Opinion
G056614
12-11-2020
ALBERT HUMPHREY et al., Plaintiffs and Appellants, v. HARVEST HOLDINGS, LP, et al., Defendants and Respondents.
Schimmel & Parks, Alan I. Schimmel, Michael W. Parks and Arya Rhodes for Plaintiffs and Appellants. Carothers Disante & Freudenberger, John R. Giovannone and Allison O. Chua for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2014-00753430) OPINION Appeal from a judgment of the Superior Court of Orange County, Linda S. Marks, Judge. Affirmed in part and reversed in part. Remanded with directions. Schimmel & Parks, Alan I. Schimmel, Michael W. Parks and Arya Rhodes for Plaintiffs and Appellants. Carothers Disante & Freudenberger, John R. Giovannone and Allison O. Chua for Defendants and Respondents.
* * *
Albert and Tritia Humphrey appeal from a judgment confirming an arbitration award in favor of two individual defendants, Steven Massey and Teri Taylor, and multiple corporate defendants, including Harvest Holdings, LP, and several related entities doing business under the moniker, Holiday Retirement. The trial court denied the Humphreys' cross-petition to vacate the arbitration award. On appeal, the Humphreys contend the court erred in failing to vacate the award for numerous reasons primarily involving the arbitrator's alleged bias or violation of disclosure rules. They also claim the arbitrator's award against them was jurisdictionally invalid because it was untimely and that it should be vacated because it did not resolve certain claims. They further argue that because they would not have been subject under Supreme Court precedent to an award of attorney fees and costs if they had pursued their discrimination claims in court, attorney fees and costs were similarly unavailable to Holiday in the arbitration. An exception allows for attorney fees and costs if claims such as the Humphreys are found frivolous—but that was not the case here. As we explain, we agree only with the Humphreys concerning fees and costs. Therefore, we reverse the attorney fee and cost award, and affirm the judgment in all other respects.
For ease of reference, we adopt Albert and Tritia's use of their first names in their briefs to refer to one or the other individually, when appropriate. As our discussion below illustrates, there is generally little need to distinguish between the individual and corporate defendants, and therefore we refer to them collectively as Holiday, unless the context indicates an individual defendant. The Humphreys' original complaint referred to individual defendant, Teri Taylor, as Teri Massey; we use the former as reflected in her respondents' brief. The corporate entity defendants that the Humphreys named in addition to Harvest Holdings, LP, were Harvest Management Sub LLC, Harvest Management Sub TRS Corp., and Holiday AL Management Sub LLC dba Holiday Retirement.
FACTUAL AND PROCEDURAL BACKGROUND
The Humphreys' claims against the defendants arose from their participation for three days in a five-day training session in May 2014 to qualify them for assignment as on-site property managers at Holiday residential retirement facilities. After an initial round of interviews in early 2014, Holiday hired the Humphreys to at-will "Community Co-Manager" positions, with a commencement date coinciding with the May training program.
At the outset of the training, the Humphreys and Holiday signed a "Mutual Agreement to Arbitrate Employment-Related Disputes." (Capitalization adjusted.) The parties agreed to arbitrate "any dispute between Associate and the Company . . . that is related to, arises from, or is in connection with [the] Associate's employment, or the termination of . . . employment . . . ." The agreement expressly extended to "all federal, state, and local statutory, constitutional, contractual and common law claims, including . . . claims arising under . . . the California Fair Employment and Housing Act [FEHA]."
The Humphreys' training included "shadowing" Holiday managers Massey and Taylor at Holiday's retirement community in Visalia to learn how to handle the day-to-day responsibilities of an on-site manager. The Humphreys are a mixed race couple. In October 2014, within several months of their initial training, which ended under disputed circumstances, they filed a complaint in superior court asserting FEHA causes of action against Holiday, including racial discrimination. Because the merits of the Humphreys' claims are not at issue on appeal, we turn to the procedural background of their appellate contentions.
Once the Humphreys filed suit, Holiday immediately demanded arbitration. The Humphreys refused, and Holiday filed an answer requesting arbitration and then a motion to compel arbitration, which the Humphreys opposed. Holiday's answer also asserted the Humphreys failed to exhaust administrative remedies, barring their FEHA claims.
The trial court granted Holiday's motion to compel arbitration. In doing so, the court interpreted the effect of confidentiality provisions in the arbitration agreement to apply only to any award issued, not to the arbitration subject matter or proceedings "involving claims like the ones at issue in this case . . . ," in which the court found a compelling public interest. The court held that Holiday acquiesced in this interpretation by "distanc[ing] themselves from" a broad interpretation of the agreement's confidentiality terms, demonstrated by Holiday's "lack of interest in enforcing" that interpretation at argument. The court, in "an abundance of caution," found "the broader confidentiality provision cited by Plaintiffs to be substantively unconscionable in the context of this litigation," and excised it under the arbitration agreement's severability clause. The court identified the offending confidentiality provision as a single sentence: "'[A]ll arbitration proceedings under this Agreement shall be conducted on a confidential basis.'" The court found "the offending provision does not permeate the Agreement with an unlawful purpose," severed the sentence, and ordered the matter to arbitration.
As required by the arbitration agreement, the Humphreys sought arbitration by filing an arbitral demand with Judicial Arbitration and Mediation Services, Inc., (JAMS). The Humphreys asserted four claims "under FEHA" in their arbitral demand: (1) harassment; (2) racial discrimination; (3) failure to investigate; and (4) disability discrimination. They also asserted "Denial of Reasonable Accommodation." They made no claim for retaliatory discharge or other retaliation.
The parties did not mutually agree on an arbitrator, instead selecting one through JAMS's strike-and-rank process for employment arbitration. Each side struck two potential arbitrators from a list of eight provided by JAMS, ranked the remaining six, and the arbitrator with the highest combined ranking was appointed by JAMS. When the initial arbitrator withdrew, JAMS appointed the next highest scoring arbitrator from the parties' ranked lists.
Upon her appointment, the arbitrator disclosed to the Humphreys (and to Holiday) that she previously had arbitrated 11 matters in which an attorney or attorneys from the law firm representing Holiday, Seyfarth Shaw LLP (Seyfarth, or the Seyfarth firm), had represented a party before her. She disclosed the names of the attorneys representing each side in the prior arbitrations and in some instances the name of the respondent party, including several large corporate entities. She also disclosed that nine of the 11 matters had "Settled prior to hearing" or "Settled Prior to Final Award," which may have interested the Humphreys or their counsel. The other two prior arbitration had resulted in a final award for the respondent, one "Monetary" and the other "Non-Monetary."
The arbitrator further disclosed at this juncture that she had seven pending or "on-going" arbitrations or mediations in which a party was represented by the Seyfarth firm. Together with the 11 completed arbitrations, that totaled 18 matters in which Seyfarth attorneys had appeared before the arbitrator in dispute resolution matters. She also disclosed that Holiday's attorney, then employed at the Seyfarth firm, had not appeared before her in any of the prior or pending matters. The Humphreys did not seek to disqualify the arbitrator on the basis of any of these disclosures; instead, they (and Holiday) assented to her hearing their claim.
In March 2016, pursuant to the parties' agreement, the arbitrator scheduled a three-day arbitral hearing to commence on December 12, 2016, and set a corresponding discovery schedule that included exchanging documents by May 2, 2016, and completing all depositions by July 8, 2016. The arbitrator further ordered that experts or other witnesses not identified by November 11, 2016, "shall not be permitted to testify."
