:21.359 --> 00:17:26.230 to you. Did I skip that? Hang on just a second. 00:17:30.359 --> 00:17:33.200 Oh, well, I think I discussed slide seven, so 00:17:33.200 --> 00:17:41.720 we can go on to slide eight. So Mike, did you 00:17:41.720 --> 00:17:44.839 want to? Yeah, so I'll post it up here. So there's 00:17:44.839 --> 00:17:48.319 the idea of the exclusive grounds to vacate an 00:17:48.319 --> 00:17:51.710 arbitration award under the CAA or the FAA, and 00:17:51.710 --> 00:17:54.609 can you expand those by contract? Arbitration 00:17:54.609 --> 00:17:56.990 we'll talk about is a creature of contract. So 00:17:56.990 --> 00:17:59.410 can you, in effect, bind the courts or get the 00:17:59.410 --> 00:18:04.089 courts to enforce your notion of vacatur? No. 00:18:04.369 --> 00:18:07.089 Under the Federal Arbitration Act, the Supreme 00:18:07.089 --> 00:18:09.569 Court addressed this in the Hall Street Associates 00:18:09.569 --> 00:18:12.690 case. The exclusive grounds are in the statute. 00:18:13.630 --> 00:18:16.230 The court read the statutory text as mandatory. 00:18:16.930 --> 00:18:19.670 It's a limit. It's a limit on freedom of contract. 00:18:20.009 --> 00:18:22.809 And the court says it preserves the finality 00:18:22.809 --> 00:18:25.970 and efficiency of the arbitration by avoiding 00:18:26.450 --> 00:18:30.430 creating really a second level of litigation. 00:18:31.009 --> 00:18:33.890 California had a contrary decision. Rich, you 00:18:33.890 --> 00:18:37.369 can talk about this pretty soon after that. Right. 00:18:37.509 --> 00:18:41.410 Just a few months after the US Supreme Court 00:18:41.410 --> 00:18:47.450 said you couldn't expand the FAA's jurisdiction. 00:18:48.500 --> 00:18:50.759 The California Supreme Court came to the opposite 00:18:50.759 --> 00:18:57.289 conclusion. And the basis for the ruling was 00:18:57.289 --> 00:18:59.390 this, that arbitration is a matter of agreement 00:18:59.390 --> 00:19:02.769 between the parties. The parties can limit the 00:19:02.769 --> 00:19:06.490 arbitrators powers by agreement, the scope of 00:19:06.490 --> 00:19:10.700 the arbitrators, of how the arbitrator will conduct 00:19:10.700 --> 00:19:14.890 the arbitration. If they can alter the usual 00:19:14.890 --> 00:19:19.230 scope of review and that will be honored by the 00:19:19.230 --> 00:19:25.009 court. So if there is an agreement that expressly 00:19:25.009 --> 00:19:28.450 deprives the arbitrator of power to commit legal 00:19:28.450 --> 00:19:35.119 error, then if the arbitrator violates that limit 00:19:35.119 --> 00:19:39.000 on the arbitrator's powers, then the arbitrator 00:19:39.000 --> 00:19:43.150 has essentially exceeded the powers he was given 00:19:43.150 --> 00:19:46.769 under the arbitration contract. A violation of 00:19:46.769 --> 00:19:54.089 this results in the, could result in overturning 00:19:54.089 --> 00:19:59.490 the arbitration award. So essentially you get 00:19:59.490 --> 00:20:03.089 judicial review, just as if you had appealed 00:20:03.089 --> 00:20:10.470 from the judgment in superior court. be very 00:20:10.470 --> 00:20:18.269 careful about how you structure the clause essentially 00:20:18.269 --> 00:20:21.950 granting judicial review, appellate review of 00:20:21.950 --> 00:20:26.450 your arbitration. Because provisions requiring 00:20:26.450 --> 00:20:29.390 an arbitrator simply to apply California law, 00:20:30.250 --> 00:20:34.029 the Supreme Court has held that just leaves open 00:20:34.029 --> 00:20:37.269 the possibility that the arbitrator will apply 00:20:37.269 --> 00:20:42.420 the law incorrectly. the clauses have to restrict 00:20:42.420 --> 00:20:47.019 or limit the powers of the arbitrator. In fact, 00:20:47.319 --> 00:20:51.099 that word should probably be included within 00:20:51.099 --> 00:21:01.029 the arbitration clause. All right, so on to the 00:21:01.029 --> 00:21:07.829 next slide, Mike. If we don't or parties don't 00:21:08.019 --> 00:21:10.400 have that kind of agreement in the contract, 00:21:10.599 --> 00:21:15.269 what can Is there another alternative? Can they 00:21:15.269 --> 00:21:17.910 appeal internally to the arbitration provider? 00:21:19.049 --> 00:21:20.730 So the focus of our presentation here

today, 00:21:20.890 --> 00:21:24.369 yes, there is another way. In the hypothetical 00:21:24.369 --> 00:21:28.230 we had, we said assume it's a standard dispute 00:21:28.230 --> 00:21:30.430 resolution clause. Maybe it's been cut and copied 00:21:30.430 --> 00:21:34.190 for decades. There is another way which is including 00:21:34.190 --> 00:21:36.710 in that standard contract or including in your 00:21:36.710 --> 00:21:39.130 new contract a provision that the parties can 00:21:39.130 --> 00:21:41.900 appeal inside. the arbitration itself, so you're 00:21:41.900 --> 00:21:47.210 still in the arbitration form. This has been 00:21:47.210 --> 00:21:53.079 around probably for a long time, probably since 00:21:53.079 --> 00:21:56.119 the early 1900s even later in trade organizations. 00:21:56.460 --> 00:21:58.559 It was very common for a trade organization to 00:21:58.559 --> 00:22:00.700 have an orbital process. You could appeal it 00:22:00.700 --> 00:22:03.480 up to a national committee. The large national 00:22:03.480 --> 00:22:05.640 EDR providers started adopting these in about 00:22:05.640 --> 00:22:09.940 1999 into the early 2000s, and now many of them 00:22:09.859 --> 00:22:14.059 have these arbitration procedures to appeal the 00:22:14.059 --> 00:22:20.440 first level award. Ultimately, with that, arbitration 00:22:20.440 --> 00:22:24.480 is a creature of contract. This is a basic action 00:22:24.480 --> 00:22:27.500 that courts repeat all the time. The parties 00:22:27.500 --> 00:22:31.619 have delegated, basically, decision -making power 00:22:31.619 --> 00:22:35.039 to an arbitrator that they appoint. Their agreement 00:22:35.039 --> 00:22:39.059 defines the process, and courts will enforce 00:22:39.059 --> 00:22:47.829 it. Parties, courts will enforce the arbitration 00:22:47.829 --> 00:22:49.250 agreement. They'll also enforce, and there are 00:22:49.250 --> 00:22:52.990 many cases in this area, the appellate arbitration 00:22:52.990 --> 00:22:55.349 rules or the appellate arbitration processes. 00:22:55.789 --> 00:22:58.269 There is a concept, I teach a law school course 00:22:58.269 --> 00:23:01.890 on arbitration. And when I do that, I talk about 00:23:01.890 --> 00:23:04.930 this idea of arbitrate your way, that the parties 00:23:04.930 --> 00:23:07.609 can really design a dispute resolution process, 00:23:07.769 --> 00:23:11.690 an arbitration process as they wish with whatever 00:23:11.690 --> 00:23:14.099 procedures they want. so long as they're not 00:23:14.099 --> 00:23:16.759 unlawful. And that gives the parties a lot of 00:23:16.759 --> 00:23:24.490 autonomy to do that. Rich, if you want to start 00:23:24.490 --> 00:23:27.789 us off with what is an arbitration on appeal? 00:23:29.690 --> 00:23:33.329 Yes. As we mentioned before, this is all contractual. 00:23:33.769 --> 00:23:37.779 So I mean, how do you invoke this option? Well, 00:23:38.680 --> 00:23:41.859 there are a number of ways. If it's in the arbitration 00:23:41.859

