Fourth District Blasts Payne & Fears For Failing To Cite Kalai

As reported in the L.A. Daily Journal last week,

An appellate panel criticized an Irvine law firm Tuesday for not playing fair while defending a company against an employee's discrimination complaint. "In this case, we deal with tactics which were heavy-handed at best, and at worst could be viewed as a deliberate attempt to deprive a pro per plaintiff the opportunity to air his grievance in any form," Acting Presiding Judge William W. Bedsworth wrote on behalf of the three-judge panel of the 4th District Court of Appeal. Zamani v. St. John Knits Inc., G035818. In its unpublished ruling, the panel unanimously reversed an Orange County Superior Court judge's dismissal of Behzad Zamani's complaint against St. John Knits Inc., where he had worked as head mechanic for five years. Zamani sued the company after being fired, alleging discrimination. Daniel F. Fears of the Irvine firm Payne & Fears represented the company. Before the trial court, the law firm cited arguments that were already defeated by the appellate court three years earlier, the panel said. Payne & Fears should have known about the ruling because the firm represented the prevailing party in that case. Kalai v. Gray 109 Cal.App.4th 768 (2003). "To characterize counsel's efforts as disturbing would be mild," Bedsworth wrote. Fears could not immediately be reached for comment Tuesday. © 2006 Daily Journal Corporation.

Remember 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, and its arbitration waiver issue? Dead forever is that part of the opinion which defense lawyers (and some trial judges) misquoted to claim that a person cannot demand a court determination of an arbitration agreement's validity without waiving the right to arbitrate should the agreement be found enforceable. Three years ago, in Kalai v. Gray (2003) 109 Cal.App.4th 768, the Fourth District Court of Appeal held that a plaintiff will not be deprived of his right to proceed with his claim in arbitration merely because he first attempted to litigate it in court. The Supreme Court had previously held that a waiver of the right to proceed in arbitration only occurs "when the merits of the dispute have been litigated by the parties” (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180), but the 24 Hour Fitness case suggested that one who "repudiates" the arbitration agreement may never again seek to arbitrate -- an absurd rule that would have rendered any unconscionable arbitration agreement into an ad terrorem clause. Though California law clearly provides parties the right to seek a determination regarding the validity of a contract, including a contract for arbitration, St. John Knits and its counsel, Payne & Fears, claimed that it did not. They cited 24 Hour Fitness and its progeny, Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, but made no mention of Kalai, even though the losing counsel in the Kalai case was Payne & Fears. The Court of Appeal did not appreciate that tactic. We don't know of any sanction being issued, but the opinion contained a number of gems, which, if it is ever published, would make for powerful support of many common employee arguments:

Much as our legal system favors the resolution of disputes on their merits, we still sometimes run into a case in which a party manages to rope the trial court into the kind of “gotcha!” resolution that usually frustrates justice.  In this case, we deal with tactics which were heavy-handed at best, and at worst could be viewed as a deliberate attempt to deprive a pro per plaintiff of the opportunity to air his grievance in any forum. ...

In this case, we reject St. John’s contention that plaintiff Behzad Zamani “waived” his right to pursue his claim in arbitration, merely because he first attempted to pursue it in court.  The fact he also stated, during the court proceedings, that he was “refusing” to arbitrate – at a time when no arbitration proceeding had ever been initiated, and St. John’s counsel had been badgering him to stipulate to it – changes nothing.  Zamani was entitled to “refuse” to arbitrate his own claims as part of his argument he was entitled to litigate in court.  As a practical matter, every party who files an opposition to a petition or motion to compel arbitration does that.  What Zamani might not be entitled to do, if he entered in to an enforceable arbitration agreement, is litigate those claims.  And that issue – whether Zamani could proceed with his claim in court – is the only issue which should have been determined below.

... the judgment is reversed, and the case is remanded with directions to modify the summary judgment order so as to delete any finding that Zamani waived his right to arbitrate.  The court is also directed to consider whether St. John’s conduct in attempting to deprive Zamani of any forum in which to adjudicate his claim amounts to a violation of the covenant of good faith and fair dealing, and warrants a finding that St. John itself relinquished its right to compel arbitration in this case.

