Delegation and Arb Rules

Nelson v. Dual Diagnosis Treatment Center, Inc., No. G059565 (D4d3 Apr. 19, 2022)

This is an appeal of the denial of a motion to compel arbitration. The trial court found the agreement to be unconscionable and the Court of Appeal agrees. By all indications, the signatory was a schizophrenic off his meds being admitted to an unlicensed drug detox facility, in which we would later hang himself. And the provisions of the arb agreement seem pretty unfair as a matter of substance. Not much to see here.

But the interesting thing is a bit on whether the unconscionability analysis should get delegated to the arbitrator. The agreement designates the AAA rules, which provide that an arbitrator can decide his or her own jurisdiction. Cases have found that selecting the AAA rules is the kind of “clear and unmistakable” expression of intent that is adequate to delegate arbitrarily. The Court here is skeptical if that rule should apply when one of the parties is unsophisticated. But that is not the ultimate basis of the decision. The Court finds that other indicia in the agreement regarding decisions being made by courts render any expressed intent to delegate, at best, ambiguous. And an ambiguous statement of intent is not clear and unmistakable. 

Affirmed.

Three Years Wait for Fait Accompli

Nelson v. Tucker Ellis, LLP, No. A153661 (D1d3 May 5, 2020)

Three years ago, the Court of Appeal determined that an attorney’s work product belongs to the firm, not the attorney. Thus when Firm received a subpoena for documents implicating the work product of a former Attorney, it didn’t need to seek his permission before producing the documents.

The prior ruling was a writ ordering reversal of a summary judgment ruling in Attorney’s favor. On remand, the trial court granted Firm’s motion for judgment on the pleadings, finding that the Court of Appeal’s ruling was inconsistent with Attorney’s theory of liability, and, in the alternative, that the claims were barred by the litigation privilege. Attorney appealed, and the Court of Appeal affirms.

Principally, the Court holds that the prior ruling appellate ruling that Firm held the work product privilege constituted law of the case. In its strong version, the law of the case doctrine holds that earlier appellate opinions in a case bind subsequent proceedings in the trial court or future appeals to an equal court. Here, attorney alleged several different causes of action—interference with contract, invasion of privacy, negligence, conversion. But each claim had at least one element that was premised on Firm’s having wrongfully disclosed Attorney’s work product. It follows that prior ruling on appeal was fatal to all the claims.

In the alternative, the claims were also barred by the litigation privilege. Civil Code § 47(b) bars any tort liability grounded on litigation-related communications. Here, Attorney’s claims were based on Firm’s having produced documents in response to a third party subpoena in a litigation. Although not every act Firm took was necessarily communicative, the non-communicative acts, like selecting what documents to produce in response, were predicate to the communicative act of producing the documents. Given the broad construction afforded to § 47(b), Firm’s acts were, on the whole, communicative enough to fall within the privilege.

Finally, the Court of Appeal affirms that Attorney didn’t need to be afforded leave to amend his complaint. Attorney did not identify any facts that would preclude the Firm’s ownership of the work product protection from cutting the legs out from under his claims. So any amendment would have been futile.

Affirmed.