Holiday noticed the Humphreys' depositions for late June and, after several postponements at the Humphreys' request, completed them in July. At Holiday's request, the Humphreys produced at their deposition their notice of claims submitted to the relevant state agency (DFEH) before filing their 2014 complaint. The Humphreys' July 2014 DFEH filing did not include a disability claim. The Humphreys did not set any depositions during the discovery period or for 10 weeks after the arbitrator's July 8 cutoff date.
In the meantime, having advised the Humphreys it would seek its attorney fees and costs for its motion to compel arbitration, Holiday filed a motion before the arbitrator for those sums. The parties' arbitration agreement provided that "the party prevailing on a motion or petition to compel arbitration may recover the attorneys' fees and costs of bringing or defending the motion or petition to compel arbitration." The Humphreys opposed the motion on grounds that Holiday "had their Agreement declared unconscionable and forced to be modified" to strike the sentence providing for confidential proceedings. The arbitrator postponed any fee award until the end of the proceedings.
On October 10, 2016, the Humphreys contacted Holiday to schedule depositions, but Holiday objected as the proposed dates were beyond the discovery cutoff date. Holiday also advised the Humphreys it believed the arbitrator lacked jurisdiction to hear claims that were "time-barred" because they had not identified them in their DFEH complaint. On October 12, the Humphreys served Holiday with notices attempting to schedule five depositions over two days in mid-November 2016—after the November 11 cutoff date for all discovery. Holiday also learned that day from another law firm that the Humphreys had served discovery on that firm the month before, in September 2016. Later during the week of October 14, 2016, the Humphreys served Holiday with form interrogatories and document production requests.
Both parties brought the discovery dispute to the arbitrator. Holiday objected on grounds of untimeliness and overbreadth, contending the discovery was beyond the scope of the Humphreys' DFEH notice of claims. The Humphreys argued a continuance was necessary because "the Defendants have obstructed discovery, in particular by completely failing to respond to written discovery and by refusing to appear at deposition[s]." They explained they had served their written discovery on September 1, 2016, received no response, and served it again on October 14, 2016—still to no avail. Their counsel observed that the Humphreys had been "accommodating and provided professional courtesy by actually appearing for an all-day deposition on July 13, 2016," which was past the July 8, 2016 deposition deadline, but Holiday refused to return the courtesy solely to gain "a tactical advantage in this case." The Humphreys requested that the arbitration date be continued 90 days, with corresponding additional time to conduct discovery. After a telephonic hearing on November 7, 2016, the arbitrator granted a 30-day continuance and permitted limited additional discovery.
Holiday subsequently objected in e-mail correspondence to the scope of discovery propounded by the Humphreys, claiming that the arbitrator "expressly ruled . . . that the disability claims are not part of this arbitration." In a November 11, 2016 letter to the arbitrator, the Humphreys attached amended "DFEH Right To Sue Letters that were served on all of the Responding Parties (not just Holiday[])," with service dates two years earlier in October 2014. The Humphreys therefore argued they were entitled "to pursue much broader claims than mischaracterized by Respondents' counsel." The Humphreys did not amend their demand for arbitration filed in August 2015, which included claims for racial discrimination, harassment, disability discrimination, and lack of accommodation or investigation (as reflected in the amended DFEH letters), but not a retaliatory discharge or other retaliation claim.
The arbitrator responded with correspondence confirming new January 2017 arbitration dates based on the 30-day continuance, and without imposing any express limitation on the Humphreys' discovery requests. In mid-December 2016, the Humphreys deposed Massey and Holiday's "person most knowledgeable" concerning its training procedures, and the parties exchanged other discovery. The parties raised further evidentiary disputes on the eve of the arbitration, which the arbitrator resolved in limine.
In the Humphreys' November 11, 2016 letter to the arbitrator, their counsel had suggested that they were "agreeable, if the arbitrator is agreeable, to have this matter reassigned to a different arbitrator and/or arbitration process, particularly in the event that there are demands created on the arbitrator's schedule." They noted that they were "aware that since the arbitration in this matter commenced, the Seyfarth firm [representing Holiday] has engaged the [a]rbitrator in numerous other multiple [sic] arbitrations that may also take up [her] time and schedule." The Humphreys reiterated their opposition to "Seyfarth's positions taken with the [a]rbitrator," which they described as "misrepresenting the scope of the Humphreys' FEHA claims and exhaustion of the DFEH process."
The Humphreys closed the letter by stating, "[G]iven these issues and the concerns about scheduling, Claimants are agreeable to reassignment of this arbitration in the interests of justice." The arbitrator apparently did not view the letter as a request for her recusal and responded only with the correspondence noted above setting the January 2017 arbitration dates.
On December 30, 2016, the parties filed their arbitration briefs. On January 9, the day before the arbitration hearing began, the Humphreys filed an amended brief that listed within the "scope of arbitration" a new, sixth claim for "retaliation in violation of the FEHA." Holiday objected to arbitrating the new claim. Following a prehearing conference with the arbitrator, she ruled that the claim could not be added, but she would consider evidence of retaliation, if any, in support of the Humphreys' claims for discrimination and harassment.
Nine witnesses testified at the arbitration hearing. The arbitrator conducted the hearing over the three scheduled days in January 2017, and added a fourth day on February 1, 2017. At the conclusion of the hearing, the arbitrator advised the parties she would need more than 30 days to render her decision and, as she subsequently recounted in her final award, "the parties did not object to this advisement."
In the meantime, the parties submitted their respective proposed statements of decision on February 18, 2017. On April 25, 2017, Holiday submitted additional authority for the arbitrator's consideration. On May 15, 2017, the Humphreys filed a response setting out their position on the new authority and adding new authority of their own.
On May 18, 2017, the arbitrator issued a detailed 20-page ruling denying the Humphreys' claims, observing that, "[a]t bottom, the resolution of the causes of action for harassment and race discrimination turns on the credibility of the witnesses." The arbitrator found the Humphreys' testimony "not credible" and "not persuasive."
The arbitrator styled her ruling an "Interim Award" pending "a phase II hearing" on Holiday's request for attorney fees. Four days later, on May 22, 2017, the Humphreys filed with JAMS a "Notice of Disqualification of [the] Arbitrator and Request to Vacate Arbitration Proceedings and Interim Arbitration Award." They premised their request on the fact that neither JAMS nor the arbitrator served notice when she was offered the opportunity to arbitrate other matters involving an attorney or law firm representing Holiday. The disqualification request stated: "The arbitrator repeatedly did not serve adequate Notices of Offers when each offer was communicated [to her], and only sent letters after the arbitrator had already agreed and entered into the financial transactions to take on other assignments involving the Seyfarth firm."
The Humphreys also asserted as grounds to vacate the award the fact that the arbitrator did not disclose that a party in another arbitration sought to vacate an interim award she had made in that arbitration. The party's vacatur motion was based on alleged disclosure omissions by the arbitrator or the dispute resolution provider there—the American Arbitration Association (AAA). (See Honeycutt v. JPMorgan Chase Bank, N.A. (2018) 25 Cal.App.5th 909 (Honeycutt).) In that case, both the arbitrator and the provider failed to disclose not just offers of other arbitral opportunities, but also the fact that the arbitrator had accepted several offers, including four in which a party was represented by the same law firm representing the defendant in the Honeycutt arbitration. That law firm, Seyfarth, also represented Holiday in this arbitration.
The appellate opinion in Honeycutt had not issued at the time the Humphreys filed their request with JAMS to vacate the arbitrator's award, nor is it clear whether a vacatur petition had yet been filed in the trial court in the Honeycutt case, but the Humphreys stated they learned of the Honeycutt plaintiff's attempt to vacate the award there "while this arbitration has been pending." Consequently, the Humphreys asserted that JAMS was required to vacate the arbitrator's interim award because "the arbitrator failed to make required mandatory disclosures to Claimants [of] another pending matter in which the arbitrator's impartiality and/or relationships with the Seyfarth firm were materially in dispute and called into question."