--> 00:23:45.490 agreement and in language that I Just mentioned 00:23:45.490 --> 00:23:48.569 that is it's expressly provided for in the arbitration 00:23:48.569 --> 00:23:52.809 agreement. Then you have this option to appeal 00:23:52.809 --> 00:24:01.029 to the. Providers appellate panel. And so this 00:24:01.029 --> 00:24:04.750 usually involves the parties after you've given 00:24:04.750 --> 00:24:07.430 a notice of the appeal. The parties will get 00:24:07.430 --> 00:24:10.369 together and select how many arbitrators they 00:24:10.369 --> 00:24:13.910 want is possible to just select one appellate. 00:24:13.869 --> 00:24:18.089 arbitrator or to have a panel, a tripartite panel. 00:24:18.269 --> 00:24:25.750 We usually have three for jams. Of course, like 00:24:25.750 --> 00:24:29.950 the underlying arbitration that occurred, this 00:24:29.950 --> 00:24:34.269 also is a private endeavor conducted within the 00:24:34.269 --> 00:24:40.809 providers' rules. And the appellate decision 00:24:41.150 --> 00:24:45.210 becomes the final award, and this is for most 00:24:45.210 --> 00:24:47.890 providers. Judicate West has a little bit different 00:24:47.890 --> 00:24:52.230 take on this. We'll talk about that in a few 00:24:52.230 --> 00:24:58.049 minutes. Essentially, the appellate panel at 00:24:58.049 --> 00:25:01.829 Judicate West can remand to the original arbitrator, 00:25:02.349 --> 00:25:04.829 but the other providers that we mentioned in 00:25:04.829 --> 00:25:09.730 our article and that we'll discuss today, Make 00:25:09.730 --> 00:25:14.730 a final decision and the decision of the appellate 00:25:14.730 --> 00:25:18.690 panel becomes the final award and that is what 00:25:18.690 --> 00:25:25.150 you may seek to. Challenge if you prevail, you're 00:25:25.150 --> 00:25:26.970 going to you're going to file a petition to confirm 00:25:26.970 --> 00:25:30.049 with spirit court. If you're the agree party, 00:25:30.250 --> 00:25:34.990 you will file a petition to vacate or modify 00:25:34.990 --> 00:25:39.289 the appellate decision, which is the. final award. 00:25:41.480 --> 00:25:44.539 Just to emphasize some small language we have 00:25:44.539 --> 00:25:46.940 on the bottom that's important, the appellate 00:25:46.940 --> 00:25:50.940 process is not what we just described under the 00:25:50.940 --> 00:25:52.880 California Arbitration Act, where the parties 00:25:52.880 --> 00:25:55.759 can contract for expanded judicial review. This 00:25:55.759 --> 00:25:57.960 is before you ever get to court. So this is a 00:25:57.960 --> 00:26:02.569 separate procedure. Thanks. Yes. So how does 00:26:02.569 --> 00:26:06.970 an arbitration appeal work? Mike, you want to 00:26:06.970 --> 00:26:10.910 fill us in on that? So, the basics of an arbitration 00:26:10.910 --> 00:26:15.549 appeal are the mechanics. We're using four providers. 00:26:16.049 --> 00:26:19.990 They're the AAA, JAMS, Judica West, and NAMM, 00:26:20.170 --> 00:26:24.190 purely for example purposes, for exemplar purposes. 00:26:24.470 --> 00:26:27.250 There are other providers out there that provide 00:26:27.250 --> 00:26:29.829 appellate services, so we're not endorsing any 00:26:29.829 --> 00:26:33.430 of these. or commenting on them other than laying 00:26:33.430 --> 00:26:36.670 them out for what the provisions say. But start 00:26:36.670 --> 00:26:40.089 with finding a provider. Not all providers have 00:26:40.089 --> 00:26:44.589 appellate processes, but some do, as we're highlighting. 00:26:46.230 --> 00:26:49.230 You can be in one provider for the actual arbitration, 00:26:49.609 --> 00:26:52.289 the hearing, and then appeal to a different provider. 00:26:52.930 --> 00:26:55.509 So you could do that as well. You could have 00:26:55.509 --> 00:26:58.250 your own private ad hoc arbitration, presumably 00:26:58.250 --> 00:27:01.359 an incorporate a rule set. Each provider that 00:27:01.359 --> 00:27:05.440 we have on here has a rule set. And some providers 00:27:05.440 --> 00:27:08.640 here, interestingly, a different posture, would 00:27:08.640 --> 00:27:11.440 hear an appeal from a trial court decision. So 00:27:11.440 --> 00:27:15.400 the idea of getting a decision from a state trial 00:27:15.400 --> 00:27:18.059 court. And then similar to mediating an appeal, 00:27:18.180 --> 00:27:19.859 you can arbitrate an appeal. And there might 00:27:19.859 --> 00:27:22.240 be some reasons you wish to do that. I don't 00:27:22.240 --> 00:27:24.319 know how common that is. But some of the providers 00:27:24.319 --> 00:27:28.880 will also entertain your your actual appeal from 00:27:28.880 --> 00:27:32.160 a court judgment. When looking at these rules, 00:27:32.319 --> 00:27:33.500 there are a number of things you're going to 00:27:33.500 --> 00:27:36.599 want to take note of, and we'll go through them. 00:27:36.720 --> 00:27:40.400 And we list them here, standard of review, deadlines, 00:27:41.019 --> 00:27:43.599 arbitrator selection, which Justice Aronson went 00:27:43.599 --> 00:27:47.759 over, the record, new evidence, and remand authority. 00:27:53.440 --> 00:27:58.759 So let's look at the rules now that are involved. 00:27:59.660 --> 00:28:05.259 from the various providers, and you can see that 00:28:05.259 --> 00:28:09.299 there is some differences in how the process 00:28:09.299 --> 00:28:16.200 is initiated and how the agreement to appeal 00:28:16.200 --> 00:28:20.400 works. So as we mentioned, obviously, if you've 00:28:20.400 --> 00:28:22.460 contracted for it in the arbitration clause, 00:28:22.720 --> 00:28:25.380 then it is an option for you. You don't have 00:28:25.380 --> 00:28:31.480 to use it. Parties But the parties may be satisfied, 00:28:31.579 --> 00:28:34.940 both parties may be satisfied with the underlying 00:28:34.940 --> 00:28:42.710 award. But if you do choose to use it, then keep 00:28:42.710 --> 00:28:46.049 in mind that you can, if you don't have an agreement 00:28:46.049 --> 00:28:49.730 providing for an

