Judge v. Nijjar Realty, Inc.

Filed 12/17/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
GERMAINE JUDGE, B248533
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC460592)
v.
NIJJAR REALTY, INC.,
et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los Angeles County, Ruth Ann
Kwan, Judge. Appeal dismissed.
The Dion-Kindem Law Firm, Peter R. Dion-Kindem, P.C., Peter R. Dion-Kindem;
The Blanchard Law Group, APC and Lonnie C. Blanchard, III, for Plaintiff and
Appellant.
Atkinson, Andelson, Loya, Ruud & Romo, Christopher S. Andre and Ronald W.
Novotny for Defendants and Respondents.
___________________
INTRODUCTION
Plaintiff Germaine Judge appeals from an order vacating an interim arbitration
award. Although an order vacating a final arbitration award is appealable under Code of
Civil Procedure1 section 1294, subdivision (c), the order from which Judge appeals
vacated a “clause construction award” that did not resolve the entire arbitration. Instead,
the arbitrator’s award determined only, as a threshold matter, that Judge’s class and
representative claims were subject to arbitration. The clause construction award did not
rule on the merits of those claims. We conclude that, because the arbitrator has not ruled
on any of the substantive issues in the arbitration, the order from which Judge appeals did
not vacate a final arbitration award and is not appealable. We therefore dismiss the
appeal.
FACTUAL AND PROCEDURAL BACKGROUND
Nijjar Realty, Inc., doing business as PAMA Management Company, (Nijjar
Realty) is in the business of real estate property management. Mike Nijjar is the owner
and a president of Nijjar Realty. Swarnjit S. Nijjar and Daljit Kler are also presidents of
Nijjar Realty. On October 18, 2010 Nijjar Realty hired Judge as a resident property
manager. Judge’s employment with Niijar Realty continued until April 22, 2011, when
Nijjar Realty terminated her employment.
A. Judge Files This Action and a Related Class Action
On May 6, 2011 Judge filed this action (case No. BC460592, the
“individual/PAGA action”). Her first amended complaint alleged various employment-
related and Labor Code causes of action, including claims for unpaid compensation, meal
1 Undesignated statutory references are to the Code of Civil Procedure.
2
and rest period premiums, waiting time penalties, and wrongful termination. Under the
Private Attorney General Act (PAGA; Labor Code § 2698 et. seq.) Judge alleged similar
and related causes of action on behalf of herself and other aggrieved employees. On
February 14, 2012 Judge filed a class action (case No. BC478836, the “class action”)
against three defendants, Nijjar Realty, Mike Nijjar, and Daljit Kler (the Nijjar
defendants), alleging six similar employment and Labor Code claims on behalf of herself
and the class members.2
On April 9, 2012 the trial court determined that the individual/PAGA action and
the class action were related cases within the meaning of Los Angeles Superior Court
former rule 7.3(f) (now rule 3.3(f)) and designated the individual/PAGA action as the
lead case. The court denied Judge’s subsequent ex parte application to consolidate the
two cases.3 The court never consolidated the two actions.
B. The Trial Court Grants the Nijjar Defendants’ Petitions To Compel
Arbitration of Judge’s Individual Claims Only and Stays Both Cases
In April 2012 the Nijjar defendants filed a petition in the individual/PAGA action
to compel arbitration of Judge’s claims and staying the action pending completion of
arbitration. The petition was based on an arbitration agreement that Judge had signed
while she was an employee of Nijjar Realty. The arbitration agreement provides, in
relevant part, “By accepting employment with Atlas Resources/Client,[4] the undersigned
2 On February 17, 2012 Judge asked the trial court to dismiss the first five causes of
action of her first amended complaint in the individual/PAGA action without prejudice
because they were duplicative of causes of action in her complaint in the class action.
3 We take judicial notice of the trial court’s April 9 and 23, 2012 minute orders in
the individual/PAGA action. (See Evid. Code, §§ 452, subd. (d), 459.)
4 On December 13, 2010 PAMA Management Company contracted with Atlas
Resources, Inc. “to provide administrative services, including preparation of payroll and
initial hiring paperwork.” The arbitration provision appeared in a document entitled
3
agrees to submit any and all previously unasserted claims, disputes, lawsuits or
controversies arising out of or relating to his or her application or candidacy for
employment, his or her employment, or the cessation of his or her employment to binding
arbitration before a neutral and unbiased arbitrator.” The arbitration agreement contained
multiple references to the American Arbitration Association (AAA), indicating that
arbitration would be before the AAA. Although the arbitration agreement did not
mention the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) or the California
Arbitration Act (CAA) (§ 1280 et seq.), the Nijjar defendants’ maintained that the
arbitration agreement was governed by the FAA because Nijjar Realty made purchases
from states other than California and thus was engaged in interstate commerce within the
meaning of the FAA.
The Nijjar defendants also filed a petition to compel arbitration of and to stay the
class action. Again relying on the FAA, they asked the trial court “to compel the
arbitration [of] Plaintiff’s claims against them on an individual and not a class-wide
basis” and to stay the action “pending the completion of arbitral proceedings.” Citing
AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___ [131 S.Ct. 1740, 179 L.Ed.2d
742] and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. 662 [130 S.Ct.