JAMS referred the request to its "National Arbitration Committee," which denied it. In June 2017, general counsel for the committee stated in a letter to the parties "there is no support for Claimant's proposition that a disclosure . . . must be made in two separate notices," namely, one notice of an offer to arbitrate another matter and a separate, subsequent notice if the arbitrator accepted the offer. In addition the letter concluded, "there is no showing of bias to justify removal of an arbitrator at this stage of the proceedings. Taking into account the materiality of the facts and any prejudice to the parties, including that an interim decision has already been rendered, the disqualification [request] is denied."
Under the briefing schedule for phase II of the arbitration, Holiday filed a motion for attorney fees and costs on June 26, 2017. In lieu of a response, the Humphreys filed an "Objection to Untimely Proceedings," on grounds that the interim award resolving the substantive issues in the matter had been untimely issued more than 30 days after the last day of the arbitration hearing. On August 17, 2017, the arbitrator received Holiday's reply brief in support of its fee motion and Holiday's opposition to the Humphreys' untimeliness claim.
The arbitrator issued her final award on September 14, 2017, denying the Humphreys' untimeliness challenge and awarding Holiday attorney fees and costs. Holiday did not request attorney fees as the prevailing party in the arbitration; it requested $10,000 in fees only for its efforts to enforce the arbitration clause. The arbitrator awarded Holiday that amount, specifying that the award was "only [for] the fees incurred in connection with the successful motion to compel arbitration, but not any fees related to the arbitration proceeding itself." The arbitrator awarded Holiday, as the prevailing party in the arbitration, $3,181.35 in costs that Holiday had requested as "not unique to arbitration." Those costs consisted of copying charges and deposition transcript fees.
The parties then filed in December 2017 competing petitions in the trial court: Holiday to confirm the arbitration award, and the Humphreys to vacate it. After a hearing in May 2018, the trial court granted Holiday's petition and denied the Humphreys'.
The trial court explained its ruling in a detailed minute order. The court found no merit in the Humphreys' claims of misconduct by the arbitrator, finding that the arbitrator "disclosed she would continue to accept new matters," including "'offers of employment or new professional relationships . . . from a party, lawyer in the arbitration, or lawyer or law firm that is currently associated . . . with a lawyer in the arbitration including offers to serve as a dispute resolution neutral in another case.'" The arbitrator also disclosed whether she had "'any current arrangement with a party concerning prospective employment or other compensated service as a dispute resolution neutral.'" The court observed, "Petitioners cite no rule which would forbid the arbitrator from continuing to accept new matters from the Seyfarth Shaw law firm." (Capitalization omitted.) The court also found no evidence presented "as to any alleged prejudice from same."
The court further determined that the arbitrator "did disclose" the Honeycutt matter to the parties before the arbitration began, "in the disclosures she provided on or about 1/29/16," insofar as it involved a pending arbitration in which the Seyfarth firm represented one of the parties. The court noted that "the defense attorney in the present case has not been involved, participated, nor worked on the Honeycutt case."
The court emphasized it "would agree that there is a continuing duty to disclose on matters directly involving the Humphrey case which would impact on the arbitrator's ability to be fair and impartial . . . ." But the court found this did not extend to "contentions made in connection with the petition to vacate the arbitration award issued in Honeycutt[,] as Petitioners so contend." The court found that the issues raised in Honeycutt were "unrelated to Humphrey . . . ."
The court concluded the interim award was not untimely, but that "assuming arguendo it was," the Humphreys waived any challenge "by failing to promptly object" on that ground, and furthermore that the Humphreys did not establish the arbitrator "was not neutral because she did not rule on a retaliation claim." Finding that the retaliation claim "was not pled in the Demand for Arbitration" and the Humphreys only "sought to add [it] the day before the arbitration," the court concluded the arbitrator properly denied the last-minute motion to amend.
The court also reached the Humphreys' fees and costs challenge. The court upheld the attorney fees and costs as awarded by the arbitrator, concluding that because "[t]he prevailing party in the arbitration did not seek attorneys' fees and costs incurred for the arbitration proceedings, . . . no analysis under FEHA is necessary." (Italics added.) The Humphreys now appeal.
DISCUSSION
The Humphreys contend the trial court erred when it denied their petition to vacate the arbitration award. Because their challenges turn primarily on their claim that the arbitrator acted improperly and was biased against them, we first set out the applicable framework and standard of review for a trial court to vacate an award for bias. Then we examine each of the Humphreys' specific claims of error. We hardly need to observe that the "mere fact" that a decisionmaker, including an arbitrator, "issued rulings adverse to [a party] on several matters . . . , even assuming one or more of those rulings were erroneous, does not indicate an appearance of bias, much less demonstrate actual bias." (Brown v. American Bicycle Group, LLC (2014) 224 Cal.App.4th 665, 674.)
1. Bias
A. Governing Law for Review of Arbitral Awards, Including Bias Claims
"As a general rule, the merits of an arbitrator's decision are not subject to judicial review." (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1195-1196.) To avoid intruding on the parties' choice of an arbitral forum to resolve their disputes, our Supreme Court has explained that, "with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law." (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 (Moncharsh); see Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1361.) "[B]y voluntarily submitting to arbitration, the parties have agreed to bear that risk in return for a quick, inexpensive, and conclusive resolution to their dispute." (Moncharsh, at p. 11.) Courts therefore "limit judicial review of private arbitration awards to those cases in which there exists a statutory ground to vacate or correct the award." (Id. at p. 28.) The Legislature has codified those reasons in Code of Civil Procedure section 1286.2.
All further undesignated statutory references are to the Code of Civil Procedure.
"The party seeking to vacate an arbitration award bears the burden of establishing that one of the six grounds listed in section 1286.2 applies and that the party was prejudiced by the arbitrator's error." (Royal Alliance Associate, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1106.)
Several of the grounds for vacatur specified in section 1286.2 relate to bias. Vacatur applies if the "arbitrator making the award . . . failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware." (§ 1286.2, subd. (a)(6)(A).) Vacatur similarly lies if "[t]here was corruption in any of the arbitrators" or "[t]he rights of [a] party were substantially prejudiced by misconduct of a neutral arbitrator." (§ 1286.2, subd. (a)(2) & (3).) Likewise, an arbitrator's decision rebuffing a request for recusal may be vacated by the trial court when the arbitrator "was subject to disqualification upon grounds specified in [s]ection 1281.91 but failed . . . to disqualify himself or herself as required by that provision." (§ 1286.2, subd. (a)(6)(B).) Section 1281.91 impliedly references the familiar rule precluding not only bias, but the appearance of bias.
Specifically, section 1281.91 provides generally that an arbitrator is subject to disqualification if "any ground specified in [s]ection 170.1 exists." (§ 1281.91, subd. (d).) In turn, section 170.1 requires disqualification if the adjudicator of a dispute "believes there is a substantial doubt as to his or her capacity to be impartial" or "[a] person aware of the facts might reasonably entertain a doubt that the [adjudicator] would be able to be impartial" (§ 170.1, subd. (a)(6)(A)(ii), (iii)).
