Estate Of Dr. Michael Romney v. Franciscan Medical Group , 199 Wash. App. 589 ( 2017 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
CINDIUS ROMNEY as PERSONAL )
REPRESENTATIVE for the ESTATE ) No. 74806-8-I
OF MICHAEL ROMNEY; FARON )
BAUER; and KRISTEN CHILDRESS, ) DIVISION ONE
individually and on behalf of all others )
similarly situated, ) PUBLISHED OPINION
)
Appellants, )
v. )
FRANCISCAN MEDICALGROUP,a )
Washington corporation; FRANCISCAN) —
HEALTH SYSTEM, a Washington )
corporation; FRANCISCAN HEALTH )
VENTURES, a Washington )
corporation; FRANCISCAN ) .%
GO <
NORTHWEST PHYSICIANS HEALTH )
NETWORK, LLC, a Washington )
corporation; and CATHOLIC HEALTH )
INITIATIVES, a Colorado corporation, )
)
Respondents. ) FILED: July 10, 2017
TRICKEY, A.C.J. — Michael Romney and several other medical professionals
1 sued their former employer, Franciscan Medical Group (FMG),
(collectively Romney)
individually and on behalf of a putative class. In the first appeal in this case, Romney
argued that the arbitration agreements the employees had signed were unconscionable.
We disagreed. On remand, the superior court granted FMG’s motion to compel individual
arbitration rather than class arbitration.
Romney argues in this second appeal that FMG waived its right to compel
individual arbitration. Because FMG’s conduct in the superior court and during the first
1
For ease of reference, we refer to Michael Romney, the individual plaintiff, as Dr. Romney and
the putative class as Romney. Dr. Romney passed away during the litigation. His wife, Cindius
Romney, is participating in the case as the personal representative of his estate.
No. 74806-8-I /2
appeal was inconsistent with a right to compel individual arbitration, and the delay in
asserting the right prejudiced Romney, we agree. Accordingly, we reverse.
FACTS
We summarized the facts preceding the first appeal in Romney v. Franciscan
Medical Group, 186 Wn. App. 728, 349 P.3d 32, review denied, 184 Wn.2d 1004, 357
P.3d 666 (2015).
Plaintiffs-respondents Michael Romney, MD, Faron Bauer, MD, and
Kristen Childress, ARNP, are former employees of defendant-appellant
Franciscan Medical Group (FMG). Each entered into an employment
contract with FMG that included agreements to arbitrate all employment
related disputes between the parties. The employees brought suit against
FMG for damages, statutory penalties, and equitable relief for wage
violations on behalf of themselves and the class of physicians, medical
assistants, and nurse practitioners. Romney and Bauer brought individual
claims for being fired in retaliation for whistle-blowing and for losing their
hospital privileges.
Romney, Bauer, and Childress filed suit in King County Superior
Court and at the same time requested the court to find the arbitration
agreement[s] signed by each of the parties to be unconscionable. FMG
moved to compel arbitration. The trial court found the arbitration addendum
unconscionable, invalidated it, and denied FMG’s motion to compel
arbitration. FMG timely appeal[ed].
Romney, 186 Wn. App. at 733-34 (footnote omitted).
While the first appeal was pending, Dr. Romney was diagnosed with terminal
cancer. Romney sought to engage in discovery, including discovery for the putative class.
FMG agreed to discovery for Dr. Romney’s individual claims, but opposed class discovery
at that time. FMG argued that class discovery was premature because the superior court
or an arbitrator might decline to certify the class.
On February 17, 2015, this court held that the agreements were not
unconscionable and reversed the superior court. Romney, 186 Wn. App. at 733. Romney
2
No. 74806-8-I I 3
petitioned the Supreme Court for review. On September 30, 2015, the Supreme Court
denied review. Romneyv. Franciscan Med. Grp., 184 Wn.2d 1004, 357 P.3d 666 (2015).
On October 2, 2015, Romney attempted to start the arbitration process by reaching
out to an arbitrator the parties had discussed using before Romney filed suit in superior
court. FMG responded a few days later by inviting Romney to propose “three different
arbitrators for the three individual arbitrations.”
2 Because the parties disagreed about the
availability of class arbitration, they returned to the courts.