internal appeal to the provider, 00:28:50.509 --> 00:28:54.430 you can always agree later on to do that. And 00:28:54.430 --> 00:28:59.529 obviously, the time to agree is before you get 00:28:59.529 --> 00:29:04.269 involved in the arbitration. You want to do this 00:29:04.269 --> 00:29:12.630 at the outset, usually at the preliminary arbitration 00:29:12.630 --> 00:29:18.069 management conference. And especially so if the 00:29:18.069 --> 00:29:21.109 stakes are high in the litigation. So both parties 00:29:21.109 --> 00:29:26.390 might want to have this option. So you can agree 00:29:26.390 --> 00:29:29.650 anytime. You can agree also afterwards. Now, 00:29:30.519 --> 00:29:34.980 it's very unlikely that the winner of an arbitration 00:29:34.980 --> 00:29:41.740 award will agree to an appeal if it's not in 00:29:41.740 --> 00:29:44.779 the arbitration agreement. There might be situations 00:29:44.779 --> 00:29:50.519 where that happens though. For instance, if one 00:29:50.519 --> 00:29:53.910 side The winner is dissatisfied with the amount 00:29:53.910 --> 00:29:56.910 of damages that were awarded. Perhaps the winner 00:29:56.910 --> 00:29:59.210 feels that the arbitrator made a mistake and 00:29:59.210 --> 00:30:03.059 should have awarded more damages. The losing 00:30:03.059 --> 00:30:07.460 party, which may feel that the arbitrator never 00:30:07.460 --> 00:30:12.859 should have imposed liability on the client. 00:30:13.720 --> 00:30:16.400 And so in that limited situation, perhaps the 00:30:16.400 --> 00:30:20.000 parties might agree to an arbitration appeal. 00:30:20.549 --> 00:30:23.730 But if you've lost, and then you approach your 00:30:23.730 --> 00:30:27.980 opponent, and your opponent's won, don't count 00:30:27.980 --> 00:30:31.359 on it. I mean, it's just as likely to happen 00:30:31.359 --> 00:30:34.000 that there's going to be an agreement to arbitrate. 00:30:35.180 --> 00:30:41.009 OK, with that, then let's turn to the steps that 00:30:41.009 --> 00:30:47.000 are involved in an appeal. On the notice, there 00:30:47.000 --> 00:30:51.259 are certain time limits. Jams, for instance, 00:30:51.440 --> 00:30:57.319 as we'll see, has a 14 -day notice of appeal. 00:30:58.819 --> 00:31:03.259 The right to cross -appeal exists, and almost 00:31:03.259 --> 00:31:08.759 all the providers provide for that. The panel 00:31:08.759 --> 00:31:13.599 usually involves three by default, but the parties 00:31:13.599 --> 00:31:19.400 may agree to one arbitrator if they do that. 00:31:20.140 --> 00:31:22.859 I don't know an arbitrator that would not honor 00:31:22.859 --> 00:31:28.519 that agreement. And when filing the appellate 00:31:28.519 --> 00:31:32.529 record, hopefully, especially if the case involved 00:31:32.529 --> 00:31:38.009 a lot of money, a lot of issues that are important 00:31:38.009 --> 00:31:40.930 issues and that are very consequential to your 00:31:40.930 --> 00:31:47.349 clients in terms of money or other matters. hopefully 00:31:47.349 --> 00:31:49.730 you have a transcript that you can provide the 00:31:49.730 --> 00:31:53.390 appellate panel. That makes things a lot easier. 00:31:53.950 --> 00:31:56.750 If you don't have an appellate transcript, then 00:31:56.750 --> 00:32:00.069 I think that it's likely then that the panel 00:32:00.069 --> 00:32:03.430 will rely on any factual findings made in the 00:32:03.430 --> 00:32:08.210 final award by the underlying arbitrator. And 00:32:08.210 --> 00:32:10.930 if there's a discrepancy, if you feel that the 00:32:10.930 --> 00:32:14.390 arbitrator below left out some material facts 00:32:14.390 --> 00:32:20.809 in the Now, in the award, then you have the option, 00:32:20.809 --> 00:32:24.809 I think, to try to come or try to form a settled 00:32:24.809 --> 00:32:32.170 statement on appeal. But again, if the prevailing 00:32:32.170 --> 00:32:36.130 party satisfied with the is likely to be satisfied 00:32:36.130 --> 00:32:38.890 with the final award issued by the arbitrator, 00:32:39.410 --> 00:32:41.690 then getting an agreement on a settled statement 00:32:41.690 --> 00:32:45.910 is going to be very difficult. The best option. 00:32:46.190 --> 00:32:48.990 is to, especially if it's a high stakes case, 00:32:49.410 --> 00:32:54.609 is to have a court reporter take down the proceedings 00:32:54.609 --> 00:32:58.069 and create a transcript for review later on. 00:32:59.680 --> 00:33:02.880 The briefs, in arbitration, they're compressed 00:33:02.880 --> 00:33:09.319 schedules and page limits. The underlying arbitration 00:33:09.319 --> 00:33:13.000 procedure for these appellate providers, the 00:33:13.000 --> 00:33:16.740 providers are, They're designed to quickly process 00:33:16.740 --> 00:33:21.700 this. I know JAMS, I think, requires a decision 00:33:21.700 --> 00:33:25.359 after oral argument or submission on the briefs. 00:33:25.359 --> 00:33:28.119 I think it requires a decision within 21 days. 00:33:28.740 --> 00:33:32.079 Other providers, it's usually around 30 days. 00:33:32.319 --> 00:33:35.640 But in any event, this is designed to be a quick 00:33:35.640 --> 00:33:40.319 procedure, not like the procedures that you would 00:33:40.319 --> 00:33:43.970 face. or the delays that you would face in an 00:33:43.970 --> 00:33:48.750 appellate court. And usually there's oral argument. 00:33:48.910 --> 00:33:51.690 I have a preference for oral argument if it's 00:33:51.690 --> 00:33:56.230 a serious case and the issues are close. At Jams, 00:33:56.390 --> 00:33:59.849 in fact, if both parties request it, then the 00:33:59.849 --> 00:34:05.769 panel must provide oral argument. So those are 00:34:05.769 --> 00:34:11.170 essentially the main steps in the appeal. Mike, 00:34:11.230 --> 00:34:16.360 what about the deadlines that are involved? Thanks, 00:34:16.400 --> 00:34:19.280 Justice. So the deadlines are critically important, 00:34:19.360 --> 00:34:22.519 just as they are in court if you're taking an 00:34:22.519 -->