As the language of section 170.1 suggests, an arbitrator is subject to disqualification—and an arbitration award is consequently subject to vacatur—if the arbitrator is (1) actually biased or (2) if there is an "appearance-of-partiality." (Haworth v. Superior Court (2010) 50 Cal.4th 372, 393 (Haworth); Roitz v. Coldwell Banker Residential Brokerage Co. (1998) 62 Cal.App.4th 716, 723 (Roitz).) Whether there is an appearance of partiality is to be judged objectively—that is, by asking whether a "well-informed, thoughtful, disinterested observer could reasonably form a belief that [the] arbitrator was biased for or against a party for a particular reason." (Haworth, at p. 389, italics and internal quotation marks omitted; Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1311; Ceriale v. AMCO Ins. Co. (1996) 48 Cal.App.4th 500, 506, italics omitted.) The appearance of bias is not determined from the perspective of "[t]he partisan litigant emotionally involved in the controversy . . . ." (Haworth, at p. 389.) The party alleging actual or apparent bias bears the burden of "'clearly . . . establish[ing]'" bias; an "'"unsubstantiated suggestion of personal bias"'" does not suffice. (Ibid; Betz v. Pankow (1993) 16 Cal.App.4th 919, 926.)
It has long been the case that "rulings against a litigant, even when numerous and continuous, form no ground for a charge of bias or prejudice, especially when they are subject to review." (McEwen v. Occidental Life Ins. Co. (1916) 172 Cal. 6, 11; accord, Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 59-60.) General claims of unfairness are also insufficient to demonstrate bias. "[T]he due process clause should not be routinely invoked as a ground for judicial disqualification. Rather, it is the exceptional case presenting extreme facts where a due process violation will be found." (People v. Freeman (2010) 47 Cal.4th 993, 1005.)
"'Bias or prejudice consists of a "mental attitude or disposition of the judge towards a party to the litigation."'" (Roitz, supra, 62 Cal.App.4th at p. 724.) Claims of bias cannot be "based upon [an adjudicator's] actual observance of the witnesses and evidence given during the trial." (People v. Hamilton (1988) 45 Cal.3d 351, 378.) It is the decisionmaker's "duty to consider and pass upon the evidence produced before him [or her], and when the evidence is in conflict, to resolve that conflict in favor of the party whose evidence outweighs that of the opposing party." (Kreling v. Superior Court (1944) 25 Cal.2d 305, 312.) "It shall not be grounds for disqualification that the [adjudicator] [¶] . . . expressed a view on a legal or factual issue presented in the proceeding." (§ 170.2, subd. (b).)
Were the rule otherwise, every trier of fact and law could be subjected to allegations of bias, and disqualification would be the norm. But the opposite is true. This rule applies even when, after a ruling adverse to one party, the adjudicator continues to preside over the matter and continues to be paid as a judge or arbitrator for doing so. (Roitz, supra, 62 Cal.App.4th at p. 724.) An arbitrator's "refusal to continue [a] hearing and waive his fee" does not "g[i]ve rise to disqualification." (Ibid.)
An order dismissing a petition to vacate an arbitration award is an appealable order, as is entry of judgment on a petition to confirm an award. (§ 1294, subds. (b), (d).) "'"On appeal from an order confirming an arbitration award, we review the trial court's order (not the arbitration award) under a de novo standard. [Citations.] To the extent that the trial court's ruling rests upon a determination of disputed factual issues, we apply the substantial evidence test to those issues."' [Citations.]" (ECC Capital Corp. v. Manatt, Phelps & Phillips, LLP (2017) 9 Cal.App.5th 885, 900.)
With the foregoing principles in mind, we turn to the Humphreys' specific claims of bias.
B. Other Arbitrations: Offer vs. Acceptance
The Humphreys contend vacatur was required because the arbitrator did not expressly disclose receiving several new offers to arbitrate or mediate other cases involving the Seyfarth firm that arose while the Holiday-Humphrey arbitration was pending. The Humphreys acknowledge the arbitrator disclosed that she had accepted the offers to serve as a neutral in those matters, and that a party in each of the new matters was represented by the same law firm representing Holiday. But they fault her for not earlier disclosing the underlying offers she received to act as the arbitrator or mediator in the new dispute resolution matters.
These six new matters were in addition to the previous seven pending and 11 completed dispute resolution cases involving the Seyfarth firm that the arbitrator disclosed at the outset of the arbitration to the Humphreys and to Holiday. As with these 18 previously-disclosed matters, the Humphreys similarly made no objection when notified of five of the six new matters that arose while their arbitration with Holiday was pending. All told, then, the Humphreys consented 23 times without objection to the arbitrator deciding their claims despite notice of the Seyfarth firm's involvement in those other matters. They objected in the 24th instance only after the arbitrator rendered an interim award against them.
As we explain, waiver disposes of the Humphreys' specific challenge distinguishing between requisite notice that an arbitrator has received an offer to arbitrate another matter and notice that the arbitrator has accepted the offer.
The Humphreys ground their claim regarding disclosure of offers in the Honeycutt case, including the special rules Honeycutt explained apply to consumer arbitrations such as this. Pursuant to a legislative directive issued in 2001 (see § 1281.85), the Judicial Council adopted ethical standards governing alternative dispute resolution providers, including "Ethics standard 12(d)." (Honeycutt, supra, 25 Cal.App.5th at pp. 921, 923.) Standard 12(d) requires disclosure when an arbitrator "entertain[s] offers to serve as a dispute resolution neutral in another case involving the same parties or lawyers." (Id. at p. 923.)
The ethics standards are found in California Rules of Court, Ethics Standards for Neutral Arbitrators in Contractual Arbitration (Ethics Standards, or Standards).
"'[I]n consumer arbitrations'" in particular, the standard requires that "'from the time of appointment until the conclusion of the arbitration, the arbitrator must inform all parties to the current arbitration of any such offer and whether it was accepted.'" (Honeycutt, supra, 25 Cal.App.5th at p. 923, italics added.) The arbitrator thus must notify the parties in writing "'within five days of receiving the offer and, if the arbitrator accepts the offer, [he or she] must notify the parties in writing within five days of that acceptance.'" (Id. at pp. 923-924.)
Honeycutt observed generally that "[a]n arbitrator may be unaware [that an arbitration service's] case manager failed to send out a notice, [or that] an assistant accidentally deleted an attorney from a proof of service, or an envelope or e-mail was incorrectly addressed or lost in the mail or cyberspace." (Honeycutt, supra, 25 Cal.App.5th at p. 930.) But an arbitrator's notice obligations apply nonetheless because "an arbitrator knows he or she has an arbitration, and knows the parties and attorneys involved in that arbitration." (Ibid.)
Like the court in Honeycutt, which involved arbitration of an employee-plaintiff's claims for "discrimination, retaliation, wrongful termination, and related claims," we see no reason why these disclosure rules would not apply here. (Honeycutt, supra, 25 Cal.App.5th at pp. 915, 923.) Honeycutt explained that under the Ethics Standards, a "Consumer arbitration" includes "an arbitration pursuant to a contract with '[a]n employee or an applicant for employment in a dispute arising out of or relating to the employee's employment or the applicant's prospective employment that is subject to the arbitration agreement.'" (Id. at p. 923, fn. 7.)
Nevertheless, Honeycutt also explained that waiver principles may preclude a party's belated claim of nondisclosure as a basis for disqualifying the arbitrator. Parties are presumed to be aware of the Ethics Standards' disclosure requirements, no less than are the arbitrators themselves. (See Honeycutt, supra, 25 Cal.App.5th at pp. 926-927.) A party "'aware that a disclosure is incomplete . . . cannot passively reserve the issue for consideration after the arbitration has concluded.'" (Id. at p. 927.) Instead, the party must "object to the defective disclosures, demand [that] the arbitrator make complete and compliant disclosures, or move to disqualify the arbitrator at the time." (Id. at p. 926.) Failure to do so forfeits the issue. "To hold otherwise," Honeycutt explained, "would allow [a party] to '"'to play games' with the arbitration and not raise the issue"' until she lost." (Id. at p. 927.)