1758, 176 L.Ed.2d 605] (Stolt-Nielsen), the Nijjar defendants asked that “arbitration be
ordered as an individual as opposed to a collective basis . . . .” They argued that the
arbitration agreement “contain[s] no basis at all for authorizing class arbitration
proceedings, thereby requiring that Plaintiff be compelled to arbitrate her claims against
Defendants individually and not as part of a class action.”
Judge opposed both petitions to compel arbitration. In both cases Judge argued,
among other things, that the FAA did not govern the arbitration agreement. In the class
action Judge argued that if the court were inclined to grant the petition the court “must
“Atlas Resources, Inc. — New Employee Information Form,” which Judge signed on
December 23, 2010.
4
send all of the claims asserted by Plaintiff to arbitration, including the PAGA claims and
the class action claims.”
On September 11, 2012 the trial court held a hearing on the Nijjar defendants’
petitions to compel arbitration. At that hearing the following exchange occurred between
counsel and the court:
“[Counsel for Judge]: Your Honor, with respect to the PAGA action and also the
class action, there’s no arbitration or collective action or representative action
proscription in the arbitration agreement. It doesn’t say you can only file an individual
action, you can’t file a class action, you can’t file a representative action. And the
arbitration agreement as you noted in your order is very broad, includes all claims of any
nature. There are many cases that hold that the issue is to the extent that the claims to be
arbitrated when there’s been no actual waiver of class action. It’s up to the arbitrator.
That’s exactly what the [American Arbitration Association (AAA)] arbitration rules say,
that the arbitrator decides the scope of the arbitrable claims. And that’s what the
arbitrator should decide. If they’re saying that the arbitration should be conducted under
AAA rules and the AAA rules say, we’re going to decide — the AAA is going to decide
what claims —
“The Court: Then you can make that argument to the arbitrator. I have no right to
force them, force you into a class arbitration when the agreement doesn’t — is silent on
that issue, that’s what I’m saying.
“[Counsel for Judge]: Well, when it’s silent?
“The Court: If you want to bring up that issue with the arbitrator, I don’t think
you’re foreclosed from doing so.
“[Counsel for Judge]: Okay. As long as that’s clear, your Honor, then that’s
fine.”
“[Counsel for Nijjar defendants]: But for the record, it’s our position that he’s
waived that. That he can’t do that with the arbitrator. That the AAA rules absolutely do
not provide for the arbitrator to determine —
“The Court: Well, then you can talk to the arbitrator regarding that issue.
5
“[Counsel for Judge]: Yes, the AAA rules —
“The Court: What I’m saying is that I can’t force your client to do a class
arbitration because that was not necessarily provided for, okay?
“[Counsel for Judge]: Right. But the fact that it wasn’t provided for does not
mean given the breadth of the agreement which does not preclude it, does not allow it
under arbitration the AAA rules. And if you’re saying that the AAA triple rules apply in
whatever the arbitrator decides it to be.
“The Court: You’re not precluded from bringing whatever argument you wish to
bring before the arbitrator if the AAA rules provides — the arbitrator allows the
arbitration agreement. And under the AAA rules would allow you to bring up those
arguments, okay?
“[Counsel for Judge]: Thank you.”
After additional argument, the trial court granted the Nijjar defendants’ petition to
compel arbitration and stay proceedings in the individual/PAGA action. The trial court
concluded that the FAA governed the arbitration agreement and that Judge’s
“employment-related claims” and her “individual PAGA claims [were] covered by the
Agreement.” The court also granted the Nijjar defendants’ petition in the class action to
compel arbitration and stay proceedings “only as to Plaintiff’s individual claims,” again
concluding that the FAA applied.5 Citing Stolt-Nielson, supra, 559 U.S. 662, the trial
court concluded that, because “the Agreement is silent on the issue of class arbitration,
arbitration cannot be compelled on a class-wide basis. Therefore, Defendants’ motion to
compel arbitration is granted as to Plaintiff’s individual claims only.” Both cases
proceeded to arbitration before the AAA, pursuant to the terms of the arbitration
agreement.
5 We take judicial notice of the trial court’s September 11, 2012 minute orders in
the individual/PAGA and class action. (See Evid. Code, §§ 452, subd. (d), 459.)
6
C. The Arbitrator Issues a Scheduling Order and a Clause Construction
Award
On December 7, 2012 the arbitrator issued a scheduling order. The arbitrator
noted that the trial court had “found the arbitration agreement to be enforceable pursuant
to the [FAA],” and she stated that, “[e]xcept as provided to the contrary in the arbitration
agreement, the proceeding will be governed by the FAA, California substantive law, the
Employment Dispute Resolution Rules of the [AAA], and the AAA’s Supplementary
Rules for Class Arbitrations.” In paragraph 7, entitled “The Clause Construction
Award,” the arbitrator stated that she would be issuing a “partial final award on the
construction of the arbitration clause” in accordance with “Rule 3 of the Supplementary
Rules.”6 She gave the parties an opportunity to submit briefs on the issue, set a briefing
schedule, and scheduled a telephonic hearing for January 14, 2013. The arbitrator also
established a discovery and motion schedule, and she set an evidentiary hearing for
April 22-24, 2013. On January 21, 2013 the arbitrator issued a lengthy clause
construction award in which she concluded that the arbitration agreement permitted
arbitration of class and representative claims.
