Kabiling v. Lithia Motors CA2/2
B305901
| Cal. Ct. App. | Oct 6, 2021Background
- Kabiling worked at Downtown L.A. Motors starting in 1985 and became business office manager; Lithia purchased the dealership in Aug. 2017 and Kabiling signed a mandatory arbitration agreement.
- Management (Rasor) concluded Kabiling was underperforming with computer/accounting tasks and noted a $60,000 adjustment in December 2017 financials.
- On March 9, 2018, Kabiling was informed she would be demoted and offered three alternative positions; she took leave, filed discrimination complaints, never accepted an alternate job, and later worked elsewhere; Lithia terminated her for job abandonment months later.
- Kabiling sued for age discrimination, harassment, retaliation, wrongful termination, and related claims; the trial court compelled arbitration under the signed agreement.
- After a three-day arbitration hearing (10 witnesses, 69 exhibits), the arbitrator found for respondents, concluding demotion/termination were for performance, not age, and issued a written decision; the trial court denied Kabiling’s petition to vacate and confirmed the award.
- On appeal, the Court of Appeal affirmed, holding Kabiling failed to identify any statutory ground under Code Civ. Proc. § 1286.2 to vacate the award and that factual findings by the arbitrator are not reviewable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated under Code Civ. Proc. § 1286.2 because it contravened FEHA/public policy | Kabiling: arbitrator ignored documentary and testimonial evidence of ageist remarks and thus the award violates FEHA/public policy and must be vacated | Lithia: parties received a full hearing; arbitrator’s adverse factual findings are binding and not reviewable absent a statutory ground in § 1286.2 | Denied — no § 1286.2 ground shown; factual findings stand and do not contravene unwaivable statutory rights |
| Whether the arbitrator exceeded powers by making factual errors that warrant vacatur | Kabiling: arbitrator misapplied law/fact and failed to conduct mixed-motive analysis | Lithia: alleged errors are factual; arbitration provides finality and legal/factual mistakes are not vacatur grounds | Denied — factual errors alone do not show arbitrator exceeded powers; Moncharsh controls |
| Whether mixed-motive instruction/analysis was required | Kabiling: employer had both discriminatory and nondiscriminatory motives, so mixed-motive analysis should apply | Lithia: arbitrator found demotion was based solely on underperformance, so mixed-motive analysis was unnecessary | Denied — arbitrator found no discriminatory motive, so mixed-motive rule inapplicable |
| Whether employer’s alleged failure to prevent harassment is a legal ground to vacate | Kabiling: Rasor failed to prevent ageist remarks, so failure-to-prevent claim should succeed as matter of law | Lithia: arbitrator heard evidence and rejected the claim; factual rejection is binding | Denied — arbitrator found Kabiling failed to prove failure-to-prevent; court will not reweigh evidence |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (arbitral awards generally insulated from judicial review for factual or legal error)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (Cal. 2010) (limits on mandatory employment arbitration when procedural errors bar a hearing on FEHA claims)
- Richey v. AutoNation, Inc., 60 Cal.4th 909 (Cal. 2015) (arbitrator exceeds powers only in narrow circumstances such as violating unwaivable statutory rights)
- Harris v. City of Santa Monica, 56 Cal.4th 203 (Cal. 2013) (mixed-motive instruction where both discriminatory and nondiscriminatory reasons exist; employer may show it would have acted regardless)
- Department of Personnel Administration v. California Correctional Peace Officers Assn., 152 Cal.App.4th 1193 (Cal. Ct. App. 2007) (arbitrator cannot alter MOU terms in a way that violates statutory legislative approval requirement)
- Ling v. P.F. Chang’s China Bistro, Inc., 245 Cal.App.4th 1242 (Cal. Ct. App. 2016) (arbitration award vacated where award granted attorney fees contrary to statute)
- Ahdout v. Hekmatjah, 213 Cal.App.4th 21 (Cal. Ct. App. 2013) (arbitrator’s award vacated where enforcing it would conflict with statutory licensing/public-safety policy)
- Sargon Enterprises, Inc. v. Browne George Ross LLP, 15 Cal.App.5th 749 (Cal. Ct. App. 2017) (correcting award where it effectively deprived a party of statutory right to test arbitration agreement in court)
- Brown v. TGS Management Co., LLC, 57 Cal.App.5th 303 (Cal. Ct. App. 2020) (vacatur where arbitration award conflicted with statutory right to work in chosen profession)