That is the situation here. On at least six occasions after the arbitrator's initial disclosures at the outset of the case and before her interim decision on the Humphreys' claims, she notified them that she had accepted appointment as the arbitrator in other JAMS proceedings where one of the parties was represented by the same firm representing Holiday. The first five of the six notices did not separately or expressly state that she had been offered the opportunity to arbitrate a matter in which the Seyfarth firm represented one of the parties. Instead, the notices simply stated, for example, that the arbitrator "has been appointed by the parties [in another matter] to serve as an Arbitrator in a new Employment case (Ref# [redacted]) in which Seyfarth Shaw LLP is involved." These notices necessarily included notice that the arbitrator had been offered the appointment because, logically, she could not accept an assignment as the arbitrator where no such offer had been made.
Despite this knowledge, the Humphreys did not object to the first five notices they received. They therefore waived any disclosure violation or omission that the arbitrator may have made in those notices. The Humphreys' acquiescence to the arbitrator continuing to serve as their decisionmaker under these circumstances constitutes a forfeiture. As courts have long explained, it would be "'intolerable to permit a party to play fast and loose with the administration of justice by deliberately standing by without making an objection of which he is aware and thereby permitting the proceedings to go to a conclusion which he may acquiesce in, if favorable, and which he may avoid, if not.'" (Caminetti v. Pac. Mutual L. Ins. Co. (1943) 22 Cal.2d 386, 392 (Caminetti.)
The Humphreys finally did object in May 2017 after the arbitrator gave notice of a sixth new JAMS dispute resolution matter she agreed to handle involving the Seyfarth firm, this one a breach of contract mediation. The Humphreys did not initially object after having been given notice of the new mediation on May 12, 2017, but they did so after the arbitrator rendered her interim arbitration award on May 18, 2017, and they learned it was an adverse ruling.
On May 22, 2017, the Humphreys filed with JAMS a "Notice of Disqualification of Arbitrator" on grounds of "undisclosed conflicts and bias claims involving Justice Cooper and Seyfarth," including that "[t]he arbitrator repeatedly did not serve adequate Notices of Offers [to arbitrate other matters] when each offer was communicated" to her. Applying waiver principles, JAMS denied "the request to disqualify Justice Cooper" and further concluded that "there is no support for Claimant's proposition that a disclosure under Ethics Standard 12(d) must be made in two separate notices." We agree.
The Humphreys' challenge to the sixth notice fails because they did not establish a disclosure violation. The arbitrator's May 12th notification disclosed both that she had received a mediation offer in which the Seyfarth firm represented one of the parties and it disclosed that she accepted the offer. The Humphreys cite nothing in the Ethical Standards or otherwise that requires the notice of an offer and the notice of acceptance to be transmitted to the parties in separate communications.
We observe that combining the notices does risk violating the five-day window that applies to each. (Ethics Standards, std. 12(d)(1); see Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2017) ¶¶ 7:142.2-7:142.3 [written notice of offer and of acceptance each must be "within five days"].) Nevertheless, the Humphreys did not attempt to establish any such violation for their vacatur petition, nor do they do so on appeal. There is no reason in the record to suppose that the arbitrator's May 12, 2017, notification letter went out to the parties more than five days after her receipt of the mediation offer or her acceptance of it. Because the burden rests on the party challenging an arbitration to show it must be vacated (Lopes v. Millsap (1992) 6 Cal.App.4th 1679, 1685), there is no merit to their appellate bid for reversal based on allegedly inadequate notice of offers.
Had the arbitrator failed to make a required disclosure in her May 12, 2017, notice, section 1281.91, subdivision (a), suggests the Humphreys would have had 15 days within which to serve notice of her disqualification based on the omission. The Humphreys do not cite the 15-day window for disqualification anywhere in their briefing, nor did they do so at argument. (See also id., subd. (b).) In any event, we find not only that there was no omission—given that the arbitrator expressly notified the Humphreys she had received an offer to mediate another case—we observe that section 1281.91, subdivisions (c) and (d), place an important restriction on disqualifying an arbitrator, even if timely initiated. "[I]n no event may a notice of disqualification be given . . . after any ruling by the arbitrator regarding any contested matter" (id., subd. (c), italics added), unless "any ground specified in section 170.1 exists." (§ 1281.91, subd. (d).) The grounds for disqualification identified in [s]ection 170.1 include any circumstances in which "[a] person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial." (§ 170.1, subd. (a)(6)(A)(iii).)
Here, the arbitrator issued her interim ruling before the Humphreys sought to disqualify her, thereby triggering section 1281.91's limitation on disqualification to reasons identified in section 170.1. None apply. For example, even assuming arguendo that the arbitrator's May 12th notice was somehow deficient in any respect, it would not furnish grounds to disqualify the arbitrator because every person aware of the circumstances would recognize why the Humphreys objected. After earlier consenting to the arbitrator despite notice of the Seyfarth firm's involvement in 23 other matters, they now objected only after an interim adverse ruling. The objection was plainly opportunistic and furnishes no reasonable basis to doubt the arbitrator's impartiality.
C. The Arbitrator Here Was the Arbitrator in the Honeycutt Case
The Humphreys contend vacatur was required because the arbitrator did not disclose that a party who suffered an adverse ruling she made in another arbitration sought—during the pendency of the Humphrey-Holiday arbitration—to vacate the ruling for alleged disclosure violations. Honeycutt was the other arbitration. As we explain, the Honeycutt plaintiff obtained vacatur on another ground in that case.
In the underlying arbitration proceedings in Honeycutt, the plaintiff-employee sought to disqualify the arbitrator after an interim award against her by submitting a letter to the dispute resolution service provider (AAA) handling that arbitration. The letter alleged that the arbitrator or the arbitration service "failed to disclose all cases that she accepted from Respondent's counsel during the pendency of the arbitration." In other words, the failure was more than omitting express notice of offers to arbitrate another matter involving the same law firm representing one of the parties. It was a complete failure to disclose that the arbitrator had accepted several of the offers.
Here, the Humphreys do not dispute that at the outset of their arbitration with Holiday, the arbitrator disclosed the Honeycutt matter and that the Seyfarth firm represented a party there. Instead, the Humphreys contend that once the plaintiff-claimant in that other matter sought to vacate the arbitration award there, the arbitrator was required to disclose that fact to them. Unlike in Honeycutt, however, there was no underlying disclosure violation here, and therefore the Humphreys do not establish a basis to vacate the award against them.
Sometime after the arbitrator's interim award against them on May 18, 2017, the Humphreys learned of the Honeycutt plaintiff-claimant's September 28, 2016, letter to AAA seeking to vacate the arbitrator's interim award there. The Humphreys included that letter in their May 22, 2017, notice to JAMS as a basis to disqualify the arbitrator. The timeline in the Honeycutt matter is not particularly clear thereafter, but the Honeycutt plaintiff eventually sought to vacate the arbitrator's final ruling, failed in the trial court, and was ultimately successful on appeal. (Honeycutt, supra, 25 Cal.App.5th at p. 932.) That opinion issued in August 2018, several months after the trial court denied the Humphreys' vacatur petition on May 31, 2018 here. The Humphreys argue the trial court erred because they cited the September 28, 2016, letter by the Honeycutt plaintiff as grounds to vacate the arbitrator's award here. We disagree.