6 The rules to which the arbitrator referred are the AAA’s Supplementary Rules for
Class Arbitrations, effective October 8, 2003. Rule 3, entitled “Construction of the
Arbitration Clause,” provides in relevant part: “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. Once all parties inform the
arbitrator in writing during the period of the stay that they do not intend to seek judicial
review of the Clause Construction Award, or once the requisite time period expires
without any party having informed the arbitrator that it has done so, the arbitrator may
proceed with the arbitration on the basis stated in the Clause Construction Award. If any
party informs the arbitrator within the period provided that it has sought judicial review,
the arbitrator may stay further proceedings, or some part of them, until the arbitrator is
informed of the ruling of the court.”
7
D. The Trial Court Grants the Nijjar Defendants’ Petition To Vacate
the Clause Construction Award in the Individual/PAGA Action
On March 8, 2013 the Nijjar defendants filed a petition in the individual/PAGA
action (but not in the class action) to vacate the clause construction award. The Nijjar
defendants argued that the “Arbitrator . . . lacked jurisdiction to issue a ‘clause
construction award,’ and clearly exceeded her power in doing so, because the parties had
already submitted [the issue of class arbitrability to] the Court to decide and were bound
by the Court’s ruling.” The Nijjar defendants further argued that they “did not agree to
arbitrate the issue of whether the parties’ agreement provided for class or representative
action, either under the AAA’s Supplementary Rules for Class Arbitration or otherwise,”
and that the parties did not agree to arbitrate claims on a class basis. Judge opposed the
petition to vacate the arbitrator’s clause construction award and sought to confirm it.
On April 2, 2013 the trial court granted the Nijjar defendants’ petition to vacate
the clause construction award. The court ruled: “The Arbitrator exceeded her powers by
deciding the issue of whether the parties agreed to arbitrate class or representative claims.
The parties submitted the issue to the Court for determination. Defendants petitioned the
Court to compel arbitration of Plaintiff’s claims against them on ‘an individual and not a
class-wide basis,’ pursuant to Stolt-Nielsen . . . . [Citation.] In opposition to the petition,
Plaintiff argued that if the Court ordered arbitration, ‘it must order arbitration of all
Plaintiff’s claims, including the PAGA claims and the class action claims.’ [Citation.]
The Court ruled on the issue of class and representative arbitration by granting the
petitions to compel arbitration (in BC478836 [the class action] and BC460592 [the
individual/PAGA action]) only as to Plaintiff’s individual claims. The Court had the
authority to address the issue because the parties expressly and specifically submitted the
matter for determination by the Court. [¶] . . . [¶]
“Once the Court ruled on the issue of class and representative arbitration, the
Arbitrator lost authority, even under the AAA rules, to decide the issue. As discussed
above, the parties submitted the issue of class and representative arbitration to the Court
for determination and the Court ruled on the issue by granting Defendants’ petitions to
8
compel arbitration of Plaintiff’s individual claims. The AAA Rules, on which Plaintiff
relies, require that the Arbitrator follow the Court’s ruling. See AAA Supplementary
rule 1(c) (‘Whenever a court has, by order, addressed and resolved any matter that would
otherwise be decided by an arbitrator under these Supplementary Rules, the arbitrator
shall follow the order of the court.’) [Citation.] By issuing the Clause Construction
Award and finding the arbitration agreement ‘expressly authorizes class/representative
arbitration,’ the Arbitrator violated AAA Supplemental Rule 1(c) and exceeded her
authority.
“Plaintiff argues it is ‘clear from the Court’s comments at the hearing on the
Petition to Compel Arbitration that she was not ruling that Plaintiff could not assert
before the arbitrator that Plaintiff’s class and PAGA claims should be arbitrated.’
Instead, ‘the trial court specifically ruled that Plaintiff could raise such issues before the
Arbitrator.’ [Citation & footnote.] However, Plaintiffs characterization of the Court’s
comments at the hearing is incorrect. The Court merely advised the parties that it could
not stand in the way of any arguments they wished to make to the Arbitrator about the
arbitrability of class or representative arbitration.” The trial court further noted that,”[t]o
the extent there was any ambiguity regarding the Court’s decision, the Arbitrator should
have sought clarification.” Judge filed a timely notice of appeal.
DISCUSSION
Judge asks this court to reverse the trial court’s order vacating the clause
construction award and to direct the trial court to enter an order confirming the clause
construction award. Judge argues that the arbitrator did not exceed her authority in
making the clause construction award because the arbitration agreement specifically
authorized the arbitrator to decide all issues and because defendants submitted the
individual/PAGA action and the class action to the AAA. Judge also argues that the trial
court did not have the authority to second-guess the arbitrator’s decision that the
arbitration agreement allows Judge to arbitrate her class and PAGA claims. We do not
9
resolve these issues at this time because we conclude that the order from which Judge
purports to appeal is not appealable.
A. Appealability
A reviewing court’s jurisdiction over a direct appeal depends on the existence of
an appealable judgment or order. (Otay River Constructors v. San Diego Expressway
(2008) 158 Cal.App.4th 796, 801.) “A judgment is defined as ‘the final determination of
the rights of the parties in an action or proceeding’ (§ 577) and it is the substance and
effect of an adjudication that is determinative, not the form of the decree. [Citation.] As
a general test, an order constitutes the final determination of a case ‘where no issue is left
for future consideration except the fact of compliance or noncompliance with the terms of
the first decree.’” [Citation.] (Ibid.)
Where, as here, it is doubtful that the trial court has entered an appealable
judgment or order, we must raise and address the issue of appealability. (Jennings v.
