Odyssey Engineering v. Longo CA4/3
G059242
| Cal. Ct. App. | Dec 14, 2021Background
- Odyssey (Anthony and Teresa Longo and Odyssey Engineering) sued Vincent Longo/Wesrae and Stradling Yocca (and an individual) in private JAMS arbitration alleging aiding-and-abetting embezzlement; Stradling moved to dismiss based on attorney–client privilege.
- The JAMS-appointed arbitrator, retired Judge Gail Andler, initially disclosed each JAMS neutral has an “economic interest” in JAMS; later (after the Ninth Circuit’s Monster Energy decision) she disclosed she had an equal ownership share and described modest distributions.
- The arbitrator considered briefs and argument and granted Stradling’s motion to dismiss rather than staying the claim (Odyssey had argued Favila required a stay to allow future waiver/exception evidence).
- After the additional ownership disclosure Odyssey sought disqualification at JAMS and from the arbitrator, then petitioned the trial court to vacate the arbitration award under CCP §1286.2 (claims: refusal to hear evidence/substantial prejudice and undisclosed disqualifying interest).
- The trial court denied the petition and the disqualification motion; Odyssey sought to augment the appellate record with a redacted JAMS report—appellate court denied supplementation and affirmed the trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether granting Stradling’s dismissal (vs. staying) amounted to arbitrator’s refusal to hear evidence under §1286.2(a)(5) | Dismissal eliminated Odyssey’s ability to develop/offer later evidence; thus arbitrator prevented fair presentation | Arbitrator fully considered Odyssey’s submissions; an allegedly incorrect legal ruling is not misconduct under (a)(5) | Denied vacatur: legal error in applying Favila is not a §1286.2(a)(5) ground when arbitrator considered evidence (following Heimlich) |
| Whether failure to disclose arbitrator’s JAMS ownership required vacatur under §1286.2(a)(6)/disqualification standards | Ownership disclosure (vs. generic “economic interest”) would raise reasonable doubt about impartiality given BigLaw repeat players; Monster Energy supports disclosure | Initial JAMS disclosure of an economic interest was sufficient; parties had opportunity to ask for clarification and failed to timely disqualify (waiver) | Denied vacatur: initial economic-interest disclosure was adequate and Odyssey forfeited challenge by not timely inquiring/disqualifying (court adopts Speier/Dornbirer approach) |
| Whether appellate record should be supplemented with unredacted JAMS information | Appellant sought to add redacted JAMS case-count data after briefing to show repeat dealings | Record on appeal must mirror trial-court record; no extraordinary reason to augment | Denied: augmentation untimely and the appellate court reviews based on evidence before the trial court |
Key Cases Cited
- Heimlich v. Shivji, 7 Cal.5th 350 (Cal. 2019) (arbitrator legal error that excludes evidence is not necessarily misconduct under §1286.2(a)(5))
- Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019) (FAA case holding ownership in ADR provider must be disclosed where party has substantial business dealings with provider)
- Favila v. Katten Muchin Rosenman LLP, 188 Cal.App.4th 189 (Cal. Ct. App. 2010) (staying versus dismissing claims where privilege may be waived or exception later shown)
- McDermott, Will & Emery v. Superior Court, 83 Cal.App.4th 378 (Cal. Ct. App. 2000) (dismissal may be required when privilege prevents meaningful defense)
- Speier v. The Advantage Fund, LLC, 63 Cal.App.5th 134 (Cal. Ct. App. 2021) (California rule analysis: ownership disclosure not always required in commercial arbitrations; evaluate whether facts would reasonably raise impartiality doubts)
- Dornbirer v. Kaiser Foundation Health Plan, Inc., 166 Cal.App.4th 831 (Cal. Ct. App. 2008) (disclosures that put parties on notice obligate them to seek clarification or timely disqualify)
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (parties who agree to private arbitration generally accept arbitrator’s decision as final; courts have limited vacatur grounds)