Archives: February 2007
Wed Feb 07, 2007
Awards Issued after Judgment
The Court of Appeal recently ended its decision (January 30, 2007) with these prophetic words: “Formalities matter, particularly when dealing with the informality of arbitration. The process of judicially confirming an arbitration award is the time when it is necessary to ‘dress up’ what otherwise can be a casual occasion. Be sure the arbitration award properly covers the submitted issues before wrapping it in the judicial cloak of confirmation.”
The objective of arbitration is “finality” as manifested in the arbitration award. Once the court confirms the award in a judgment, only an appeal on the limited grounds set forth in CCP 1294 is available. Prior to judicial confirmation of the award, arbitrators retain flexibility, within bounds of statutory and decisional law, to correct an award in response to a request from the parties ( CCP 1284) on grounds referenced in CCP 1286.6. Temporal guidelines for correcting an award are rigid for the parties and arbitrators (CCP 1284) but an amendment to the award is possible prior to judicial confirmation of the award.
In some cases, an amended award submitted after judicial confirmation is also possible but permitted only under strict guidelines to avoid lack of “finality.” The Court of Appeal has confirmed the right of an arbitrator to amend an award after judgment when future events are likely to emerge, e.g., in probate, corporate merger and acquisitions, or accounting issues. But any amendment must concur in the findings and reasoning of the original award. To avoid the absence of “finality,” the arbitrator must specifically identify reserved issues in the original award.
Arbitrators have always issued “interim” awards during an arbitration, resolving issues for future determination prior to issuing the final award. In the most familiar example, the arbitrator defers resolution of damages contingent on a finding of liability or reserves a decision on establishing third party interests; joint or several liability; attorney fees, interest and costs. There are limits on issuing incremental “interim” awards but resolution of reserved issues can await future proceedings during the arbitration. To confirm this practice, most arbitrators will reserve jurisdiction until issuing the final award.
Log on to Arbitrationadr.com authored by Judge Waddington. Ch. XXI-C, Corrected Awards by Arbitrator
Sun Feb 04, 2007
Arbitration Permitted in Credit Card Contracts
Cognizant of the disproportionate bargaining power between consumers and manufacturers/ distributors of goods or services, the Legislature enacted CC 1750 et. seq (Consumer Legal Remedies Act; CLRA). The statute proscribes any deceptive or unfair acts or practices “in a transaction intended to result or which results in the sale or lease of goods or services to any consumer.”
In his complaint, plaintiff sought injunctive relief under CLRA solely to enjoin enforcement of an allegedly unconscionable arbitration clause in agreements between cardholders and a credit card company. CC 1770 (a) (19) prohibits unfair or deceptive practices and specifically includes “[i]nserting an unconscionable provision in a contract." Seeking class action status, plaintiff alleged the arbitration clause contained a class action waiver recently held unconscionable in consumer transactions; Discover Bank v. Sup.Ct., 36 Cal.4th 148 (2005).
A recent California Court of Appeal has held that extension of credit manifested by a credit card, separate and apart from a sale or lease of goods or services, is not covered by the CLRA. The court declined to enjoin arbitration absent evidence of compliance with a sale or lease of goods or services.
For additional discussion in the text of "Arbitrationadr.com": See, Ch. XVII-B-11 (Class Actions) and XVII-C-5-b (Consumer Contracts). Note also the federal rule preempting the CLRA in Ch. IV-H-8.