Under California law, a Trial Court’s order vacating a final arbitration award is appealable under California Code of Civil Procedure section 1294. A question that has arisen, however, deals with whether an order vacating an arbitrator’s interim award is appealable. That question has been answered in part in the matter Germaine Judge v. Nijjar Realty, Inc., (2014) Westlaw 7176531 (“Judge v. Nijjar”).
Judge v. Nijjar concerned an employment dispute. Nijjar Realty, Inc. doing business as PAMA Management Company ("Nijjar Realty") hired Germaine Judge as a residential property manager in October 2010. Ms. Judge's employment with Nijjar Realty continued until April 2011 when Ms. Judge was terminated. In May 2011, Ms. Judge filed an action against Nijjar Realty alleging various employment related and Labor Code causes of action including unpaid compensation. Under the Private Attorney General Act, Judge also alleged similar and related causes of action on behalf of herself and other aggrieved employees. In February 2012, Judge filed a separate class action against three defendants, including Nijjar Realty. The Trial Court found the two actions to be related but did not consolidate them.
In April 2012, the Nijjar defendants filed a Petition in the individual action to compel arbitration. The Petition was based on an arbitration agreement that Judge had signed while she was an employee of Nijjar Realty. The arbitration agreement was silent as to whether the Federal Arbitration Act or the California Arbitration Act would apply (although the Nijjar defendants contended that the Federal Arbitration Act applied). The Nijjar defendants also filed a Petition to compel arbitration of and/or to stay the class action.
Judge opposed both Petitions to compel arbitration. The Trial Court ordered the individual action to go to arbitration. The Trial Court also granted the Nijjar defendants' Petition in the class action to compel arbitration and stay proceedings but “only as to Plaintiff's individual claims” (concluding that the Federal Arbitration Act applied).
In December 2012, the appointed arbitrator issued a scheduling order pursuant to American Arbitration Association (“AAA”) rules, including the AAA Supplementary Rules for Class Actions. In January 2013, the arbitrator issued a lengthy “clause construction award” pursuant to Rule 3 of the AAA Supplementary Rules wherein she concluded that the parties’ arbitration agreement permitted arbitration of class and representative claims.
In March 2013, arguing that the arbitrator lacked jurisdiction and exceeded her powers in issuing her clause construction award, the Nijjar defendants filed a Petition in the individual action (but not the class action) to vacate the clause construction award. In April 2013, the Trial Court granted the Nijjar defendants Petition to vacate the clause construction award.
On Appeal, Judge asked the Court of Appeal to reverse the Trial Court's order vacating the clause construction award and to direct the Trial Court to enter an order confirming the clause construction award. The Court of Appeal affirmed the ruling of the Trial Court. In its decision, the Court of Appeal held that the Federal Arbitration Act does not preempt California procedural law and commented that, “[a]bsent an agreement by the parties to apply the procedural provisions of the FAA to their arbitration, federal procedural rules apply only where state procedural rules conflict with or defeat the rights Congress granted in the FAA.” The Court of Appeal, applying Code of Civil Procedure section 1294, then concluded that the Trial Court’s order was not appealable because the arbitrator’s interim award did not include a determination of all the questions submitted to the arbitrator. It bears mention that the Court of Appeal appeared to be sympathetic to Judge’s position and commented in a footnote that the Trial Court probably did not have jurisdiction to grant the Nijjar defendants Petition to Vacate. However, the Court of Appeal ruled that, to permit appeals of interim awards, a wide variety of orders vacating (or dismissing Petitions to vacate) interim arbitration awards would be appealable, which would interfere with the “efficient, streamlined procedure” that is supposed to be arbitration's “fundamental attribute.” The Court of Appeal also held that it made no difference that the AAA rules provided for bifurcated awards.
Judge v. Nijjar is an important decision in that it holds that interim awards – even ones based on a bifurcated proceeding per the neutral entity’s rules - will not likely be immediately appealable.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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