Marralle (1994) 8 Cal.4th 121, 126; see Olson v. Cory (1983) 35 Cal.3d 390, 398 [“since
the question of appealability goes to our jurisdiction, we are dutybound to consider it on
our own motion”]; City of Gardena v. Rikuo Corp. (2011) 192 Cal.App.4th 595, 599,
fn. 3 [same]; see also People v. Elder (2014) 227 Cal.App.4th 1308, 1319 [“[u]nder the
celebrated jurisdictional truism, an appellate court always has jurisdiction to determine its
appellate jurisdiction”].)7
Under both federal and state law, the right to appeal is strictly statutory. (See
Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 633 [129 S.Ct. 1896, 173 L.Ed.2d
832] [“[t]he right of appeal is ‘a creature of statute’”]; Dana Point Safe Harbor Collective
v. Superior Court (2010) 51 Cal.4th 1, 5 [“[t]he right to appeal is wholly statutory”];
Apex LLC v. Korusfood.com (2013) 222 Cal.App.4th 1010, 1014 [“[t]he right to appeal
7 We asked the parties to file letter briefs addressing, among other issues, the
appealability of the order vacating the clause construction award and to be prepared to
address the issue at oral argument. Both sides filed letter briefs.
10
is conferred by statute”]; Doe v. United States Swimming, Inc. (2011) 200 Cal.App.4th
1424, 1432 [“‘[a] trial court’s order is appealable when it is made so by statute’”].)
Therefore “‘“[n]o appeal can be taken except from an appealable order or judgment, as
defined in the statutes and developed by the case law . . . .”’” (City of Gardena v. Rikuo
Corp., supra, 192 Cal.App.4th at p. 601, italics omitted.)
B. The FAA Does Not Preempt California Procedural Law
Before we can resolve the issue whether the trial court’s order expressly vacating
the clause construction award (and impliedly denying Judge’s motion to confirm the
clause construction award) is appealable, we must determine which law applies to this
issue. The trial court found that the FAA applied to the parties’ arbitration agreement.
That, however, is not the end of the inquiry. Even assuming the substantive provisions of
the FAA apply to the parties’ arbitration agreement, the procedural law of California
governs the issue whether the trial court’s order vacating the clause construction award is
appealable.
Section 2 of the FAA is a substantive rule that applies in both federal and state
courts.8 (Vaden v. Discover Bank (2009) 556 U.S. 49, 59 [129 S.Ct. 1262, 173 L.Ed.2d
206]; Southland Corp. v. Keating (1984) 465 U.S. 1, 16 [104 S.Ct. 852, 79 L.Ed.2d 1].)
It reflects Congress’ intent “to foreclose state legislative attempts to undercut the
enforceability of arbitration agreements.” (Southland Corp., supra, at p. 16, fn. omitted.)
“The FAA was designed ‘to overrule the judiciary’s longstanding refusal to enforce
agreements to arbitrate,’ [citation] and to place such agreements ‘“upon the same footing
8 Section 2 of the FAA provides: “A written provision in any maritime transaction
or a contract evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction, or the refusal to perform
the whole or any part thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction, or refusal, shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” (9 U.S.C. § 2.)
11
as other contracts[.]”’ [Citation.]” (Volt Info. Sciences v. Leland Stanford Jr. U. (1989)
489 U.S. 468, 478 [109 S.Ct. 1248, 103 L.Ed.2d 488]; see Granite Rock Co. v.
International Brotherhood of Teamsters (2010) 561 U.S. 287, 303 [130 S.Ct. 2847, 177
L.Ed.2d 567].) Therefore, the effect of section 2 of the FAA “‘is to create a body of
federal substantive law of arbitrability, applicable to any arbitration agreement within the
coverage of the Act.’” (Perry v. Thomas (1987) 482 U.S. 483, 489 [107 S.Ct. 2520, 96
L.Ed.2d 426]; see Southland Corp., supra, at p. 10 [“[i]n enacting § 2 of the [FAA],
Congress declared a national policy favoring arbitration and withdrew the power of the
states to require a judicial forum for the resolution of claims which the contracting parties
agreed to resolve by arbitration”].)
“The FAA contains no express pre-emptive provision, nor does it reflect a
congressional intent to occupy the entire field of arbitration.” (Volt Info. Sciences v.
Leland Stanford Jr. U., supra, 489 U.S. at p. 477.) In addition, “[t]here is no federal
policy favoring arbitration under a certain set of procedural rules; the federal policy is
simply to ensure the enforceability, according to their terms, of private agreements to
arbitrate.” (Id. at p. 476.) Therefore, while “[t]he FAA’s substantive provisions are
applicable in state as well as federal court, . . . the FAA’s procedural provisions apply
only to proceedings in federal court.” (Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC
(2012) 212 Cal.App.4th 539, 544].)
In federal court, appeals in arbitration matters under the FAA are governed by
section 16 of title 9 of the United States Code (section 16 of the FAA), which lists the
types of orders, including interlocutory orders, from which an appeal may be taken under
the FAA.9 In California, appeals in arbitration matters are governed by section 1294,
9 Section 16 of the FAA provides:
“(a) An appeal may be taken from—
“(1) an order—
“(A) refusing a stay of any action under section 3 of this title . . . ,
“(B) denying a petition under section 4 of this title . . . to order arbitration
to proceed,
12
which specifies the types of orders from which an appeal may be taken under the CAA.10
There are differences between the two provisions. For example, Section 16 of the FAA
states that certain interlocutory orders are appealable; section 1294 does not.