This court issued its mandate terminating the first appeal on November 13, 2015.
On December 14, 2015, FMG moved to compel arbitration. This time, it asked the
court to compel individual arbitration, arguing that the arbitration agreements did not
indicate consent to class arbitration. The superior court granted the motion. Romney
appeals.
ANALYSIS
Surerior Court’s Authority
Romney argues that the superior court erred by determining whetherthe arbitration
agreements permit class arbitration. Romney contends that the availability of class
arbitration is an issue for the arbitrator. We conclude that it is a threshold issue of
arbitrability for the court to decide.
While courts enforce a liberal policy favoring arbitration, the courts should usually
decide threshold questions of arbitrability. Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83, 123 S. Ct. 588, 154 L. Ed. 2d 491 (2002). The court should decide questions
2
Clerk’s Papers (CP) at 1558-59.
The Federal Arbitration Act, 9 U.S.C. § 1-16, governs these arbitration agreements. Romney,
186 Wn. App. at 734. Accordingly, we must apply substantive federal law concerning arbitration.
Romney, 186 Wn. App. at 734.
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No. 74806-8-I /4
where the
contracting parties would likely have expected a court to have decided the
gateway matter, where they are not likely to have thought that they had
agreed that an arbitrator would do so, and, consequently, where reference
of the gateway dispute to the court avoids the risk of forcing parties to
arbitrate a matter that they may well not have agreed to arbitrate.
Howsam, 537 U.S. at 83-84.
By contrast, procedural questions, which the court refers to an arbitrator, ‘“grow
out of the dispute and bear on its final disposition.” Howsam, 537 U.S. at 84 (quoting
John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 5. Ct. 909, 11 L. Ed. 2d 898(1964)). Courts will also refer to arbitration any dispute which the parties have clearly
and unmistakably agreed to submit to arbitration. See Howsam, 537 u.s. at 83.
The Supreme Court has not yet determined whether the availability of class
arbitration is a threshold question of arbitrability for the court or a procedural question for
the arbitrator. In Green Tree Financial Corp. v. Bazzle, a plurality of the United States
Supreme Court held that the arbitrator should decide whether an agreement permitted
class arbitration. 539 U.S. 444, 453, 123 S. Ct. 2402, 2407, 156 L. Ed. 2d 414 (2003).
Since then, in Stolt-Nielsen S.A. v. AnimalFeeds International Core., the Supreme Court
has pointed out that, in Bazzle, only a plurality agreed on that point. 559 U.S. 662, 680-
81, 130 5. Ct. 1758, 176 L. Ed. 2d 605 (2010). But, in Stolt-Nielsen, the Court did not
revisit the issue because, there, the parties had expressly agreed to have an arbitration
panel decide whether the agreement permitted class arbitration. 559 U.S. at 680.
The trend in federal courts since Stolt-Nielsen has been that the court should
decide whether class arbitration is available. All federal circuits that have addressed this
4
No. 74806-8-I I 5
issue in published opinions have arrived at this same conclusion.
4 Most recently, the
Fourth Circuit concluded that a court should determine the availability of class arbitration
because of the “significant distinctions between class and bilateral arbitration.” Dell Webb
Communities, Inc. v. Carlson, 817 F.3d 867, 874-75 (4th Cir.), cert. denied sub nom. 137
S. Ct. 567 (2016). The Fourth Circuit noted that class arbitration would reduce or
eliminate nearly all the benefits of bilateral arbitration. Dell Webb, 817 F.3d at 875. It
reasoned that the Supreme Court was “but a short step away” from announcing that this
was a question for the courts. Dell Webb, 817 F.3d at 875.
We conclude that the availability of class arbitration is a gateway issue of
arbitrability. The differences between class arbitration and bilateral arbitration are
significant enough that we cannot assume that the parties expected an arbitrator to decide
whether it was allowed. The question does not arise out of the underlying dispute over
wage violations and retaliation claims. The resolution of the issue should not impact the
final disposition of the dispute for each plaintiff. Thus, absent an agreement by the
parties, the issue of whether class arbitration is available is a gateway issue of arbitrability
properly decided by the superior court.