00:34:27.980 appeal from a trial judgment. And the dates are 00:34:27.980 --> 00:34:30.800 different, right? The AAA, you have a 30 -day 00:34:30.800 --> 00:34:34.980 window to appeal. Jams is 14, Judica West 20, 00:34:35.340 --> 00:34:38.800 NAM is 21. And these typically are triggered 00:34:38.800 --> 00:34:43.090 by service. AAA will call it submission to the 00:34:43.090 --> 00:34:46.869 parties. There is not a lot of case law here. 00:34:46.949 --> 00:34:49.690 I don't know if there's any, maybe some you can 00:34:49.690 --> 00:34:52.329 interpret, but these are jurisdictional in the 00:34:52.329 --> 00:34:55.849 sense that the arbital panel, I don't believe, 00:34:55.969 --> 00:34:57.550 and again, this would have to be briefed and 00:34:57.550 --> 00:34:59.530 decided, but from what cases there are, it doesn't 00:34:59.530 --> 00:35:02.090 look like the arbital panel can extend these 00:35:02.090 --> 00:35:08.219 deadlines. The final award, the arbitration proceedings, 00:35:09.320 --> 00:35:11.840 become the final award at the end of them, but 00:35:11.840 --> 00:35:16.219 until the arbitration panel has the case, the 00:35:16.219 --> 00:35:18.280 award does not open back up from the final award 00:35:18.280 --> 00:35:23.019 into a pending award. There are dates on the 00:35:23.019 --> 00:35:27.360 cross appeals, if there is a cross appeal. Judica 00:35:27.360 --> 00:35:29.699 West does not address the issue, so that's something 00:35:29.699 --> 00:35:32.059 we would want to note and perhaps take up with 00:35:32.059 --> 00:35:37.929 them. If you come there, as Justice Aronson mentioned, 00:35:38.050 --> 00:35:40.110 there are decision due dates that are pretty 00:35:40.110 --> 00:35:43.170 expedited. The same with oral argument. It jams, 00:35:43.170 --> 00:35:45.090 right? As you mentioned, the parties can ask 00:35:45.090 --> 00:35:47.730 for it, or you can order it. But places like 00:35:47.730 --> 00:35:53.190 the AAA have a presumption of oral argument on 00:35:53.190 --> 00:35:56.750 the papers, which could be a process to expedite. 00:35:57.429 --> 00:36:01.849 We've gone over the award that Mike, just before 00:36:01.849 --> 00:36:04.710 you leave that, I just want to mention. It might 00:36:04.710 --> 00:36:07.570 look like 14 days is a pretty short time to decide 00:36:07.570 --> 00:36:11.650 whether to appeal, especially if there's a long 00:36:11.650 --> 00:36:18.010 transcript to review. Even in our arbitration, 00:36:20.750 --> 00:36:27.769 the decision can be costly and time consuming. 00:36:28.690 --> 00:36:31.949 So is that enough time? 14 days should be enough 00:36:31.949 --> 00:36:34.349 time, because remember, the arbitrator is going 00:36:34.349 --> 00:36:39.130 to issue an interim award. And so you'll be familiar 00:36:39.130 --> 00:36:42.670 with the reasoning, the logic of the award. And 00:36:42.670 --> 00:36:47.070 then the arbitrator then has to issue a final 00:36:47.070 --> 00:36:50.489 award. And that usually involves awarding costs 00:36:50.489 --> 00:36:54.809 or attorney's fees or making a decision on maybe, 00:36:54.989 --> 00:36:57.630 for instance, who the prevailing party is. Those 00:36:57.630 --> 00:37:01.179 issues you can decide. pretty quickly as to whether 00:37:01.179 --> 00:37:06.679 it warrants an appeal or not. So again, the providers, 00:37:06.820 --> 00:37:10.559 and especially Jams, is interested in providing 00:37:10.559 --> 00:37:13.360 the benefits of arbitration to the parties. And 00:37:13.360 --> 00:37:16.280 that, I think, is the reason why we have a 14 00:37:16.280 --> 00:37:19.860 -day rule. Other outfits, other providers, as 00:37:19.860 --> 00:37:24.840 you can see, give you a bit more time to decide 00:37:24.840 --> 00:37:28.510 whether to appeal. And these are dates for the 00:37:28.510 --> 00:37:30.429 notice of appeal, not for the full briefing on 00:37:30.429 --> 00:37:32.710 the appeal, which the panel will set under the 00:37:32.710 --> 00:37:41.639 rules. OK, so now this becomes pretty important, 00:37:41.679 --> 00:37:46.619 the standard of review. And each provider that 00:37:46.619 --> 00:37:55.320 we looked at has a different definition of how 00:37:55.360 --> 00:38:02.710 the arbitration appeal is reviewed. Jams says 00:38:02.710 --> 00:38:05.889 that the same standard of review that a first 00:38:05.889 --> 00:38:09.510 level appellate court in the jurisdiction would 00:38:09.510 --> 00:38:13.309 apply to an appeal from the trial court decision. 00:38:13.449 --> 00:38:18.010 That means that you're using the standard that 00:38:18.010 --> 00:38:22.469 the court of appeal would apply. So let's discuss 00:38:22.469 --> 00:38:25.469 that. And this one standard you must be aware 00:38:25.469 --> 00:38:29.679 of here is the substantial evidence rule in California. 00:38:30.670 --> 00:38:36.530 That is a review of the facts. Remember, under 00:38:36.530 --> 00:38:41.630 California law, the decision on appeal, the lower 00:38:41.630 --> 00:38:44.730 court's decision is presumed to be correct. All 00:38:44.730 --> 00:38:47.250 inferences are drawn in favor of the judgment 00:38:47.250 --> 00:38:51.730 or in this case, the final award. The substantial 00:38:51.730 --> 00:38:55.050 evidence standard is applied to the factual findings 00:38:55.050 --> 00:39:02.000 by the arbitrator. substantial evidence is defined 00:39:02.000 --> 00:39:06.599 as evidence that is of ponderable legal significance. 00:39:06.980 --> 00:39:09.559 In other words, it's credible and it looks like 00:39:09.559 --> 00:39:14.460 it has some solid value. So in review, the appellate 00:39:14.460 --> 00:39:18.280 court and the jams appellate court will just 00:39:18.280 --> 00:39:22.380 search for evidence, factual evidence to support 00:39:22.510 --> 00:39:28.750 the underlying arbitration award. it's highly 00:39:28.750 --> 00:39:33.329 deferential. So once there is, or the appellate 00:39:33.329 --> 00:39:37.130 panel spots evidence,

substantial evidence that 00:39:37.130 --> 00:39:41.230 supports the arbitrator's finding below, then 00:39:41.269 --> 00:39:45.289 that factual finding will be adopted by the appellate 00:39:45.289 --> 00:39:49.250 panel, even if the appellate panel would have 00:39:49.250 --> 00:39:52.750 come to a different conclusion. It doesn't matter 00:39:52.750 --> 00:39:56.489 if the weight of the evidence is more convincing 00:39:56.489 --> 00:39:58.809 to the appellate panel, that is, the weight of 00:39:58.809 --> 00:40:01.090 the evidence favored the losing party, the appealing 00:40:01.090 --> 00:40:04.530 party. If there's substantial evidence supporting 00:40:04.590 --> 00:40:08.550 the decision below, then that's it. You're stuck 00:40:08.550 --> 00:40:15.219 with those factual findings. It's different in 00:40:15.219 --> 00:40:19.599 other providers have a different rule. For instance, 00:40:19.920 --> 00:40:24.420 in the AAA, the error of law has to be material 00:40:24.420 --> 00:40:27.940 and prejudicial. and determinations of fact have 00:40:27.940 --> 00:40:32.719 to be clearly erroneous. That's still deferential, 00:40:32.719 --> 00:40:35.539 but not like the Jams Substantial Evidence Rule, 00:40:35.900 --> 00:40:37.840 or not the Jams Rule, it's the Appellate Rule 00:40:37.840 --> 00:40:43.670 in California. So despite evidence, substantial 00:40:43.670 --> 00:40:46.010 evidence that may support the award, the panel 00:40:46.010 --> 00:40:49.630 may still conclude the arbitrator's factual conclusions 00:40:49.630 --> 00:40:53.670 were wrong. So what they're doing, or they have 00:40:53.670 --> 00:40:56.119 the authority That is, under the AAA, at least 00:40:56.119 --> 00:41:00.760 the way I read that standard, is to weigh the 00:41:00.760 --> 00:41:03.619 supporting evidence versus contradictory evidence. 