“[I]f a contract involves interstate commerce, the FAA’s substantive provision . . .
applies to the arbitration. But the FAA’s procedural provisions . . . do not apply unless
the contract contains a choice-of-law clause expressly incorporating them.” (Valencia v.
Smyth (2010) 185 Cal.App.4th 153, 173-174; see Mave Enterprises , Inc. v. Travelers
Indemnity Co. (2013) 219 Cal.App.4th 1408, 1429 [“the procedural provisions of the
CAA” apply in California courts “absent a choice-of-law provision expressly mandating
the application of the procedural law of another jurisdiction”].) The arbitration
agreement in this case does not mention the FAA or the CAA, and it does not include a
choice of law provision. There is no indication that the parties intended to apply the
procedural provisions of the FAA to the exclusion of those of the CAA. Under these
circumstances, appealability is determined by state procedural law. (See Cronus
Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 389 [“the United States
“(C) denying an application under section 206 of this title . . . to compel
arbitration,
“(D) confirming or denying confirmation of an award or partial award, or
“(E) modifying, correcting, or vacating an award;
“(2) an interlocutory order granting, continuing, or modifying an injunction
against an arbitration that is subject to this title; or
“(3) a final decision with respect to an arbitration that is subject to this title.
“(b) Except as otherwise provided in section 1292(b) of title 28, an appeal may not
be taken from an interlocutory order—
“(1) granting a stay of any action under section 3 of this title . . . ;
“(2) directing arbitration to proceed under section 4 of this title . . . ;
“(3) compelling arbitration under section 206 of this title . . . ; or
“(4) refusing to enjoin an arbitration that is subject to this title.”
10 Section 1294 provides: “An aggrieved party may appeal from: [¶] (a) An order
dismissing or denying a petition to compel arbitration. [¶] (b) An order dismissing a
petition to confirm, correct or vacate an award. [¶] (c) An order vacating an award
unless a rehearing in arbitration is ordered. [¶] (d) A judgment entered pursuant to this
title. [¶] (e) A special order after final judgment.”
13
Supreme Court does not read the FAA’s procedural provisions to apply to state court
proceedings”]; see, e.g., Southland Corp. v. Keating, supra, 465 U.S. at p. 16, fn. 10
[section 4 of the FAA does not apply to state courts]; Cable Connection, Inc. v.
DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1351 [“[s]ections 3 and 4 of the FAA, governing
stays of litigation and petitions to enforce arbitration agreements, do not apply in state
court”]; Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC, supra, 212 Cal.App.4th at
p. 541 [section 9 of the FAA is procedural and thus does not apply in state court
proceedings].)11
Absent an agreement by the parties to apply the procedural provisions of the FAA
to their arbitration, federal procedural rules apply only where state procedural rules
conflict with or defeat the rights Congress granted in the FAA. (See Rosenthal v. Great
Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 409 [the FAA’s procedural
provisions are not binding on state courts as long as the state’s procedures do not defeat
11 Courts in other jurisdictions have similarly concluded that the procedural
provisions of the FAA do not apply in state court. (See, e.g., Southern California Edison
Co. v. Peabody Western Coal (Ariz. 1999) 977 P.2d 769, 773-774 [“[t]he FAA does not
. . . require submission to federal procedural law,” and “[e]ach state is free to apply its
own procedural requirements so long as those procedures do not defeat the purposes of
the act”]; Simmons Co. v. Deutsche Financial Services (Ga.Ct.App. 2000) 532 S.E.2d
436, 440 [state rule permitting immediate appeal from an order compelling arbitration not
preempted by section 16 of the FAA because allowing such an appeal did not defeat the
purposes or objective of the FAA]; Collins v. Prudential Ins. Co. of America (La. 2000)
752 So.2d 825, 828-829 [“the provisions of § 16 of the FAA governing the timing of
appeals are procedural in nature and that states are free to follow their own procedural
rules regarding appeals, unless those rules undermine the goals and principles of the
FAA”]; Wells v. Chevy Chase Bank (Md. 2001) 768 A.2d 620, 629 [“the Maryland
procedural rule, recognizing an order compelling arbitration to be a final and appealable
judgment, is not preempted by the FAA”]; Weston Securities Corp. v. Aykanian
(Mass.App.Ct. 1998) 703 N.E.2d 1185, 1189 [section 16 of the FAA did not preempt a
state statute prohibiting appeal of order compelling arbitration]; Kremer v. Rural
Community Ins. Co. (Neb. 2010) 788 N.W.2d 538, 547 [section 16(b) of the FAA does
not preempt Nebraska’s appellate procedural rules]; Toler’s Cove Homeowners v. Trident
Constr. (S.C. 2003) 586 S.E.2d 581, 584-585 [state procedural rule, rather that FAA rule,
governs whether order compelling arbitration is immediately appealable].)
14
the rights granted by Congress]; Muao v. Grosvenor Properties, Ltd. (2002) 99
Cal.App.4th 1085, 1092 [“‘[l]ike other federal procedural rules,’ section 16 of the FAA is
not binding on our state court proceedings, ‘“provided applicable state procedures do not
defeat the rights granted by Congress”’”].) Here, there is no conflict between section
1294 and the policy underlying the FAA of enforcing arbitration agreements. Therefore,
California procedural law governs the question whether the order vacating the clause
construction award is appealable.