First, we must address the conduct of St. John’s counsel in attempting to persuade the trial court of the merits of its summary judgment motion, without so much as acknowledging the existence of our prior Kalai opinion. Of course, counsel is always free to disagree with our published opinions (even to disparage them, privately); to distinguish them; or perhaps to argue they are inconsistent with other, more persuasive authority. What counsel cannot do is mischaracterize the state of the law. “An attorney has a duty ‘[t]o employ, for the purpose of maintaining the causes confided to him or her such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by any artifice or false statement of fact or law.’ (Bus. & Prof. Code, § 6068, subd. (d).) Further, a member of the State Bar ‘[s]hall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or law.’ (Rules Prof. Conduct, rule 5-200(B).) ‘“Honesty in dealing with the courts is of paramount importance, and misleading a judge is, regardless of motives, a serious offense.”’ (Paine v. State Bar (1939) 14 Cal.2d 150, 154; see also Di Sabatino v. State Bar (1980) 27 Cal.3d 159, 162-163; Garlow v. State Bar (1982) 30 Cal.3d 912, 917.) ‘Counsel should not forget that they are officers of the court, and while it is their duty to protect and defend the interests of their clients, the obligation is equally imperative to aid the court in avoiding error and in determining the cause in accordance with justice and the established rules of practice.’ (Furlong v. White (1921) 51 Cal.App. 265, 271.” (Williams v. Superior Court (1996) 46 Cal.App.4th 320, 330.) ...

No attorney in her right mind would have acceded to the stipulation shortening time for a summary judgment motion from 75 days to only 21 days, without knowing what St. John intended to do with it – and certainly would not have if she did know. ...

In 24 Hour Fitness, the court concluded, in accordance with Charles J. Rounds, that defendants were entitled to summary judgment based upon their arbitration agreement. It then went on to say, in a footnote contained in the disposition portion of its opinion, that: “[w]e recognize the result of our decision here is that Munshaw has no avenue for recourse against Nautilus, Rodriguez, Harmon or Cunningham. This consequence flows from her decision to repudiate the arbitration agreement.” (24 Hour Fitness, Inc. v. Superior Court, supra, 66 Cal.App.4th at p. 1216, fn. 12.) The court does not, however, make any effort to explain exactly why that would be the result. In Kalai, we attributed the court’s statement to the fact the arbitration provision at issue expressly required an arbitration be commenced within a year, which had not occurred. That factor distinguished 24 Hour Fitness from both Kalai and this case, and we consequently have no need to consider whether we might agree with the court’s conclusion on that basis. However, if the 24 Hour Fitness court meant to suggest that a plaintiff’s mere repudiation of the agreement would entitle defendant to avoid any adjudication of plaintiff’s claims, we simply disagree. That conclusion is inconsistent with both basic contract law and the precedents discussed above. ...

Rather than employing the arbitration provision in the parties’ agreement as a means of resolving this dispute in arbitration, as is clearly intended, it appears St. John was attempting to spin it into a means of avoiding resolution altogether. If that is true, it would constitute grounds for concluding that it is St. John, rather than Zamani, that has waived its right to arbitration in this case. As explained in Davis v. Blue Cross of Northern California (1979) 25 Cal.3d 418, 427, the covenant of good faith and fair dealing, which “requires each contracting party to refrain from doing anything to injure the right of the other to receive the benefits of the agreement” is implied in arbitration agreements as well as others. And conduct by one party which amounts to a deliberate effort to deprive the opposing party of those arbitration benefits can be construed as a violation of the covenant of good faith and fair dealing, and can be used to preclude the first party from thereafter seeking to enforce the arbitration agreement. We remand this case to the trial court with directions to consider whether St. John’s conduct rises to that level, and to determine whether, as a consequence, St. John has relinquished its own right to compel arbitration.

Zamani v. St. John Knits, Inc. can be downloaded here in pdf or word format.

Comments

[sima fard]

Nice article. How about mentioning the plaintiff's attorney (moi) for the achievment?
yours
Sima Fard