Richey v. Autonation, Inc.
60 Cal. 4th 909
| Cal. | 2015Background
- Richey, on CFRA/FMLA medical leave, was terminated for outside employment while on leave despite an employer policy prohibiting outside work during CFRA leave.
- Arbitration agreement required resolution by applicable law and a written reasoned opinion, but did not expressly permit judicial review for legal error.
- Arbitrator held the policy violation, not the CFRA/FMLA leave itself, justified termination and relied on an "honest belief" defense regarding misrepresentation of medical condition.
- Trial court denied vacating the award; Court of Appeal vacated, ruling the arbitrator violated CFRA reinstatement rights by applying the honest belief defense.
- This court granted review to determine if arbitration awards involving unwaivable statutory rights may be reviewed or corrected where the award hinges on policy-based termination while on CFRA/FMLA leave.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrator exceeded powers by applying the honest belief defense. | Richey argues the defense improperly undermines CFRA rights. | Power Toyota contends defense may be permissible if legally sound and supported by evidence. | Arbitrator did not deprive CFRA rights; any error was not prejudicial and the award stands. |
| Whether the CFRA reinstatement right was violated by the award. | CFRA requires reinstatement to same or comparable position after leave. | Termination for policy violation while on leave is permissible and not a reinstatement denial. | No violation of unwaivable CFRA rights; evidence supported termination for policy violation. |
| What is the proper standard of review for arbitration awards involving unwaivable statutory rights? | Harms CFRA rights if court defers entirely to arbitral decision. | General restraint on judicial review should be maintained; only limited review applies. | Pearson Dental framework governs; review is narrow and may vacate where legal error denied hearing on merits, but not here. |
| Did the arbitrator act within powers under the arbitration agreement when applying statutory rights and policy considerations? | Arbitrator’s reliance on an outside policy violates statutory rights. | Award was based on proven policy violation and substantial evidence, not on statutory denial. | Arbitrator acted within powers; substantial evidence supported the award. |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (1992) (general rule against reviewing arbitral errors; finality favored)
- Cable Connection, Inc. v. DIRECTTV, Inc., 44 Cal.4th 1334 (2008) (arbitration law may be interpreted to require legal error review only by explicit agreement)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000) (judicial review for unwaivable statutory rights; written award required)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (2010) (narrow exception for correcting legal error to ensure hearing on merits)