C. The Order Vacating the Clause Construction Award Is Not Appealable
As noted, section 1294 governs appealability of orders in arbitration matters in
California. (Vivid Video, Inc. v. Playboy Entertainment Group, Inc. (2007) 147
Cal.App.4th 434, 442.) Subdivision (c) of section 1294 makes appealable “[a]n order
vacating an award unless a rehearing in arbitration is ordered.” (See SWAB Financial,
LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1195 [order vacating
arbitration award without ordering a rehearing is appealable ]; Marcus & Millichap Real
Estate Investment Brokerage Co. v. Woodman Investment Group (2005) 129 Cal.App.4th
508, 515 [“while an order vacating an arbitration award and ordering rehearing is an
‘intermediate ruling,’ a similar order vacating an award without ordering rehearing is, of
necessity, ‘final’”].) Because the trial court vacated the clause construction award and
did not order a rehearing, the order at first blush appears appealable under section 1294,
subdivision (c). The issue, however, is whether the trial court’s order in this case vacated
an arbitration “award.”
In Rubin v. Western Mutual Ins. Co. (1999) 71 Cal.App.4th 1539, the court held
that an order confirming an arbitration award under section 1287.4 is not appealable
where merits of the claims remain to be resolved in the arbitration. (Id. at pp. 1547-
1548.) The court relied on the language of section 1287.4, which provides that, “[i]f an
award is confirmed, judgment shall be entered in conformity therewith,” and the
“judgment so entered . . . is subject to all the provisions of law relating[] to a judgment in
a civil action . . . .” (Id. at p. 1547, italics omitted.) The court held that “[t]he express
15
language of section 1287.4 requires that a judgment imposed after confirmation of an
arbitration award be treated as one in an ordinary civil action; as a result, the finality
requirement before an appeal may proceed is applicable . . . .” (Ibid.) The court noted
that “our holding is limited to the appealability of a judgment imposed pursuant to section
1287.4 confirming an arbitration award where the resolution of the merits of the
complaint remain unresolved. Other orders listed in section 1294 do not contain the
restrictive language in section 1287.4. . . . We need not address under what
circumstances, if ever, the section 904.1, subdivision (a) finality requirement applies to
the other orders identified in section 1294. . . .” (Id. at p. 1548, fn. omitted.) This appeal
raises the issue, left unresolved in Rubin, whether the finality requirement applies to the
orders listed in section 1294, including an order vacating a non-final arbitration award
under section 1294, subdivision (c).
Section 1283.4 provides that an arbitration award must “include a determination of
all the questions submitted to the arbitrators the decision of which is necessary in order to
determine the controversy.” The clause construction award in this case does not
determine all of the questions that are necessary for the arbitrator to decide in order to
determine the controversy. Rather, the clause construction award only resolved what the
arbitrator described as the “threshold matter” of “whether the applicable arbitration
clause permits the arbitration to proceed on behalf of or against a class,” and allowed the
class claims to continue. Because the clause construction award does not qualify as an
“award” under section 1283.4, the trial court’s order is not an order vacating an
arbitration award, and it is not appealable.12 (See Otay River Constructors v. San Diego
12 Because the order vacating the clause construction award is not appealable, the
resolution of whether the trial court had jurisdiction to vacate a less than final arbitration
award in the first instance must await future determination. It is highly unlikely,
however, that the trial court had jurisdiction to rule on the Nijjar defendants’ petition,
which sought to vacate a less than final ruling made by the arbitrator. (See Cinel v.
Christopher (2012) 203 Cal.App.4th 759, 767 [“[b]efore confirming an award, the trial
court has a duty, in order to follow the dictates of section 1283.4, to ensure that the
arbitrator’s ‘award’ is an ‘award’ within the meaning of that statute”].) It does not seem
16
Expressway, supra, 158 Cal.App.4th at p. 803 [“[u]nder section 1294, appealable
arbitration orders also require finality and this requirement is consistent with the language
of section 1294 and the general prohibition of appeals from interlocutory nonfinal
judgments in section 904.1, subdivision (a)”], citing Vivid Video, Inc. v. Playboy
Entertainment Group, Inc., supra, 147 Cal.App.4th at p. 442; see also Kurwa v. Kislinger
(2013) 57 Cal.4th 1097, 1100 [“a judgment that fails to dispose of all the causes of action
pending between the parties is generally not appealable”].)13
There are good reasons for applying a finality requirement to orders listed in
section 1294. Without such a requirement, a wide variety of orders vacating (or
dismissing petitions to vacate) interim arbitration awards would be appealable, which
would interfere with the “‘efficient, streamlined procedure[]’” that is supposed to be
arbitration’s “fundamental attribute.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57
Cal.4th 1109, 1140; see Rosenson v. Greenberg Glusker Fields Claman & Machtinger
LLP (2012) 203 Cal.App.4th 688, 694 [“[t]he purpose of arbitration is to provide a quick
and efficient form of alternate dispute resolution”].) Aggrieved parties could appeal
right that the trial court would have jurisdiction to vacate an interim award and this court
would not have jurisdiction to review the trial court’s ruling. Nothing in this opinion
should be construed as precluding Judge from filing in the trial court a motion for
reconsideration of the order vacating the interim clause construction award, at least in the
individual/PAGA action, which is the only case in which the trial court vacated the
interim award.
