Monday, December 13, 2010

Prayer to St. Agnes, Patron Saint of Arbitrations

St. Agnes,  intervene for me before the Court of Appeal to cause, by your four factors, a decision that compels arbitration.  Amen. 

A physician sued for malpractice by his patient would ordinarily want to arbitrate under his own arbitration agreement with the patient. The patient had sought liposuction surgery with the doctor. Apparently, matters did not turn out well. This patient filed and litigated in court, but near the eve of trial, sought a court order to have the matter arbitrated. Probably to her surprise, the defendant physician refused. In holding for the physician, the court wrote: “Audiences matter . . .” [Burton v. Cruise, 2010 DJDAR 18393.] In this case, the audience was a jury.

In this December 2010 decision, the Court of Appeal provided a glimpse into the minds of counsel who may delay a petition to compel arbitration until well into the usual court litigation process. The Plaintiff Burton brought an ex parte motion to shorten time for a petition to compel arbitration. Defendant Cruise had already selected and exchanged experts. Burton had requested a jury trial at the case management conference. Inconsistently, in the motion to compel arbitration, Burton stated she wasn’t sure she would add other parties not subject to the arbitration agreement, and so did not request arbitration. Also, Burton’s counsel did not demand arbitration or even an inquiry about arbitration just before bringing her petition to compel arbitration.

The Court of Appeal cited the four “St. Agnes” factors to decide if arbitration has been “waived’: 1) actions inconsistent with seeking arbitration, including failure to request it; 2) are the parties “well into preparation” of the lawsuit; 3) is there an imminent trial date; and 4) has the delay caused harm to the other party? St. Agnes Medical Center v. PacifiCare of California (2003) 31 Ca.4th 1187, 1196. Applying these factors, the court affirmed the trial court’s denial of the petition to compel arbitration. Burton v. Cruise, 2010 DJDAR 13893 at 18396.

The Burton court reasoned that the purpose of arbitration: to expedite a hearing at less expense, is turned upside down by tactics that delay arbitration until the near-end of a civil litigation process. The Court adopted the reasoning of Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 558 that “the courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a part to create his own unique structure combining litigation and arbitration.” The Court also accepted the defendant’s argument that it selected and exchanged experts with a jury trial in mind, making tactical decisions differently than if the matter was destined for arbitration.

The value of the Burton case to the party opposing a petition to compel arbitration is that it exposes improper tactics of subverting an arbitration agreement to increase delay and costs. Those costs can include the extra expense of choosing different experts than one might otherwise. This case will have particular value as precedent to deny a petition to compel where the case management conference has been held with no reference to arbitration, where the other party has not referenced the arbitration agreement by additional demand for arbitration, and where experts or other witnesses have been tactically selected and prepared for jury trial.

Now, there is text and there is subtext. The latter is subject to speculation of course, but educated speculation. My view of the subtext is that the doctors’ attorneys were struck with a case of hubris. They really thought they could so bedazzle a jury with their experts that they did not want to forego the opportunity. The truth of course is that experts do not often bedazzle juries, who often disregard most of what they say, assuming the expert makes it understandable to them. Secondly, one wonders why the Plaintiff would not want her great case before twelve of her peers. The plaintiff almost always prefers a jury. Why this change of direction on the eve of trial? I suspect the answer also pertains to experts. Possibly the Plaintiff hoped the arbitrator would allow a late designation of experts. Or perhaps the Plaintiff was worried that the medical evidence was weak for her case, and hoped an arbitrator would do what arbitrators do, but never admit: produce a “compromise” outcome that might salvage the case, and at least provide for a possible recovery of attorney’s fees under the arbitration agreement. Or maybe the Plaintiff just wanted to delay the hearing because a witness was not available or she hoped to re-open discovery. These speculations matter little, except to point out that the real story is not often told in the formal appellate decision.

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