00:41:04.739 --> 00:41:08.239 And so, as you can tell, if they have the ability 00:41:08.239 --> 00:41:11.239 to do that, it's not nearly as deferential as 00:41:11.239 --> 00:41:17.039 the substantial evidence rule. And Judicate West, 00:41:19.360 --> 00:41:23.219 it sounds to me, and I don't know whether institutionally 00:41:23.219 --> 00:41:27.880 there's a different way to interpret this, but 00:41:27.880 --> 00:41:30.800 it sounds to me like the panel makes a de novo 00:41:30.800 --> 00:41:33.980 determination again. In other words, it's like 00:41:33.980 --> 00:41:37.079 another arbitration using the identical standard. 00:41:37.159 --> 00:41:40.139 Perhaps there's some deference there. I'm unfamiliar 00:41:40.139 --> 00:41:43.019 with how the rule works, but you should be aware 00:41:43.019 --> 00:41:47.079 of that, that you might be signing up if you 00:41:47.079 --> 00:41:50.500 have an arbitration appeal at Judica West. You 00:41:50.500 --> 00:41:52.800 might be signing up for another arbitration. 00:41:53.460 --> 00:41:57.179 That may not be very satisfactory to the prevailing 00:41:57.179 --> 00:42:02.900 party in the below. So keep that in mind. Mike, 00:42:02.940 --> 00:42:07.599 what about the remedies that are available? So 00:42:07.599 --> 00:42:10.599 you might think, what does the panel do if they 00:42:10.599 --> 00:42:16.719 disagree? At the AAA jams, there's no remand. 00:42:17.630 --> 00:42:20.730 So Rich, you can maybe talk about what you're 00:42:20.730 --> 00:42:23.550 doing in that situation. But let me go to Judith 00:42:23.550 --> 00:42:26.239 at West. They do send it back. The panel will 00:42:26.239 --> 00:42:28.619 not take evidence. Most remedies will go back 00:42:28.619 --> 00:42:31.380 to the original arbitrator who heard the case. 00:42:31.820 --> 00:42:34.000 NAMM's rules are silent, and so there might be 00:42:34.000 --> 00:42:39.019 some institutional process. The panel may affirm. 00:42:39.199 --> 00:42:43.139 They may reverse. They may modify. Rich, have 00:42:43.139 --> 00:42:46.019 you had the opportunity to handle a case like 00:42:46.019 --> 00:42:51.579 this at JAMS where there was an error, but you 00:42:51.579 --> 00:42:53.739 couldn't remand? Or how would you approach a 00:42:53.739 --> 00:42:58.309 case like that? Yeah, under the jams rules, remand 00:42:58.309 --> 00:43:01.590 is not an option for the appellate panel. If 00:43:01.590 --> 00:43:03.409 this was an appellate court, there are instances 00:43:03.409 --> 00:43:05.630 where we would have remanded the trial court, 00:43:05.670 --> 00:43:07.449 for instance, to make certain factual findings. 00:43:08.110 --> 00:43:10.489 The appellate court doesn't, in California, the 00:43:10.489 --> 00:43:13.449 appellate court has no ability to make or does 00:43:13.449 --> 00:43:18.449 not make factual findings on an appeal from the 00:43:18.449 --> 00:43:24.699 judgment below. Can't remand. So what are the 00:43:24.699 --> 00:43:29.019 options for the Jams appellate panel? Reopen 00:43:29.019 --> 00:43:31.800 the evidence. Make the decision themselves. That 00:43:31.800 --> 00:43:39.619 is provided for in the rules. So again, keep 00:43:39.619 --> 00:43:43.239 that in mind. And then the rules for the different 00:43:43.239 --> 00:43:44.699 providers, we have them on the bottom of the 00:43:44.699 --> 00:43:47.780 slide, do address new evidence on appeal. As 00:43:47.780 --> 00:43:50.860 Justice Anderson is saying, you can at Jams reopen 00:43:50.860 --> 00:43:54.449 the record at some of the other ADR firms that 00:43:54.449 --> 00:43:56.389 have different standards and different limitations. 00:44:08.489 --> 00:44:11.489 So this one, yours or mine? This would be you. 00:44:12.230 --> 00:44:16.550 This is me? Yes. Oh, OK. I have you written down 00:44:16.550 --> 00:44:20.510 here, but that's all right. I think I mentioned 00:44:20.510 --> 00:44:23.789 this before, but once the appellate decision 00:44:23.789 --> 00:44:27.789 hands down the decision, it becomes the final 00:44:27.789 --> 00:44:35.599 award. And so that is what you. That is what 00:44:35.599 --> 00:44:38.119

you challenge in the Superior Court. You can't 00:44:38.119 --> 00:44:40.860 go directly to the Appellate Court. You go to 00:44:40.860 --> 00:44:43.519 Superior Court and challenge in a motion to vacate 00:44:43.519 --> 00:44:48.599 or a motion to confirm if you prevail. So keep 00:44:48.599 --> 00:44:50.840 that in mind. And then the court will enter a 00:44:50.840 --> 00:44:54.039 judgment or a dismissal. And that is what you 00:44:54.039 --> 00:44:59.320 appeal from, not the final award in the arbitration. 00:45:02.250 --> 00:45:04.590 I want to talk about this case very briefly in 00:45:04.590 --> 00:45:06.969 the Southern District of Texas. Sure. So the 00:45:06.969 --> 00:45:10.030 final award becomes, as Justice Erin was saying, 00:45:11.389 --> 00:45:14.289 the orbital award. But the arbitration panel 00:45:14.289 --> 00:45:18.269 itself might introduce a new error. It could 00:45:18.269 --> 00:45:21.070 be something relating to the claims that was 00:45:21.070 --> 00:45:25.389 below. But in this province case, the claim of 00:45:25.389 --> 00:45:29.050 error was that the arbitration panel itself decided 00:45:29.050 --> 00:45:31.719 the case without a transcript. that the argument 00:45:31.719 --> 00:45:35.059 was required under the AAA rules. The court rejected 00:45:35.059 --> 00:45:37.920 the challenge, but it does show that the arbital 00:45:37.920 --> 00:45:41.960 panel itself might provide a new basis to make 00:45:41.960 --> 00:45:48.360 it. So should you use an arbitration appeal? 