Romney argues that Washington law requires a different outcome. In Washington,
courts must order the arbitration of all disputes “covered by the substantive scope” of an
enforceable arbitration agreement. Townsend v. Quadrant Corp., 153 Wn. App. 870,
881, 224 P.3d 818 (2009). But Romney’s argument assumes that the availability of class
See Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett, 734 F.3d 594, 597-99 (6th Cir. 2013)
(concluding that the courts should decide the question and suggesting that the Supreme Court
was close to completing its “puzzle” on the issue); Opalinski v. Robert Half Int’l Inc., 761 F.3d 326,
332 (3d Cir. 2014); see also Eshagh v. Terminix Int’l Co., L.P., 588 F. App’x 703, 704 (9th Cir.
2014)).
5
No. 74806-8-I /6
arbitration is within the scope of the agreements. We disagree because the question
whether the agreements permit class arbitration is a question about the scope of the
agreements itself. Therefore, Washington law does not dictate that an arbitrator decide
the question.
Here, Romney claims that the parties agreed in the arbitration agreements to
submit to arbitration the issue of whether class arbitration was available. The agreements
incorporated the American Arbitration Association (AAA) rules. The supplemental rules
for class arbitration provide:
Upon appointment, the arbitrator shall determine as a threshold matter, in a
reasoned, partial final award on the construction of the arbitration clause,
whether the applicable arbitration clause permits the arbitration to proceed
on behalf of or against a class (the “Clause Construction Award”). The
arbitrator shall stay all proceedings following the issuance of the Clause
Construction Award for a period of at least 30 days to permit any party to
move a court of competent jurisdiction to confirm or to vacate the Clause
Construction Award J5]
These rules apply
where a party submits a dispute to arbitration on behalf of or against a class
or purported class. . These [rules] shall also apply whenever a court
. .
refers a matter pleaded as a class action to the AAA for administration.
6
The rules, by their own terms, apply only when the dispute is already submitted to
arbitration, not when the case is pending in front of a court. The rules also allow the
parties to seek judicial review immediately after the arbitrator’s decision on this issue.
The availability of judicial review suggests that the parties did not intend to have an
arbitrator make the final decision on this issue.
We conclude that the parties’ agreement to have an arbitrator decide the question
CP at 1358.
6
CP at 1357.
6
No. 74806-8-I /7
under some circumstances is not a clear and unmistakable agreement to have the court
refer the question to an arbitrator. Accordingly, it was not error for the superior court to
determine if the agreements permitted class arbitration.
Availability of Class Arbitration
Romney argues that the arbitration agreements permit class action.
7 Romney
contends that consent to class arbitration is implied by the failure to exclude class actions
explicitly from the arbitration agreements, despite specifically including employment
claims that are frequently brought as class actions. We conclude that the agreements do
not permit class arbitration because they are silent on the issue and we cannot infer
consent to submit to class arbitration from silence.
“[A]rbitration is a matter of consent.” Stolt-Nielsen, 559 U.S. at 684. Arbitrators
derive their power “from the parties’ agreement to forgo the legal process and submit their
disputes” to arbitration. Stolt-Nielsen, 559 U.S. at 682. As with any contractual dispute,
the parties’ intentions control. Stolt-Nielsen, 559 U.S. at 682. Parties may choose which
issues they want to arbitrate and with whom they wish to arbitrate. Stolt-Nielsen, 559
U.S. at 683. Therefore, the court cannot compel parties to participate in class arbitration
without a contractual basis for concluding that they agreed to do so. Stolt-Nielsen, 559
U.S. at 684.
An agreement to arbitrate disputes does not imply that the party agreed to class
arbitration of those disputes, because class arbitration significantly changes the nature of
FMG points out, Romney did not raise this issue in their motion for discretionary review. They
also did not assign error to the superior court’s ruling on this issue, in violation of RAP 10.3. But
Romney did list this as a separate argument in their table of contents and devote several pages
to that argument in their brief. Romney also raised the issue below in their motion for
reconsideration to the trial court. Accordingly, we review the issue under RAP 12.1(a) and RAP
1.2(a).
7
No.74806-8-1/8
arbitration. Stolt-Nielsen, 559 U.S. at 685. When the arbitration agreement contains “‘no
agreement’” on the class arbitration question, the court cannot compel the parties to
submit to class arbitration. Stolt-Nielsen, 559 U.S. at 687.