13 Unlike an order dismissing class claims, which is appealable under the death knell
doctrine, the clause construction award allows class claims to proceed. (See In re Baycol
Cases I & II (2011) 51 Cal.4th 751, 757-758 [“orders that only limit the scope of a class
or the number of claims available to it are not similarly tantamount to dismissal and do
not qualify for immediate appeal under the death knell doctrine; only an order that
entirely terminates class claims is appealable”]; Green v. Obledo (1981) 29 Cal.3d 126,
149, fn. 18 [class action interim orders are not appealable unless “‘tantamount to a
dismissal of the action as to all members of the class’”]; General Motors Corp. v.
Superior Court (1988) 199 Cal.App.3d 247, 250, 251 [“intermediate order” certifying a
smaller class than requested did “not have what has come to be known as the ‘death
knell’ effect” and was not appealable].)
17
orders vacating interim arbitration awards resolving discovery disputes, sustaining or
overruling demurrers, granting summary adjudication on certain claims, ruling on
liability but not damages in a bifurcated proceeding, and denying motions for a new
arbitration hearing. It would be anomalous to allow parties participating in an arbitration
to appeal orders vacating interim arbitration awards when the underlying orders are not
appealable in non-arbitration cases. (See Regents of University of California v. Superior
Court (2013) 220 Cal.App.4th 549, 557 [“[a]n order overruling a demurrer is not directly
appealable”]; Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 503
[“[g]enerally, orders granting summary adjudication are interlocutory orders and, as such,
are not appealable”]; Chakalis v. Elevator Solutions, Inc. (2012) 205 Cal.App.4th 1557,
1568, fn. 4 [“[a]n order denying a motion for a new trial is not directly appealable”];
NewLife Sciences, LLC v. Weinstock (2011) 197 Cal.App.4th 676, 689 [discovery orders
are generally not appealable]; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181
Cal.App.4th 471, 485, fn. 9 [“an order sustaining a demurrer without leave to amend is
ordinarily not appealable”]; see also Plaza Tulare v. Tradewell Stores, Inc. (1989) 207
Cal.App.3d 522, 523-524 [order in bifurcated trial on interpretation of contract not
appealable where issue of damages had not yet been litigated]; Lauderdale v. U & I
Equipment Co. (1969) 271 Cal.App.2d 140, 142-143 [judgment on verdict against
defendant on issue of liability only is not a final judgment and thus is not appealable];
Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group
2013) ¶ 5:422.5, p. 5-290 [when issues of liability and damages have been bifurcated in
arbitration, the arbitrator’s decision or order issued at the conclusion of the liability phase
“is not an ‘award’” within the meaning of sections 1283.4 or 1284 and thus “cannot be
confirmed, corrected or vacated by” the trial court].)
Hightower v. Superior Court (2001) 86 Cal.App.4th 1415 is not to the contrary. In
Hightower the arbitrator issued an award, after “an extensive evidentiary hearing” over
38 days on the merits of the dispute, entitled a “‘[p]artial final award’” that the court
stated “would be subject to confirmation.” (Id. at pp. 1423, 1439.) The court stated that
“an arbitrator, in order to provide a proper remedy for the prevailing party, may resolve
18
certain critical areas of a dispute in a ‘partial final award’ but reserve jurisdiction to later
decide, by a ‘final award,’ issues which will likely arise as a result of the implementation
of that remedy.” (Id. at p. 1419.) The arbitrator’s award in Hightower, however, did not
leave any “undecided issues ‘necessary in order to determine the controversy,’” but
instead “determined all issues that [were] necessary to the resolution of the essential
dispute” in the case. (Id. at p. 1439.) The arbitrator did reserve jurisdiction to decide “ a
number of potential and conditional issues that the arbitrator will have to address”
regarding the appropriate form of the final remedy, but the award resolved the dispute
between the parties. (Id. at pp. 1440-1441.)14 In contrast, the clause construction award
here dealt only with the issue of whether the parties could arbitrate the class claims. The
award did not resolve any of the issues necessary to the resolution of the dispute between
the parties, nor did the award merely reserve potential or conditional issues relating to
implementation of a remedy. More important, the Hightower court stated that the award
would be reviewable not by appeal, but “by application for an extraordinary writ” based
on “a demonstration as to why an appeal from the judgment confirming the ultimate final
award would not be adequate.” (Id. at p. 1440.) Thus, the holding and result in
Hightower are entirely consistent with our decision in this case.
14 The dispute in Hightower was between two 50 percent shareholders of a
corporation, each of whom had the right to offer to sell his shares to the other at a
specified price pursuant to a buy-sell agreement. If one of the shareholders exercised the
right, then the other shareholder could either buy the shares or sell his shares to the other
at the same price. (Hightower v. Superior Court, supra, 86 Cal.App.4th at p. 1421.) One
of the shareholders eventually exercised this right, and the other shareholder filed a
demand for arbitration, claiming that the offering shareholder interfered with his ability
to obtain financing to purchase the shares. (Id. at pp. 1422-1423.) The arbitrator ruled in
favor of the offering shareholder. The problem was the remedy. The offering
shareholder had the financing to purchase the other shareholder’s shares at the time he
made the offer three years earlier, but it was uncertain whether he could obtain it again at
the time of the award. So the arbitrator gave the offering shareholder “the right, but not
the obligation,” to exercise his option, subject to 10 specified conditions. (Id. at p. 1426
& fn. 15.) The arbitrator reserved jurisdiction to determine these “potential and
conditional issues” that were likely to arise in connection with the exercise of the option
and the various conditions. (Id. at p. 1439.)