00:45:48.920 --> 00:45:51.539 There are a lot of considerations that an advocate, 00:45:51.719 --> 00:45:56.260 a counselor would want to consider in approaching 00:45:56.260 --> 00:45:58.280 the issue of including this in your arbitration 00:45:58.280 --> 00:45:59.980 agreement or agreeing during the arbitration 00:45:59.980 --> 00:46:11.630 process. And so what would you put in the clause? 00:46:12.000 --> 00:46:14.000 There are a lot of standard things we put in 00:46:14.000 --> 00:46:17.139 arbitration clauses in general. And similar to 00:46:17.139 --> 00:46:18.960 that, you're going to want to put the appellate 00:46:18.960 --> 00:46:22.539 provider's rules by name. There are some cases 00:46:22.539 --> 00:46:26.710 out there that say the bare right to appeal inside 00:46:26.710 --> 00:46:29.750 the arbitration may not be enough to actually 00:46:29.750 --> 00:46:32.630 invoke an appellate process. So rules by name, 00:46:32.670 --> 00:46:34.329 you may want to put the date of the rule, since 00:46:34.329 --> 00:46:37.590 rules do change sometimes to avoid any motion 00:46:37.590 --> 00:46:41.480 practice or defect there. Most likely, you're 00:46:41.480 --> 00:46:46.639 going to want to require a reasoned award called 00:46:46.639 --> 00:46:49.400 the trial arbitrator by the initial arbitrator 00:46:49.400 --> 00:46:53.099 so the appellate panel has some reasoning to 00:46:53.099 --> 00:46:57.239 consider. As Justice Aronson has said, a transcript 00:46:57.239 --> 00:47:02.780 could be incredibly important. So while the underlying 00:47:02.780 --> 00:47:05.400 rules may not require a stenographer, consider 00:47:05.400 --> 00:47:08.590 whether you want one. One of the providers in 00:47:08.590 --> 00:47:11.170 the absence of a transcript, will ask you to 00:47:11.170 --> 00:47:13.050 have a settled statement. You may want to put 00:47:13.050 --> 00:47:16.909 that in the clause itself to forestall any argument 00:47:16.909 --> 00:47:20.269 later. And as we talked about, you can have one 00:47:20.269 --> 00:47:22.210 arbitrator. You could have three. I suppose you 00:47:22.210 --> 00:47:26.769 could have more. Figure that out in your contract 00:47:26.769 --> 00:47:30.070 itself. Finality, while the case law may give 00:47:30.070 --> 00:47:33.409 you some guidance here, what happens to the deadlines? 00:47:34.000 --> 00:47:37.699 the court deadlines during your appeal. The case 00:47:37.699 --> 00:47:40.119 law seems to be that the appeal will stay your 00:47:40.119 --> 00:47:42.380 deadlines, but don't follow my guidance on that. 00:47:42.599 --> 00:47:48.539 Check the rules. And be careful. We look to California 00:47:48.539 --> 00:47:52.199 law specifically. There are cases that have struck 00:47:52.199 --> 00:47:55.440 down appellate arbitration provisions where they 00:47:55.440 --> 00:47:59.559 are substantively unconscionable. One was, it's 00:47:59.559 --> 00:48:01.519 typically when the court believes that they're 00:48:01.519 --> 00:48:05.219 one -sided, oftentimes in the employer -employment 00:48:05.219 --> 00:48:08.079 relationship and employee, excuse me, employer 00:48:08.079 --> 00:48:11.699 -employee relationship where only one side can 00:48:11.699 --> 00:48:14.639 appeal or certain dollar thresholds make the 00:48:14.639 --> 00:48:17.280 clause unconscionable. So be careful when you're 00:48:17.280 --> 00:48:21.429 writing them. Mike, before we leave this, is 00:48:21.429 --> 00:48:23.710 there a sentence, an essential sentence that 00:48:23.710 --> 00:48:26.639 you would put in an arbitration clause? Yeah, 00:48:26.639 --> 00:48:32.039 so I would focus on the the provider and the 00:48:32.039 --> 00:48:35.659 rules it the cases that are out there have some 00:48:35.659 --> 00:48:38.579 cases that are out there have found clauses defective 00:48:38.579 --> 00:48:41.119 where they don't sufficiently adopt a rule set 00:48:41.119 --> 00:48:44.260 so that the other party the the Non -appealing 00:48:44.260 --> 00:48:47.920 party has no idea what the arbitration process 00:48:47.920 --> 00:48:50.650 could look like And what their exposure might 00:48:50.650 --> 00:49:01.369 be and these are some of the cases that we have 00:49:01.369 --> 00:49:04.659 identified. There are many more The little case 00:49:04.659 --> 00:49:08.460 seems to be one case that's often cited where 00:49:08.460 --> 00:49:11.920 an employment agreement where the arbitration 00:49:11.920 -->

00:49:14.679 clause was one sided, the employer had the right 00:49:14.679 --> 00:49:17.980 to appeal, the employee could not. It was a $50 00:49:17.980 --> 00:49:22.039 ,000 threshold. There's contrary case law. We 00:49:22.039 --> 00:49:26.329 have this Texas case. Take a look at the cases. 00:49:26.510 --> 00:49:28.150 They come out a variety of ways, but when you 00:49:28.150 --> 00:49:31.170 have a dollar threshold, be particularly cautious. 00:49:32.079 --> 00:49:36.400 If an appellate arbitration clause is struck, 00:49:37.019 --> 00:49:38.820 courts will look to severability. And they often 00:49:38.820 --> 00:49:41.420 will be severed where the underlying arbitration 00:49:41.420 --> 00:49:44.440 clause will be saved, putting on an issue to 00:49:44.440 --> 00:49:51.039 flag. The little case is interesting. The threshold 00:49:51.039 --> 00:49:57.159 award issue, there's some dispute about that. 00:49:58.559 --> 00:50:02.900 So in that particular case, It was an employment 00:50:02.900 --> 00:50:06.239 case. It was a wrongful termination action, I 00:50:06.239 --> 00:50:11.699 think. And so on appeal in the Supreme Court, 00:50:12.320 --> 00:50:18.940 the employer argued that this was not an unconscionable 00:50:18.940 --> 00:50:21.960 provision. It made sense. There was a rationale 00:50:21.960 --> 00:50:24.519 for supporting it. And that is that anything 00:50:24.519 --> 00:50:30.059 below the $50 ,000 threshold was just Too de 00:50:30.059 --> 00:50:33.980 minimis to bother with it. They should the final 00:50:33.980 --> 00:50:37.920 award should Should stand and that only matters 00:50:37.920 --> 00:50:42.239 exceeding $50 ,000 In other words where those 00:50:42.239 --> 00:50:46.079 stakes were raised that's when the appeals should 00:50:46.079 --> 00:50:50.019 be available Some courts have bought that in 00:50:50.019 --> 00:50:52.079 the past, but the California Supreme Court did 00:50:52.079 --> 00:50:54.980 not especially in the context of unemployment 00:50:54.980 --> 00:51:00.250 litigation because Well, that was rational way 00:51:00.250 --> 00:51:04.469 to view things. It was one sided. That was certainly 00:51:04.469 --> 00:51:10.980 would help the employer who have the employer 00:51:10.980 --> 00:51:17.739 that has more resources and and is likely to 00:51:17.739 --> 00:51:21.380 want to appeal a judgment against it that exceeded 00:51:21.380 --> 00:51:28.309 $50 ,000. But if the employee claimant. received 00:51:28.309 --> 00:51:33.510 no award, nothing at all, then that employee 00:51:33.510 --> 00:51:36.889 could not appeal because of the $50 ,000 threshold. 