In Reed Elsevier, the Sixth Circuit held that an agreement did not permit class
arbitrations because it did not mention class actions at any point and limited its scope to
“claims ‘arising from or in connection with this Order,’ as opposed to other customers’
orders.” 734 F.3d 594, 599 (6th Cir. 2013). The court agreed with the plaintiff that the
agreement did not “expressly exclude the possibility of classwide arbitration,” but held
that was not enough in light of Stolt-Nielsen. Reed Elsevier, 734 F.3d at 600.
Here, the parties agreed to arbitrate all of their claims. The agreements defined
claims as “all disputes arising out of or related to the Employment Agreement, your
employment by FMG, and/or your separation from employment with FMG.”
8 The
agreements cover claims related to wage violations, which are frequently brought as class
actions. The agreements explicitly exclude certain types of claims, such as worker’s
compensation claims, or third-party claims that FMG might bring against Romney if a
party sued FMG because of Romney’s behavior. The parties agree that the arbitration
agreements do not mention class actions at any point.
FMG argues that the agreements were intended to allow only individual arbitration
because they repeatedly refer to the employee in the singular and concern the rights of
individual signatories. Romney contends that these arguments are overly technical since
“you” can be singular or plural and this court has already ruled that the court could order
arbitration of claims against a nonsignatory when the claims were inherently inseparable.
CPat63.
8
8
No. 74806-8-I /9
See Romney, 186 Wn. App. at 747. But, while Romney has shown that the class
members’ claims are similar, they have not shown that their claims are inherently
inseparable. Moreover, when viewed in context, the “You” in the agreements is clearly
9
singular.
Romney also points out that class action lawsuits are generally available even
though contracts are usually written in the singular. But class action lawsuits, unlike class
arbitration, do not rely on the parties’ consent. Thus, the similarity between these
agreements and agreements that often form the basis of class action lawsuits is not
evidence of FMG’s consent to class arbitration.
Romney attempts to distinguish this case from Stolt-Nielsen by analogizing it to
Oxford Health Plans LLC v. Suffer, — U.S.—, 133 S. Ct. 2064, 2067-71, 186 L. Ed. 2d
113 (2013). Reliance on Oxford Health cannot help Romney. There, an arbitrator held
that an arbitration agreement that was silent on the subject of class arbitration permitted
class arbitration. Oxford Health, 133 S. Ct. at 2067. The Court explicitly refused to
approve of the arbitrator’s interpretation of the contract. Oxford Health, 133 5. Ct. at
2070. It affirmed because the parties sought review of the arbitrator’s construction of the
agreement and the Court could not correct the arbitrator’s mistakes. Oxford Health, 133
S. Ct. at 2070-71. A concurrence by Justice Samuel Alito even noted that, if the Court
were reviewing the arbitrator’s decision de novo, it “would have little trouble concluding
that [the arbitrator] improperly inferred ‘[a]n implicit agreement to authorize class-action
arbitration. . . from the fact of the parties’ agreement to arbitrate.” Oxford Health, 133 S.
Ct. at 2071 (Alito, J., concurring) (alterations in original) (quoting Stolt-Nielsen, 559 U.S.
For example, at the top of the agreement, “You” is the name given to the singular “Physician.”
CP at 63.
9
No. 74806-8-I / 10
at 685).
Finally, Romney argues that FMG’s delay in asserting a contractual right to compel
individual arbitration is evidence that it consented to class arbitration via the agreements.
A party’s “subsequent acts and conduct” may be of aid in interpreting that party’s intent.
Berg v. Hudesman, 115 Wn.2d 657, 677-78, 801 P.2d 222 (1990). In Berg, a tenant
offered proof that its landlord had accepted rent payments for years to argue against the
landlord’s interpretation of their lease agreement. 115 Wn.2d at 677. In Adler v. Fred
Lind Manor, the court noted that conduct was relevant to determining intent, but looked
only at the conduct surrounding the formation of the contract. 153 Wn.2d 331, 351-52,
103 P.3d 773 (2004).
Romney does not cite any cases where the court determined the meaning of a
contract by looking at a party’s conduct during the litigation of the contract dispute. FMG’s
conduct during litigation is appropriate evidence for waiver, discussed next, but not
relevant to establishing its intent at the formation of the agreements.
