B312663
Cal. Ct. App.Apr 25, 2022Background
- Raines Feldman demanded arbitration against former partner Erik Syverson; JAMS administered the arbitration and appointed multiple arbitrators after Syverson objected.
- JAMS appointed Barbara Reeves; her initial disclosures did not state she was a part-owner of JAMS; she disclosed ownership on October 29, 2019.
- JAMS later disqualified Reeves and on December 2, 2019 declined to continue as the provider and refunded fees.
- Syverson sued Reeves and JAMS in January 2020 alleging CLRA, fraud, false advertising, unfair business practices, and related claims; demurrers to the original and first amended complaints were sustained with leave to amend.
- In the demurrer to the second amended complaint, defendants for the first time argued arbitral immunity; the trial court sustained the demurrer without leave to amend, concluding arbitral immunity barred the claims, and entered judgment.
- On appeal Syverson argued Code Civ. Proc. § 430.41(b) barred defendants from raising arbitral immunity for the first time; the Court of Appeal affirmed because Syverson failed to show prejudice, holding arbitral immunity was a complete defense to his claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 430.41(b) prohibited raising arbitral immunity for the first time in demurrer to the second amended complaint | Syverson: § 430.41(b) bars demurring on grounds that could have been raised earlier | Defendants: even if not raised earlier, immunity could be asserted later; Syverson forfeited arguing merits | Court: did not decide whether § 430.41(b) barred the late assertion; moved to prejudice inquiry and affirmed because no prejudice shown |
| Whether arbitral immunity bars tort and statutory claims based on nondisclosure of arbitrator ownership/affiliation | Syverson: nondisclosure was actionable (fraud, CLRA, UCL, etc.) causing damages | Defendants: arbitral immunity shields arbitrators and sponsoring organizations for acts integrally related to arbitration; remedy is vacatur, not civil suit | Court: Arbitral immunity applies and operates as a complete bar to the alleged causes of action (following Weisbach and related authorities) |
| Whether any erroneous consideration of arbitral immunity was prejudicial | Syverson: he was prejudiced because the defense should not have been allowed in a demurrer to the second amended complaint | Defendants: Syverson failed to brief merits below or on appeal; immunity could be raised later by other motions so no prejudice | Court: No prejudice shown; even if error occurred, immunity would have barred the claims later; judgment affirmed |
Key Cases Cited
- La Serena Props., LLC v. Weisbach, 186 Cal.App.4th 893 (Cal. Ct. App. 2010) (arbitral immunity covers failure to disclose; remedy is vacatur rather than civil liability)
- Stasz v. Schwab, 121 Cal.App.4th 420 (Cal. Ct. App. 2004) (arbitral immunity shields arbitrators and sponsoring organizations for functions integrally related to arbitration)
- Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019) (failure to disclose an arbitrator’s ownership interest in JAMS can create a reasonable impression of bias and support vacatur)
- F.P. v. Monier, 3 Cal.5th 1099 (Cal. 2017) (reversal required a showing of prejudice under the California Constitution)
- Beames v. City of Visalia, 43 Cal.App.5th 741 (Cal. Ct. App. 2019) (judgment on the pleadings may be filed at any time)