00:51:37.429 --> 00:51:41.730 That bar was deemed unconscionable by the court. 00:51:43.010 --> 00:51:48.500 So keep that in mind when you're contemplating 00:51:48.500 --> 00:51:54.320 or if you're drafting and going to incorporate 00:51:54.320 --> 00:51:57.360 the option of an internal appellate procedure 00:51:57.360 --> 00:52:03.570 in your arbitration clause. Okay, deciding whether 00:52:03.570 --> 00:52:07.469 to include an appeal in your arbitration clause. 00:52:08.030 --> 00:52:11.840 Mike? So these considerations cut both ways as 00:52:11.840 --> 00:52:15.300 we put here, right? So favoring appeal, oftentimes 00:52:15.300 --> 00:52:17.840 you might think a large potential exposure would 00:52:17.840 --> 00:52:20.400 justify the cost of an appeal, whereas a lower 00:52:20.400 --> 00:52:23.099 value would not. Are the legal issues important? 00:52:23.400 --> 00:52:26.099 Are they novel? Do they relate to an ongoing 00:52:26.099 --> 00:52:28.420 business relationship where you want to get some 00:52:28.420 --> 00:52:33.179 certainty? Or is it backbound, deference? It's 00:52:33.179 --> 00:52:36.360 a difficult case to vacate. You just don't want 00:52:36.360 --> 00:52:39.659 to go there. Think about finality and speed, 00:52:39.980 --> 00:52:43.300 the delay, potentially the expedited nature of 00:52:43.300 --> 00:52:48.179 the appeal, but the delay of having one. There 00:52:48.179 --> 00:52:51.619 are cost provisions in all of the rules, some 00:52:51.619 --> 00:52:54.650 more detailed than others. that could be a driver 00:52:54.650 --> 00:52:57.570 for you. And who bears the cost is also an issue 00:52:57.570 --> 00:53:01.730 that we're not going into, but one that would 00:53:01.730 --> 00:53:05.409 warrant some investigation. Again, is this an 00:53:05.409 --> 00:53:08.090 ongoing relationship or a one -off dispute? Are 00:53:08.090 --> 00:53:11.610 there many disputes like this that come about? 00:53:14.929 --> 00:53:17.929 So favor and appeal, you would have one arbitrator 00:53:17.929 --> 00:53:24.590 below, a panel on appeal. coming against and 00:53:24.590 --> 00:53:31.829 you're worried how they're handled. Enforceability, 00:53:32.210 --> 00:53:34.849 you have a negotiated contract in the commercial 00:53:34.849 --> 00:53:37.469 sense, but commercial employment contracts are 00:53:37.469 --> 00:53:39.489 sometimes excluded from, at least these providers 00:53:39.489 --> 00:53:41.409 would like that. Not all of them are sometimes 00:53:41.409 --> 00:53:45.030 excluded from the cases that they will administer. 00:53:46.250 --> 00:53:48.309 You do get the benefit of errors can be corrected 00:53:48.309 --> 00:53:50.710 before finality. As Justice Emerson said at the 00:53:50.710 --> 00:53:53.639 beginning, I think there's a 50 % a modification 00:53:53.639 --> 00:53:58.119 reversal rate here. But there could be a delay 00:53:58.119 --> 00:54:04.239 in leverage for the losing side. On the delay 00:54:04.239 --> 00:54:11.860 issue, if you're concerned about that, this is 00:54:11.860 --> 00:54:17.300 still a speedy process. The parties will select 00:54:17.300 --> 00:54:29.250 the three panel judge. And you can, in inquiring 00:54:29.250 --> 00:54:34.130 about who to select, you can have the case managers, 00:54:35.389 --> 00:54:39.750 at least at JAMS, check with the people, the

00:54:39.750 --> 00:54:42.210 neutrals you're thinking about selecting to see 00:54:42.210 --> 00:54:46.150 if they have any scheduling conflicts. A lot 00:54:46.150 --> 00:54:49.130 of neutrals will be too busy to immediately... 00:54:50.170 --> 00:54:53.869 tackle your appeal. But there are plenty of neutrals 00:54:53.869 --> 00:54:59.769 that will have an option or have an opening to 00:54:59.769 --> 00:55:02.989 get in and decide the appeal right away. So that's 00:55:02.989 --> 00:55:07.809 something to think about in selecting the panel. 00:55:14.659 --> 00:55:20.000 Okay, building the record. I can't emphasize. 00:55:20.099 --> 00:55:24.460 In fact, I've been on panels where the tripartite 00:55:24.460 --> 00:55:30.469 panels where we just order the parties to have 00:55:30.469 --> 00:55:34.750 a court reporter in a very complicated arbitration. 00:55:34.929 --> 00:55:36.570 I have one coming up that we're just going to 00:55:36.570 --> 00:55:41.809 tell the parties. We're not scriveners. We can't 00:55:41.809 --> 00:55:45.550 evaluate the demeanor of the witnesses and take 00:55:45.550 --> 00:55:49.710 down notes as to what's said. And I know it can 00:55:49.710 --> 00:55:52.250 be costly, but usually the parties will split 00:55:52.250 --> 00:55:55.170 the costs. And if they're more than two parties 00:55:55.170 --> 00:55:59.550 and it's a It might be, it's still better to 00:55:59.550 --> 00:56:01.289 do this. You're going to avoid a lot of headaches 00:56:01.289 --> 00:56:04.610 down the road by having a court reporter. It's 00:56:04.610 --> 00:56:08.809 just essential for us in a complicated case to 00:56:08.809 --> 00:56:16.719 have a transcript. So whether to, and we were 00:56:16.719 --> 00:56:21.900 talking about whether to employ this, the appellate 00:56:21.900 --> 00:56:28.400 option in arbitration. So what does that do when 00:56:28.400 --> 00:56:33.460 the parties know at the outset that there's a 00:56:33.460 --> 00:56:39.159 potential appeal? My view is that it tends to 00:56:39.159 --> 00:56:44.000 formalize things a little bit. It's a spur, it's 00:56:44.000 --> 00:56:47.139 an incentive to the parties to create a complete 00:56:47.139 --> 00:56:55.739 record. It's much like being in court. there's 00:56:55.739 --> 00:56:59.539 more formality and that's good for the arbitrator 00:56:59.539 --> 00:57:06.019 as well as it is for the lawyers. I've reviewed 00:57:06.019 --> 00:57:11.309 a transcript where the arbitration is going to 00:57:11.309 --> 00:57:14.570 get pretty informal. You work together, you're 00:57:14.570 --> 00:57:22.309 in this either a room or you're on Zoom. I reviewed 00:57:22.309 --> 00:57:24.610 one transcript where the arbitrator was calling 00:57:24.610 --> 00:57:28.289 the lawyers by their first name. Maybe I'm old 00:57:28.289 --> 00:57:31.269 fashioned, I don't know, but it just seemed a 00:57:31.269 --> 00:57:37.610 little too familiar. Knowing that there's an 00:57:37.610 --> 00:57:42.449 appeal,

