Patterson v. Superior Court
B312411
| Cal. Ct. App. | Oct 18, 2021Background
- Michael Patterson, a former Charter employee, sued Charter for FEHA claims (sexual harassment, retaliation, failure to prevent) after alleged supervisor misconduct and termination.
- Charter moved to compel arbitration based on a company-wide opt-out email program Patterson said he never saw; the trial court granted the motion.
- Charter then sought contractual attorney fees for prevailing on its motion to compel arbitration under a clause authorizing fees for any "judicial action or proceeding . . . to compel arbitration."
- The trial court awarded Charter fees; Patterson petitioned for writ review, arguing FEHA forbids awarding fees to prevailing defendants unless plaintiff’s suit was frivolous and the clause is unconscionable.
- The Court of Appeal held the fee clause covers a motion to compel in a pending suit but must be read to incorporate FEHA’s asymmetric rule (Gov. Code §12965(b)): a prevailing defendant may recover fees only upon a finding the plaintiff’s action or opposition was frivolous, unreasonable, or groundless.
- The appellate court granted mandamus, vacated the fee award, and ordered a new hearing for findings on whether Patterson’s opposition was groundless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the fee clause apply to a motion to compel arbitration filed in a pending lawsuit? | Clause applies only to an independent action to compel arbitration, not a motion in a pending suit. | "Judicial action or proceeding" includes a motion in the pending lawsuit; clause covers Charter's motion. | Clause covers a motion to compel in pending litigation. |
| May a defendant immediately recover fees for a successful motion to compel arbitration in a FEHA case without a special finding? | FEHA (Gov. Code §12965(b)) allows fees to prevailing defendants only if the action/opposition was frivolous, unreasonable, or groundless. | Contractual fee provision permits recovery regardless of FEHA’s asymmetric standard. | Contractual fee clause is enforceable only if the court finds plaintiff’s opposition was frivolous, unreasonable, or groundless. |
| Is it unconscionable to enforce a fee-shifting clause that risks chilling FEHA claims? | Clause is substantively unconscionable because it undermines FEHA’s policy encouraging meritorious claims. | Clause is valid and should be enforced as written. | Rather than voiding the clause, court construes it to incorporate FEHA’s asymmetric standard, preserving enforceability but limiting awards. |
| Does the Federal Arbitration Act preempt applying FEHA’s fee rule to the arbitration agreement? | FEHA’s rule applies; FAA does not preempt generally applicable state-law limits on contract terms that waive statutory remedies. | FAA preempts state law that frustrates arbitration agreement terms. | FAA does not preempt: the FAA’s saving clause permits invalidation of contract terms that waive statutory remedies, so FEHA’s standard governs. |
Key Cases Cited
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (predispute employment arbitration cannot limit statutory FEHA remedies or impose unique costs on employees).
- Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 3 Cal.5th 744 (Cal. 2017) (interpret contract language; "proceeding" may be read narrowly to mean entire action).
- Acosta v. Kerrigan, 150 Cal.App.4th 1124 (Cal. Ct. App. 2007) (interim fee award for successful motion to compel arbitration enforceable where contract expressly authorized fees for that motion).
- Roberts v. Packard, Packard & Johnson, 217 Cal.App.4th 822 (Cal. Ct. App. 2013) (distinguishes motions in pending suits from independent petitions to compel; prevailing-party determination may await arbitration).
- Chavez v. City of Los Angeles, 47 Cal.4th 970 (Cal. 2010) (discusses asymmetric fee standard for FEHA litigants in light of federal precedent).
- Williams v. Chino Valley Ind. Fire Dist., 61 Cal.4th 97 (Cal. 2015) (confirms asymmetric standard applies to costs as well as fees under FEHA).
- Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (U.S. 1978) (federal rule: prevailing defendant recovers fees only if plaintiff’s claim was frivolous, unreasonable, or without foundation).
- McGill v. Citibank, N.A., 2 Cal.5th 945 (Cal. 2017) (FAA saving clause permits state-law invalidation of arbitration provisions that waive statutory remedies).
- Trivedi v. Curexo Tech. Corp., 189 Cal.App.4th 387 (Cal. Ct. App. 2010) (arbitration fee provisions that depart from FEHA’s asymmetric standard can be substantively unconscionable).
- Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (Cal. Ct. App. 2012) (denies interim fee award where only a later arbitration could determine prevailing party under Civil Code §1717).