In short, Romney has not shown that FMG consented to class arbitration.
Accordingly, under Stolt-Nielsen, the trial court’s interpretation of the agreement was not
erroneous; FMG had a contractual right to avoid class arbitration. But, in order to enforce
that right, FMG had to timely assert it.
Waiver
Romney argues that FMG waived its contractual right to compel individual
arbitration because its conduct was inconsistent with an intent to assert the right and its
delay in asserting the right prejudiced Romney. We agree.
“To establish waiver of the right to arbitration, the party opposing arbitration must
10
No. 74806-8-I I 11
demonstrate ‘(I) knowledge of an existing right to compel arbitration; (2) acts inconsistent
with that existing right; and (3) prejudice to the party opposing arbitration resulting from
such inconsistent acts.” Wiese v. Cach, LLC, 189 Wn. App. 466, 480, 358 P.3d 1213(2015) (internal quotation marks omitted) (quoting Letizia v. Prudential Bache Sec., Inc.,
802 F.2d 1185, 1187 (9th Cir. 1986)). “Waiver of an arbitration clause may be
accomplished expressly or by implication.” Canal Station N. Condo. Ass’n v. Ballard
Learv Phase II, LP, 179 Wn. App. 289, 297, 322 P.2d 1229 (2013). Whether a party
waived its right “by conduct depends on the facts of the particular case and is not
susceptible to bright line rules.” Canal Station, 179 Wn. App. at 298.
We review a waiver determination de novo. Steele v. Lundgren, 85 Wn. App. 845,
850, 935 P.2d 671 (1997). Washington has a strong presumption in favor of arbitration.
Heights at lssaguah Ridge Owners Ass’n v. Burton Landscape Grp., Inc., 148 Wn. App.
400, 405, 200 P.3d 254 (2009). Accordingly, the party opposing arbitration bears a
“‘heavy burden” of showing that another party has waived its right to arbitrate. Wiese,
189 Wn. App. at 479 (internal quotation marks omitted) (quoting Steele, 85 Wn. App. at
852).
Although the question here is whether FMG waived the right to compel a specific
type of arbitration, we approach this question the same way we would analyze whether a
party waived its right to compel arbitration in general. It is logical to analyze the right to
compel individual arbitration this way because it also stems from the arbitration
°
1
agreement.
10
The right to compel arbitration is, essentially, a contractually created affirmative defense.
.
CR 8(c); Schuster v. Prestige Senior Mgmt., LLC, 193 Wn. App. 616, 634, 376 P.3d 412 (2016).
The difference between compelling arbitration of certain claims and compelling a certain type of
arbitration changes the analysis in some ways, but should lead to the same conclusions. For
11
No. 74806-8-I / 12
Knowledge
This court presumes that someone who signs a document knows and understands
its contents. Kinsey v. Bradley, 53 Wn. App. 167, 171, 765 P.2d 1329 (1989). Here,
FMG’s right to compel individual arbitration stems from the arbitration agreements. No
one disputes that FMG prepared or signed the arbitration agreements. Therefore, we
presume that FMG knew its rights under the arbitration agreements.
Inconsistent Acts
FMG’s conduct was inconsistent with the intent to assert a right to compel
individual arbitration. First, FMG’s original motion to compel arbitration did not include
any objections to class arbitration. When Dr. Romney and the other plaintiffs filed this
action, they purported to act “individually and on behalf of all others similarly situated” and
11 Romney used the
titled their complaint “PLAINTIFFS’ CLASS ACTION COMPLAINT.”
putative class caption again when they moved to void and invalidate the arbitration
addendums. In response, FMG filed a motion to compel arbitration. FMG’s motion
adopted Romney’s caption and did not mention individual arbitration.
FMG argues that it was proper to wait until the dispute over the enforceability of
example, a party waives its right to arbitration when it has substantially invoked “the judicial
process to the detriment or prejudice of the other party.” Wiese, 189 Wn. App. at 480 (internal
quotation marks omitted) (quoting Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th
Cir. 1999). FMG did not invoke the judicial process to decide the legal and factual issues it now
seeks to arbitrate.