I think it's better for everyone that's 00:57:42.449 --> 00:57:46.550 involved to keep that in mind and ask for a reason 00:57:46.550 --> 00:57:51.730 record. It might remind you also to create a 00:57:51.730 --> 00:57:57.340 complete offer of proof. This is one of my pet 00:57:57.340 --> 00:58:01.340 peeves, I guess, and that is that lawyers either 00:58:01.340 --> 00:58:04.960 forget to make an adequate offer of proof or 00:58:04.960 --> 00:58:09.619 don't make one at all. If you recall, when we 00:58:09.619 --> 00:58:12.900 were talking about statutory grounds to challenge 00:58:12.900 --> 00:58:18.679 in California, to challenge a denial of request 00:58:18.679 --> 00:58:24.980 to continue the the hearing, one of the ways 00:58:24.980 --> 00:58:29.420 to get that arbitration award overturned is that 00:58:29.420 --> 00:58:32.239 if there was good cause, upon a showing of good 00:58:32.239 --> 00:58:34.760 cause is how it's phrased in the statute, and 00:58:34.760 --> 00:58:40.739 the arbitrator denies that, you may have a solid 00:58:40.739 --> 00:58:45.320 ground for obtaining, vacating that award. But 00:58:45.320 --> 00:58:50.590 too often I have seen where it seemed that the 00:58:50.590 --> 00:58:54.530 aggrieved party's lawyer failed to make an adequate 00:58:54.530 --> 00:58:59.389 proof. And that means specifying what the harm 00:58:59.389 --> 00:59:05.010 is. For instance, we had a case a few years ago 00:59:05.010 --> 00:59:10.030 where a material witness was unavailable. The 00:59:10.030 --> 00:59:12.969 witness was crucial to the defense and moved 00:59:12.969 --> 00:59:17.610 to continue. the hearing and the attorney specified 00:59:17.610 --> 00:59:22.590 what the witness would testify to. That was fine. 00:59:23.809 --> 00:59:27.650 That met some of the requirements for an adequate 00:59:27.650 --> 00:59:31.570 offer of proof. Unfortunately, there was no explanation 00:59:31.570 --> 00:59:35.630 as to how that would prejudice the party. And 00:59:35.630 --> 00:59:42.940 on appeal, it's not just that the evidence that's 00:59:42.940 --> 00:59:52.170 excluded or the denial of the continuance was 00:59:52.170 --> 00:59:54.269 in error because there was a showing of good 00:59:54.269 --> 00:59:58.230 cause as to materiality, it still doesn't prove 00:59:58.230 --> 01:00:00.650 that there was prejudice. Perhaps another witness 01:00:00.650 --> 01:00:02.849 testified to the same thing that the material 01:00:02.849 --> 01:00:07.550 witness would testify to. That is another aspect 01:00:07.550 --> 01:00:09.489 that you should keep in mind when making an offer 01:00:09.489 --> 01:00:11.190 of proof. I'm sorry to get off on that tangent, 01:00:11.429 --> 01:00:14.269 but it just is, I saw that when I was on the 01:00:14.269 --> 01:00:16.449 court and when the appellate court, and I've 01:00:16.449 --> 01:00:23.869 seen it since I joined Jams. Okay, I think that 01:00:23.869 --> 01:00:28.960 brings us to the end and we can tackle any questions 01:00:28.960 --> 01:00:38.679 if there are some. All right. It looks like we 01:00:38.679 --> 01:00:41.840 do have a couple of questions. We have one from 01:00:41.840 --> 01:00:44.139 Richard. How would you both address the following 01:00:44.139 --> 01:00:46.739 dispute regarding the arbitrator's jurisdiction? 01:00:47.320 --> 01:00:49.760 One party wants to argue sections of the CCP 01:00:49.760 --> 01:00:52.139 apply to the arbitration proceeding, while the 01:00:52.139 --> 01:00:55.800 opposing party argues the contract controls the 01:00:55.800 --> 01:00:58.159 arbitrator's jurisdiction and the CCP cannot 01:00:58.159 --> 01:01:00.460 be considered by the arbitrator. Can the losing 01:01:00.460 --> 01:01:02.219 party have this issue reviewed by the court? 01:01:07.849 --> 01:01:12.239 Yeah. If the arbitrator So as Mike mentioned 01:01:12.239 --> 01:01:14.840 earlier, arbitration is a creature of contract. 01:01:15.400 --> 01:01:18.000 If the contract has specified the scope of the 01:01:18.000 --> 01:01:23.159 arbitrator's powers, that prevails over anything 01:01:23.159 --> 01:01:28.500 else. And if the arbitrator exceeds the scope, 01:01:28.840 --> 01:01:32.179 then you're cooking with gas. You might have 01:01:32.179 --> 01:01:36.800 a solid grounds to... vacate the arbitration 01:01:36.800 --> 01:01:39.940 award. All depends on the language in the arbitration 01:01:39.940 --> 01:01:46.349 agreement. And Rich, I'll add there, in vacatur 01:01:46.349 --> 01:01:49.150 courts look at, did the arbitrator interpret 01:01:49.150 --> 01:01:51.969 the contract or did the arbitrator simply make 01:01:51.969 --> 01:01:55.429 a decision and apply their own judgment on policy? 01:01:55.889 --> 01:01:57.809 And this could be a situation where the latter 01:01:57.809 --> 01:02:06.409 occurred. All right, and it looks like we have 01:02:06.409 --> 01:02:08.730 one last question. What is your view of AI note 01:02:08.730 --> 01:02:11.230 -taking apps in lieu of a court reporter? Have 01:02:11.230 --> 01:02:21.159 you seen that approach used? Let me start off. 01:02:21.699 --> 01:02:25.219 My view of it is, it could be helpful, but always 01:02:25.219 --> 01:02:30.440 talk about it, disclose it to everyone else in 01:02:30.440 --> 01:02:33.059 the proceeding, the presiding officer, the opposing 01:02:33.059 --> 01:02:37.260 counsel, and get consent before you do it. But 01:02:37.260 --> 01:02:39.260 these programs, I haven't seen it done in an 01:02:39.260 --> 01:02:42.079 arbitration presided over. I suspect it will 01:02:42.079 --> 01:02:45.190 become more common. Yeah, I think the question 01:02:45.190 --> 01:02:48.849 is, instead of a court reporter that you use 01:02:48.849 --> 01:02:54.710 to record the proceedings. So I haven't encountered 01:02:54.710 --> 01:02:57.050 that yet. I don't know whether it's effective 01:02:57.050 --> 01:03:01.900 or not. Most of the cases that I've had involve 01:03:01.900 --> 01:03:07.309 a court reporter. Lawyers are, you know, lawyers 01:03:07.309 --> 01:03:13.550 are older, used to court reporters. But I imagine 01:03:13.550 --> 01:03:21.610 we will see more of that. All righty, this concludes 01:03:21.610 --> 01:03:23.869 today's presentation. Thank you so much, Michael 01:03:23.869 --> 01:03:26.050 and Judge Aronson for an excellent presentation 01:03:26.050 --> 01:03:27.969 today. And of course, we'd love to thank our 01:03:27.969 --> 01:03:29.869 audience for joining us. Have a great day.