The Humphreys' reliance on Honeycutt and the Honeycutt plaintiff's letter is misplaced because both involved a disclosure failure not present here. As Honeycutt explained, at the time the arbitrator rendered her interim award in that case, "The parties had previously received only four of the eight letters concerning employment cases involving counsel for [the arbitration respondent]." (Honeycutt, supra, 25 Cal.App.5th at p. 918, fn. omitted.) The remaining four arbitrations were disclosed to the parties in Honeycutt only after the arbitrator filed her interim award. (Ibid.)
On appeal, the Honeycutt court held that the omission required the trial court to grant the plaintiff's petition to vacate the arbitration award under the Ethics Standards—specifically standard 7. (Honeycutt, supra, 25 Cal.App.5th at pp. 927, 930-932.) The Legislature incorporated the Ethics Standards' disclosure requirements in section 1281.9, subdivision (a)(2). Standard 7(d), which is applicable to all arbitrations, not just consumer arbitrations, "requires the arbitrator to 'disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the arbitrator would be able to be impartial . . . .'" (Honeycutt,.at pp. 922-23.) This mandatory disclosure includes "service as an arbitrator for a party or lawyer for a party." (Id. at p. 930.)
Section 1281.91, in turn, provides a 15-day window in which a party may move to disqualify the arbitrator for a disclosure omission or omissions, which must be "material" to require disqualification. (§ 1281.91, subd. (c), cited by Honeycutt, supra, 25 Cal.App.5th at p. 931; see also Ovitz v. Schulman (2005) 133 Cal.App.4th 830, 846.) Unlike in Honeycutt, here there was no similar failure to disclose the arbitrator's service in other matters involving counsel for a party—all of which she disclosed. This includes the six matters involving the Seyfarth firm that arose while the Humphrey-Holiday arbitration was pending. It also includes disclosing to the Humphreys (and Holiday) at the outset of their arbitration the existence of the pending Honeycutt matter. Thus, the disclosure omission in Honeycutt of pending arbitrations involving a law firm for one of the parties furnishes no grounds for the Humphreys to win reversal on appeal here.
The Humphreys argue that, although the arbitrator disclosed the Honeycutt matter at the outset of their arbitration, she failed to fulfill her ethical disclosure obligations once the Honeycutt plaintiff sought to vacate the arbitration award there. The Humphreys reason that the Honeycutt plaintiff's September 28, 2016, request to disqualify the arbitrator implicated the arbitrator in an undisclosed and therefore unethical relationship with the Seyfarth firm in the other matter. According to the Humphreys, once this vacatur request was made, a "new professional relationship . . . emerged" and what had formerly been a "mere arbitrator-party relationship" became "qualitatively different."
The arbitrator's relationship with Holiday was now different, and became conflicted, the Humphreys claim, based on "serious economic consequences and implications surrounding [the] allegations of improper arrangements and ethical lapses." The Humphreys suggest they were entitled to notice of "the arbitrator's and the Seyfarth firm's subsequent relationship created by allegations of impropriety," and her failure to disclose this relationship furnished grounds for the Humphreys to disqualify her. (Capitalization omitted, italics added.) They rely on the principle that: "So important is this duty to disclose potential disqualifying relationships that a failure to disclose serves as a basis for setting aside the arbitration award." (La Serena Properties, LLC v. Weisbach (2010) 186 Cal.App.4th 893, 903.)
This argument fails because there is nothing to indicate a "subsequent relationship" between the arbitrator and the Seyfarth firm "created by allegations of impropriety." No evidence indicates they mounted a joint defense to answer the Honeycutt plaintiff's letter to the dispute resolution service requesting the arbitrator's disqualification, nor in the trial court to answer the plaintiff's vacatur petition, nor in the Honeycutt appeal. Like a trial judge whose decisions are challenged in a writ petition or on appeal, the arbitrator did not appear in those proceedings—at least nothing in the record suggests she did. There is no indication she coordinated with the Honeycutt defendant or the Seyfarth firm in any manner concerning the Honeycutt plaintiff's allegations.
It would be unusual for a trial or appellate court judge to appear in such a proceeding on his or her own behalf, and, as far as we are aware, unheard of to work with one side or the other, or with a law firm for a party in a "new professional relationship" as the Humphreys allege here. We expect the same is true of arbitrators, and there is no reason to conclude otherwise here. Had the arbitrator coordinated with the Seyfarth firm to challenge the Honeycutt plaintiff's vacatur petition, that would undoubtedly have impugned her ability to continue to serve as a neutral arbitrator. Nevertheless, there is no evidence that occurred. In sum, the disclosure violations in Honeycutt were not repeated here, nor was there any evidence the arbitrator developed a new or compromised relationship with the Seyfarth firm as a result of the Honeycutt plaintiff's challenge to her appointment. The Humphreys' challenges to the trial court's vacatur ruling premised on the Honeycutt matter therefore fail.
Were there such evidence in this record our opinion might well be very different.
D. Timeliness of Award
The Humphreys contend the arbitrator failed to render a timely award, thereby further demonstrating bias and requiring the trial court to vacate the award. The Humphreys argue vacatur was required because her delay in issuing her interim award caused the arbitrator to lose jurisdiction to adjudicate the dispute under the parties' arbitration agreement. They assert the delay demonstrated bias because it enabled the arbitrator "to gather further work from Seyfarth and to assist Seyfarth and its clients by accepting such work without [earlier and timely] disclosing her award in favor [of] Seyfarth in this matter."
Section 1286.2, subdivision (a)(4), provides that the trial court shall vacate an arbitration award when "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision." According to the Humphreys, the arbitrator exceeded the power conferred upon her by the parties' arbitration agreement by rendering an untimely award. In their opposition to Holiday's petition to confirm the arbitration award, the Humphreys also invoked its alleged untimeliness to buttress their attempt to vacate the award as an alleged example of "Misconduct Of The Arbitrator," thereby showing that the award "Was Obtained By Corruption, Fraud, or Other Unfair Means." (See § 1286.2, subd. (a)(1), (2), (3) & (6).)
The Humphreys premise their untimeliness claim on the arbitration agreement's language providing for an award "within 30 days after the conclusion of the arbitration," which they measure from the day that they and Holiday submitted their respective proposed statements of decision—on February 18, 2017. The last day of hearings in the arbitration had been on February 1, 2017. More than 30 days later, the JAMS case manager notified the parties of two other dispute resolution matters involving Seyfarth that the arbitrator agreed to handle. Notice of one of those matters was provided in late March 2017, and of the other in early May 2017. The Humphreys did not object before or after notice of either of these new dispute resolution matters on grounds that the arbitrator's decision was still pending at that time. Instead, they waited to see whether the decision would be in their favor.
The arbitrator issued her decision denying the Humphreys' claims on May 18, 2017, with only attorney fees and costs still to be decided. The Humphreys now insist, as they did in their vacatur petition, that once 30 days passed from February 18, 2017—which occurred on March 21, 2017—any "later actions of the arbitrator were in excess of jurisdiction" under the terms of the arbitration agreement requiring a decision within 30 days. Therefore, they argue the arbitrator was without jurisdiction to render the May 18 decision against them.
Nothing in the foregoing chronology required the trial court to vacate the award. The Humphreys omit the fact that they filed on May 15, 2017, a post-hearing brief entitled, "Notice of New Authority and Response to Respondent's Notice of New Authority." The arbitrator then issued her award within three days of this response. The arbitrator's scheduling order at the outset of the proceedings defined "the conclusion of the Hearing" that commenced the 30 days in which to issue a decision to "includ[e] the . . . filing of any post-Hearing briefs.".