But, when FMG wanted a determination on the right to compel arbitration of those issues,
it was content to litigate against the putative class. Thus, FMG was able to establish the
enforceability of the arbitration agreements against all three named plaintiffs in one action, rather
than in three individual actions. By participating in class adjudication to resolve issues of
arbitrability before asserting a right to avoid class adjudication, FMG evinced its intent to waive
that right in the same way it would have if it had litigated the issues in a court and then asserted
a right to arbitrate those issues.
CP at 1.
12
No. 74806-8-I /13
the agreements was resolved before raising the issue of individual arbitration.
12 This
argument would be more persuasive if FMG had waited to compel arbitration until the
court had determined whether the agreements were unconscionable. But FMG did not
wait, It moved to compel arbitration at the same time that it opposed Romney’s motion
to invalidate the agreements.
Second, when Dr. Romney’s illness forced the parties to address discovery while
the first appeal was pending, FMG never hinted that it believed that class arbitration was
unavailable under the arbitration agreements. Instead, FMG referred repeatedly to the
putative class and opposed class discovery on the ground that the court or the arbitrator
might decline to certify the class.
13 FMG concedes that it “acknowledged that an arbitrator
12
FMG cites Oxford Health, for the proposition that it is appropriate to wait until after a court has
determined whether an arbitration agreement is enforceable to raise any issues about class
arbitration. See 133 S. Ct. at 2067. There, the parties decided the class issue after the arbitration
issue, but there is nothing to indicate when the defendant first raised the issue. Oxford Health,
133 S. Ct. at 2067.
13
For example, FMG’s briefing to this court and the superior court included the following
statements:
Additionally, if this Court orders full discovery and then compels the parties to
arbitration, FMG may be forced to participate in discovery that is unnecessary for
the arbitration, as an arbitrator could decline to certify the putative class or narrow
other issues in the case.
CP at 611.
[T]his Court should consider all facts, including whether it is appropriate to allow
class discovery when it is still uncertain as to whether a court or an arbitrator will
preside over this matter and whether a class will even be certified.
CP at 667.
Plaintiffs cannot establish that justice requires this Court to permit discovery
regarding class claims when it is uncertain whether this Court or an arbitrator will
determine whether a class exists, when no class has been certified, and when Dr.
Bauer will be able to pursue his individual claims, as well as those of the putative
class, once the question of forum is decided.
CP at 674.
Plaintiffs, however, have failed to demonstrate that putative class members would
be harmed in any way should class-related discovery occur after these issues have
been determined by either a Court or an arbitrator. Should a class be certified. .
CP at 675-76.
13
No. 74806-8-I / 14
has the power to certify a class.”
14 An arbitrator has only the powers granted to it by an
arbitration agreement. Stolt-Nielsen, 559 U.S. at 682. Therefore, the arbitrator would
have the power to certify a class only if the agreement permits class arbitration.
FMG contends that it would be “absurd” to use its statements during a discovery
dispute as evidence that it waived a right to compel individual arbitration because, at the
time, it “was facing the very real possibility of the case being litigated in court.”
15 This
argument would be persuasive if all of FMG’s arguments during class discovery had
assumed that FMG would lose the appeal and have to litigate the matter in court. But
FMG’s arguments, which discussed which forum might ultimately hear the case, and how
a superior court or an arbitrator might decline to certify the class, attempted to
demonstrate why, win or lose the appeal, class discovery was premature. One would
have expected FMG to argue that, if it won the appeal, class arbitration would not be
available at all. Yet FMG’s arguments revolved around whether the class was viable, not
whether class arbitration was available.
Third, FMG’s argument during its first appeal is inconsistent with an intent to assert
the right to compel individual arbitration. At oral argument, FMG used the fact that
Romney was bringing a putative class action, and had engaged counsel for the class on
a contingent-fee basis, to reassure the court that the agreements’ provision requiring
plaintiffs to share in the costs of arbitration, unless they showed they could not afford it,
was not unconscionable. Counsel for FMG’s response to the court’s concern about the
plaintiffs having to prove they cannot afford to pay arbitration costs was
[w]ith respect to the cost-shifting . the test is, does the imposition of the
. .
costs of the arbitration effectively prohibit the plaintiffs from bringing it. Well,
14
Br. of Resp’ts at 23.
