I See Alter Egos...

Benaroya v. Willis, No. B281761 (D2d4 May 17, 2018)

Bruce Willis has some kind of deal with a production company. They get into a dispute. Like pretty much every Hollywood deal nowadays, the agreement calls for JAMS arbitration.

Willis isn’t getting paid his due. So Willis and ProdCo go to JAMS and start arbitrating. At some point, however, Willis likely figures out that even if we wins, ProdCo—a one-man operation—can’t or won’t pay up. So Willis asks the arbitrator to amend his demand to bring in ProCo’s owner/operator under an alter ego theory. The arbitrator agrees. Ultimately, the arbitrator finds ProdCo liable to Willis for 5 million bucks, and that ProdMan is, in fact, ProdCo’s alter ego. That makes ProdMan joint and several on the judgment. The trial court confirms the award.

The issue on appeal is that ProdMan isn’t a signatory to the contract. Which normally means he can’t be required to arbitrate at all. There is an exception to that rule, however, if the non-signatory is the alter ego of someone who signed the contract. But that doesn’t solve the problem here, because now the alter ego question is baked into the threshold question of whether ProdMan can even be required to arbitrate. And absent ProdMan’s consent, only a court, not an arbitrator, is allowed to make that call. Which means the arbitrator exceeded his authority and thus that the award against ProdMan needs to be vacated.

Reversed.