The parties' arbitration agreement also specified it was to be conducted according to JAMS's "Employment Rules and Procedures," which vested the arbitrator with authority to resolve jurisdictional issues, including whether a dispute remained arbitrable. Specifically, "[j]urisdictional and arbitrability disputes, including disputes over the . . . interpretation or scope of the [arbitration] agreement" were left to the arbitrator to decide. Therefore, by the parties' agreement, it was for the arbitrator to determine whether the language in the arbitration agreement requiring a decision within "30 days after the arbitration" was measured from the last day of the hearing, from submission of a proposed statement of decision, or was extended by the filing of post-hearing briefs. When parties confer on the arbitrator this power to interpret and apply an arbitration agreement, "our Supreme Court has declared that they will be held to those words." (David v. Abergel (1996) 46 Cal.App.4th 1281, 1283 [citing Moncharsh].) The arbitrator's award was timely.
Moreover, even assuming arguendo that the award was untimely, vacatur was not an option for the trial court. Section 1283.8 provides that the time in which to make an arbitration award generally must be "within the time fixed therefor by the agreement." Nonetheless, an express forfeiture provision applies when, as here, no party objects until after the award is issued. The statute states: "A party to the arbitration waives the objection that an award was not made within the time required unless he gives the arbitrators written notice of his objection prior to the service of a signed copy of the award on him." (Ibid., italics added.) The arbitrator signed her award deciding all substantive issues against the Humphreys on May 16, 2017, and had it served on the parties two days later, on May 18. The Humphreys served JAMS with an objection to the award as untimely approximately six weeks later, in July 2017. Because they did not object on untimeliness grounds before the award issued, their challenge had lapsed. (§ 1283.8.)
E. Retaliation Claim & Confidentiality Policy Claim
The Humphreys argue that the arbitrator acted in excess of her jurisdiction under the arbitration agreement by failing to "Adjudicate" certain claims on which they demanded arbitration. They identify those claims as a "Retaliation Claim and Claims for Equitable Relief Under The FEHA To Strike Forced 'Confidentiality' Policy Regarding Employee FEHA Claims" (sic). They cite the arbitrator's failure to decide these claims as a further example of their broader contention that her alleged bias was "Manifested Through The Arbitrator Acting In Excess of Jurisdiction."
As grounds for vacatur, the Humphreys rely on an exception to the general rule that an arbitrator's alleged legal errors are generally unreviewable. (See Pearson Dental Supplies, Inc. v. The Superior Court of Los Angeles County (2010) 48 Cal.4th 665 (Pearson).) In Pearson, the high court held that an arbitrator's legal error in failing to hear on the merits an employee's FEHA claim against the employer was reviewable as being in excess of the arbitrator's powers. (Id. at pp. 679-680.) There, a mistaken belief that the claim had not been timely submitted to mandatory arbitration led the arbitrator to deny merits review. (Ibid.) The arbitrator had reached that conclusion by misapplying a statutory tolling period that governed the underlying claim. (Id. at p. 675.) The Supreme Court concluded that the error meant "the arbitrator's award may properly be vacated." (Id. at p. 680.)
The high court explained its ruling "in light of the Legislature's intent that employees be able to enforce their right to be free of unlawful discrimination under FEHA." (Pearson, supra, 48 Cal.4th at p. 680.) The court noted legislative solicitude in the California Arbitration Act for "FEHA claims, [and] claims based on other unwaivable statutory rights" to be heard on their merits. (Ibid.) Consequently, Pearson held that "an arbitrator whose legal error has barred an employee subject to a mandatory arbitration agreement from obtaining a hearing on the merits of a claim based on such a right has exceeded his or her powers within the meaning of . . . section 1286.2, subdivision (a)(4)," requiring vacatur. (Pearson, at p. 680.)
Here, we will assume the Humphreys are correct that the arbitrator did not rule on their claim that Holiday retaliated against them for, as they put it in their reply brief, "'Engagement in Protected Activity.'" They describe the protected activity as "their right to raise complaints and concerns over harassment," which they were entitled to do "whether or not the incidents of harassment they complained of were proven." Neither the arbitrator's interim nor final awards refer to their retaliation claim. This omission is not tantamount to a ruling against the Humphreys on the merits of their asserted retaliation claim because, as Pearson stated, "'an arbitrator in a FEHA case must issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based.'" (Pearson, supra, 48 Cal.4th at p. 679.)
Nevertheless, the flaw that the Humphreys never address in their briefs or, as far as we can tell anywhere in the record, is that their demand for arbitration omitted any mention of retaliation. They submitted the demand to JAMS in August 2015. It listed as FEHA claims only harassment, racial discrimination, failure to investigate, and disability discrimination—not retaliation. They also asserted "Denial of Reasonable Accommodation" as one of their claims in their arbitral demand, presumably in relation to Tritia's disabilities, but they made no claim for retaliation.
The JAMS' rules to which the parties consented in their arbitration agreement specified a process for "Changes of Claims." The Humphreys do not suggest they followed this process to amend their arbitral demand. The Changes of Claims rule, Rule 10, specifies that "[a]fter the Arbitrator is appointed, no new or different claim may be submitted, except with the Arbitrator's approval." In their reply brief, the Humphreys contend that in their November 11, 2016, letter to the arbitrator on the eve of the scheduled arbitration, they "demanded to pursue all of the FEHA claims set forth in their 'Right to Sue'" letter that they received upon exhausting their administrative remedies. The arbitration had been scheduled to begin a month later, on December 12, 2016, but in light of the parties' ongoing dispute over the Humphreys' discovery demand, the arbitrator postponed the hearing to begin in January 2017.
The record indicates that the arbitrator denied the Humphreys' request to add any additional claims to their arbitral demand. The Humphreys had sent two letters to the arbitrator requesting a continuance. The first letter, on October 26, 2016, did not request to alter their original arbitral demand, which they had filed on August 12, 2015. Instead, the October 26 letter requested a continuance and restated the same five original arbitral claims, which did not include retaliation. The Humphreys' November 11 letter also did not specifically mention or request adding a retaliation claim to their arbitral demand. Instead, it recounted a disagreement between the parties about what claims the Humphreys had presented to the DFEH to exhaust their administrative remedies.
The Humphreys added in their amended arbitration brief—filed the day before the arbitration began in January 2017—a sixth claim to be arbitrated, "retaliation in violation of the FEHA," which had not been in their original arbitral demand. According to Holiday, in a lengthy prehearing conference, the arbitrator ruled that despite late production of their DFEH complaints, the Humphreys could pursue their disability and accommodation causes of action, which they had listed in their original arbitral demand. The arbitrator further ruled, however, that they could not add retaliation as an additional claim to their arbitral demand; the arbitrator would nonetheless consider any evidence of retaliation to the extent it supported the Humphreys' discrimination and harassment claims.
The Humphreys do not dispute that the arbitrator ruled in this manner, but their position in their reply brief is that Pearson made it "the arbitrator's responsibility to ensure that all of Appellants' statutory FEHA claims were adjudicated and enforced." Not so. Pearson held that an arbitrator's legal error may provide a basis for vacatur where it precludes adjudication of an employee's FEHA claims, but the Humphreys do not assert the arbitrator here made a legal error in applying JAMS's claim amendment procedure. Instead, they argue under Pearson that they were entirely exempt from it. The contend that Holiday's "attempt to argue over filling out JAMS forms . . . puts form over substance regarding Appellants' FEHA statutory rights." We disagree.