19
D. The Parties’ Arbitration Agreement Does Not Confer Jurisdiction
The parties’ arbitration agreement provides that, “[u]pon receipt of a notice of
intent to initiate arbitration from employee or upon service of its own notice of intent to
arbitrate upon an employee, Atlas Resources, Inc. will contact the [AAA] and request a
panel of arbitrators.” The parties thus agreed that the AAA rules would govern their
arbitration. (See Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC, supra, 212
Cal.App.4th at pp. 541-542 [“[b]y providing for AAA arbitration, the parties are deemed
to have made the AAA rules a part of their agreement”].)
AAA’s Supplemental Rule 3 (see fn. 6 ante) sets forth a bifurcated procedure in
which the arbitrator first issues a partial final award, i.e., a clause construction award, that
determines whether the arbitration clause permits arbitration on a class wide basis. Once
the arbitrator issues the clause construction award the arbitrator stays the proceedings for
a specified time to enable any party to ask the trial court to confirm or vacate the partial
award. If a party files a petition seeking such an order, the arbitrator may stay some or all
of the proceedings until the trial court rules. Otherwise, the arbitration proceeds. Here,
the arbitrator incorporated this procedure into her scheduling order, stating that she
intended to issue a clause construction award on the threshold issue of arbitrability of
class claims, give the parties an opportunity to seek review of the interim award, and then
hold an evidentiary hearing on the merits of the parties’ claims.
It is true, as the Nijjar defendants point out in their supplemental letter brief, that
the arbitrator’s decision to employ a bifurcated procedure was consistent with Rule 3 of
AAA’s Supplementary Rules for Class Arbitrations. Whether an order by the trial court
is appealable, however, is determined by statutes enacted by the Legislature, not rules
adopted by the AAA. (See In re S.B. (2009) 46 Cal.4th 529, 534 [“‘one appeals from a
judgment or from an order that the Legislature has designated as appealable’”].)
Therefore, although the bifurcated procedure of AAA Supplemental Rule 3 may apply to
the parties’ arbitration, neither the AAA nor the parties by agreement can create a right to
appeal that does not otherwise exist. The parties cannot confer jurisdiction on an
appellate court by consent or stipulation. (See City of Gardena v. Rikuo Corp., supra,
20
192 Cal.App.4th at p. 604 [“parties cannot confer jurisdiction upon an appellate court by
agreement when it otherwise does not exist”]; Branner v. Regents of University of
California (2009) 175 Cal.App.4th 1043, 1049 [jurisdiction cannot “‘be conferred upon
the appellate court by the consent or stipulation of the parties, estoppel, or waiver’”]; In
re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1216 [same].)
E. The Nijjar Defendants’ Reliance on Cable Connection Is Misplaced
The Nijjar defendants cite Cable Connection, Inc. v. DirectTV, Inc., supra, 44
Cal.4th 1334 (Cable Connection) in support of their somewhat surprising argument that
the order vacating the clause construction award is appealable.15 Like this case, Cable
Connection involved an appeal from an order vacating an arbitration award that
concluded that an arbitration provision allowed for class arbitration. The Nijjar
defendants assert that, because in Cable Connection the Court of Appeal heard the appeal
and the Supreme Court granted review, both courts impliedly found that the order was
appealable. A case, however, “is authority only for an issue actually considered and
decided.” (Moreno v. Quemuel (2013) 219 Cal.App.4th 914, 918, citing In re Chavez
(2003) 30 Cal.4th 643, 656; see Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696, 704.)
The Supreme Court in Cable Connection stated that it was considering “two questions
regarding arbitration agreements. (1) May the parties structure their agreement to allow
for judicial review of legal error in the arbitration award? (2) Is classwide arbitration
available under an agreement that is silent on the matter?” (Cable Connection, supra, at
p. 1339.) The Supreme Court did not consider or decide the appealability issue in this
case. In any event, the most applicable portions of the Cable Connection decision are the
statements in Justice Baxter’s concurring opinion that “parties proceeding under the
15 The Nijjar defendants’ position on this issue is surprising because they prevailed
in the trial court and are the respondents on appeal. If the trial court’s order vacating the
clause construction award is not appealable, then Judge’s appeal of that order will not
succeed, at least for now.
21
California Arbitration Act may obtain confirmation, correction, or vacation only of an
arbitral decision that constitutes an ‘award’ within the act’s contemplation,” and that “it is
questionable whether parties to an arbitration agreement may contract to obtain
premature judicial merit review of arbitral decisions that are labeled as ‘awards,’ but
which in substance merely resolve one or more legal or factual issues pertaining to only a
portion of the controversy submitted to the arbitrators for their determination.” (Id. at
pp. 1366-1367 (conc. opn. of Baxter, J.).)
DISPOSITION
The order vacating the clause construction award is not a final arbitration award
appealable within the meaning of section 1294, subdivision (c), and therefore is not
appealable.16 The appeal from the order vacating the clause construction award in the
individual/PAGA action, case No. BC460592, is dismissed. The parties are to bear their
own costs on appeal.
SEGAL, J.*
We concur:
PERLUSS, P. J. ZELON, J.
16 Because the Nijjar defendants did not move to vacate the clause construction
award in the class action, that interim award remains in effect in the arbitration.
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
22