15
Br. of Resp’ts at 24.
14
No. 74806-8-I /15
here you have med- established medical professionals who are seeking to
represent a class and who propose as class counsel a well-established
plaintiffs’ law firm that’s undertaken this on a contingent-fee basis.[’
]
6
If FMG had intended to assert a right to compel individual arbitration, it would not have
used the fact that Romney filed a putative class action complaint and hired class counsel
in their defense of the arbitration agreements.
We conclude that these actions show that FMG’s conduct was inconsistent with
an intent to compel individual arbitration.
FMG argues that Romney cannot show that it waived its right to compel individual
arbitration because Romney cannot show that FMG consented to class arbitration. FMG
relies on the standard for determining whether a contract permits class arbitration.
Stolt-Nielsen, 559 U.S. at 684. This argument fails because whether there is evidence
that FMG consented to class arbitration is not the same question as whether FMG waived
a right to compel individual arbitration.
17
FMG also argues that it did not have to raise the issue of class arbitration because
it was “equally incumbent upon [Romney] to make the argument that class arbitration was
18
appropriate.” But, by bringing their claim as a putative class action, seeking class
discovery, and actively promoting the interests of the putative class at every turn, Romney
was impliedly asserting that they believed class adjudication of the dispute was available,
regardless of the forum.
18
Wash. Court of Appeals oral argument, Romney v. Franciscan Med. Grp., No. 71625-5-I (Nov.
17, 2014), at 10:34:42 10:35:27 (on file with court).
—
17
By way of analogy, compare consent to personal jurisdiction via a contract with a waiver of an
objection to lack of personal jurisdiction by conduct during litigation. .f Kysar v. Lambert, 76
Wn. App. 470, 485, 887 P.2d 431 (1995) (examining consent to personal jurisdiction) with Boyd
v. Kulczyk, 115 Wn. App. 411, 415, 63 P.3d 156 (2003) (noting that a party may waive a lack of
personal jurisdiction).
18
Br. of Resp’ts at 32.
15
No. 74806-8-I /16
Prejudice
To determine whether there has been prejudice, “we consider the extent of the
delay, the degree of litigation preceding the motion to compel [arbitration], the resulting
expenses, and other surrounding circumstances.” Wiese, 189 Wn. App. at 481. “[D]elay
amounts to prejudice when there is no good excuse for it.” Steele, 85 Wn. App. at 858.
But, delay caused by the conduct of one party, is not “evidence of waiver by the other
party.” Lake Wash. Sch. Dist. No. 414 v. Mobile Modules Nw., Inc., 28 Wn. App. 59, 63,
621 P.2d 791 (1980).
Here, FMG’s failure to raise the issue caused prejudice to Romney in the form of
delay and litigation costs. There was an approximately two-year delay between when
Romney brought their suit and when FMG first asserted its right to individual arbitration.
Romney filed their class-action complaint in November 2013. FMG informed Romney
that it would be seeking individual arbitration via e-mail in October 2015. FMG did not
assert a right to compel individual arbitration in any court document until December 2015.
FMG argues that the Romney caused the delay by seeking to void the arbitration
agreements and pursue class discovery. But the main reason for the delay is that FMG
appealed the superior court’s order voiding the arbitration agreements before raising the
issue of individual arbitration.
Because FMG failed to assert its right to individual arbitration when Romney
moved to void the agreements, Romney expended time, energy, and resources on this
litigation, including a direct appeal and petition to the Washington State Supreme Court.
Romney also engaged in costly litigation over the availability of class discovery. Thus,
Romney suffered significant prejudice from FMG’s delay in asserting its right.
16
No. 74806-8-I / 17
We conclude that FMG waived its right to object to the putative class preceding to
arbitration. Because of our resolution of this issue, we do not address whether FMG
would be equitably estopped from asserting a right to compel individual arbitration or
whether the trial court exceeded the mandate by entering an order compelling individual
arbitration.
We remand for the trial court to enter an order sending the putative class to a single
arbitrator under the terms of the agreements.
WE CONCUR:
17