Pearson does not stand for the proposition that a party may dispense at their convenience with arbitral rules for FEHA claims. That would destroy the orderly administration of justice in any form, including arbitration. On this record, we conclude Pearson does not apply. To the contrary, the Humphreys forfeited their retaliation claim by not pursuing it earlier. They only attempted to do so in their arbitration brief the day before the arbitration began, which the arbitrator reasonably denied. The arbitral rules did not provide for amendment of claims by implication; amendment required written notice of the claim, with 14 calendar days for the other party to respond. The Humphreys' delay in asserting the claim cannot be tied to the parties' discovery dispute, given that they maintain they presented the claim to the DFEH in 2014. They provide no explanation for omitting it from their arbitral demand in August 2015. Consequently, we find no legal error in the arbitrator's ruling to exclude such a late claim. As the Supreme Court has observed, "'No procedural principle is more familiar to this Court than that a constitutional right,' or a right of any other sort, 'may be forfeited in criminal as well as civil cases by the failure to make timely assertion of the right before a tribunal having jurisdiction to determine it.'" (United States v. Olano (1993) 507 U.S. 725, 731.)
For similar reasons, forfeiture also applies to the Humphreys' unspecified "Claims for Equitable Relief Under The FEHA To Strike Forced 'Confidentiality' Policy Regarding Employee FEHA Claims." On appeal, the Humphreys never explain what those claims were. The trial court granted the Humphreys' request to strike the clause, so it is not clear there was anything left for the arbitrator to do. The Humphreys provide no record citation of where or when they asked the arbitrator to decide these claims, nor of their arguments and citations to authority regarding these claims. Appellate "[i]ssues do not have a life of their own" (Jones v. Superior Court (1994) 26 Cal.App.4th 92, 99); instead, if they are not explained and supported with reasoned argument, including citations to the record and authority, they are forfeited. (Ibid.; Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 (Badie).) "'The appellate court is not required to search the record on its own seeking error.'" (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.) Failure to support an appellate challenge with the necessary record citations forfeits the claim. (Ibid.)
Forfeiture similarly applies to references the Humphreys make to the arbitrator's discovery ruling and other untethered claims and assertions they sprinkle throughout their briefing. Issues not identified in the parties' table of contents specifying the issues to be resolved on appeal may be disregarded. (Cal. Rules of Court, rule 8.204; Badie, supra, 67 Cal.App.4th at pp. 784-785.) In any event, we see no abuse of discretion in the arbitrator's discovery rulings—certainly none within that broad discretion to indicate bias.
2. Unconscionability
The Humphreys contend the arbitration agreement was unenforceable because its terms were unconscionable, and they argue that the adjudicatory process they were subjected to must be vacated because it was "unfair and illegal." Their unfairness claims repeat their assertions that they "were denied a neutral arbitrator or compliance with California discovery rules" and that they were "denied adequate discovery." We therefore need not revisit these issues further. The same is true for their claims of illegality, including their assertions that their FEHA remedies for retaliation "were curtailed and limited" and that they were "not provided with a jurisdictionally valid written award" because it was untimely. None of these claims have merit.
The Humphreys' unconscionability claim is difficult to decipher. They observe that in compelling arbitration, the trial court found a confidentiality provision in the agreement substantively unconscionable. The Humphreys state that "[t]he basis for this unconscionability was the presence of forced 'confidentiality' designed to silence employees from bringing forth their protected FEHA complaints and gathering evidence from potential witnesses and other affected employees."
The Humphreys then cite cases "demonstrat[ing] that 'confidentiality of proceedings' is a material form of substantive unconscionability." (Citing Davis v. O'Melveny & Myers (9th Cir. 2007) 485 F.3d 1066; Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126.) The Humphreys do not address the fact that the trial court severed the sentence in the arbitration agreement related to the confidentiality of the proceedings, namely: "[A]ll arbitration proceedings under this Agreement shall be conducted on a confidential basis." The trial court observed at oral argument on Holiday's motion to compel arbitration that this was the sentence that "Plaintiffs clarified they objected to," and the court eliminated it. Civil Code section 1670.5 provides that when a court finds a provision in a contract to be unconscionable, it may enforce the remainder of the contract. The court having severed the offending provision, we fail to see how that furnishes grounds to conclude the arbitration agreement remained unconscionable or was otherwise unenforceable.
The Humphreys did not allege in their petition to vacate the arbitration award any claim that the trial court erred in compelling arbitration. They raised only as an "Eighth Ground" to challenge the arbitration award a claim that the arbitrator—not the trial court in sending the matter to arbitration—"did not resolve Plaintiffs' arbitration claims about illegal 'confidentiality' policies under the FEHA as part of the final arbitration award." The Humphreys did not explain this claim in their points and authorities memorandum seeking vacatur below, nor do they do so on appeal. We therefore find no error in the trial court's decisions to compel arbitration or deny vacatur.
3. Attorney Fees and Costs
The Humphreys argue the trial court erred in failing to vacate the arbitrator's attorney fees and cost award against them. We agree.
An employer that seeks to compel arbitration of an employee's FEHA claims "cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 110-111 (Armendariz).) A prevailing defendant in a FEHA case litigated in court may recover attorney fees only when the plaintiff's action was frivolous, unreasonable or groundless. (Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 985 (Chavez).)
The Supreme Court has extended that rule to apply to costs that otherwise would be available as a matter of right to the prevailing party under section 1032, subdivision (b). (Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 107-109, 115.) Thus, a prevailing defendant in a FEHA action "should not be awarded fees and costs unless the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so." (Id. at p. 115; now codified in Gov. Code, § 12965, subd. (b).) Consequently, defendants could not recover their attorney fees or costs under the arbitration agreement's prevailing party clause because that would expose the Humphreys to greater expense than if they brought their FEHA claims in court—contrary to Armendariz's proscription.
In addition to its general prevailing party clause, the arbitration agreement had a separate attorney fees and costs clause for the successful party on a motion to compel arbitration. The agreement provided, "To the extent permitted by law, the party prevailing on a motion or petition to compel arbitration may recover the attorneys' fees and costs of bringing or defending the motion or petition to compel arbitration." (Italics added.) The existence of a separate clause does not alter our analysis, particularly in the circumstances here.
The fee-shifting nature of the clause risked a chilling effect on employees' access to court in FEHA actions to assert, for instance, that the arbitration agreement is unconscionable. By providing for fees and costs on a petition to compel arbitration, an employee who successfully demonstrated the unconscionability of one or more provisions of the arbitration agreement as a whole would nevertheless be required to reimburse the employer if the court found the unconscionable provision(s) severable. That is exactly what happened here. The Humphreys persuaded the trial court that a confidentiality provision in the arbitration agreement was unconscionable, but, finding it severable, the court compelled arbitration.
The arbitrator awarded Holiday, at its request, only its attorney fees incurred in its petition to compel arbitration, not its costs. But this small grace does not change the bigger picture. The Humphreys were still faced with $10,000 in attorney fees, a substantial sum that could drive FEHA plaintiffs away from the courthouse, even to attempt to demonstrate unconscionability. Having established that part of the arbitration agreement was unconscionable, albeit a severable part, the Humphreys' opposition to Holiday's motion to compel arbitration cannot be said to have been frivolous, unreasonable, or groundless. Thus, their opposition to Holiday's petition to compel arbitration did not fall under the minimum Chavez threshold necessary for a defendant to recover attorney fees.
DISPOSITION
The judgment confirming the arbitrator's final award is reversed to the extent it confirmed the award of attorney fees and costs against the Humphreys, and the trial court's order confirming the award is affirmed in all other respects. The judgment is therefore vacated, the matter remanded, and the trial court is directed to enter a new order granting the Humphreys' petition to vacate the arbitrator's award solely on the issue of attorney fees and costs. The parties shall bear their own costs on appeal.
GOETHALS, J. WE CONCUR: ARONSON, ACTING P. J. THOMPSON, J.