Filed 8/18/20 Villanueva v. Rabobank CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

JOE VILLANUEVA, etc.,

Plaintiff and Respondent,

v.

RABOBANK, N.A.,

Defendant and Appellant.

D075455

(Super. Ct. No. 37-2018-
00028998-CU-BT-CTL)

APPEAL from an order of the Superior Court of San Diego County, Kenneth J. Medel, Judge. Reversed and remanded with directions.

Duane Morris, Paul J. Killion, Cyndie M. Chang, and Christine C. Ross for Defendant and Appellant.

Kaliel, Jeffrey Douglas Kaliel, Sophia Goren Gold; Hindman, Thomas Jesse Hindman; Carlson Lynch, Todd D. Carpenter and Scott G. Braden for Plaintiff and Respondent.

Plaintiff Joe Villanueva (Plaintiff) and defendant Rabobank, N.A. (Defendant) have stipulated that the superior court’s November 19, 2018 order denying Defendant’s petition to compel arbitration be reversed and remanded with directions. As we explain, the stipulation complies with Code of Civil Procedure section 128, subdivision (a)(8) (section 128(a)(8)), and for that reason we will reverse the order.

I. STATEMENT OF THE CASE

Alleging causes of action for breach of contract and unfair business practices, Plaintiff filed the underlying action as “a nationwide class action seeking damages and other relief from [Defendant] for its deceptive assessment and collection of so-called continued overdraft fees from its customers in violation of [Defendant’s] standardized account agreement . . . (‘Deposit Agreement’).”

Defendant petitioned to compel arbitration. The Deposit Agreement includes a “Dispute Resolution and Arbitration” provision (Arbitration Provision), which applies to “[a]ll claims . . . , regardless of legal theory and remedy sought.” Among other terms, the Arbitration Provision delegates to the arbitrator all issues, including the interpretation and application of the provision: “All issues shall be for the arbitrator to decide, including the scope of this [Arbitration] Provision” (delegation clause, italics added). The Arbitration Provision also provides that, because the Deposit Agreement concerns interstate commerce, the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) governs the ability to arbitrate.

Plaintiff opposed the petition, arguing that the Arbitration Provision is unenforceable. Plaintiff principally argued that, because the complaint sought “public injunctive relief” and the Arbitration Provision contains a waiver of “public injunctive relief,” the entire provision is void, and none of Plaintiff’s claims are subject to arbitration under the Arbitration Provision. (Citing and quoting McGill v. Citibank, N.A. (2017) 2 Cal.5th 945 (McGill).)

Defendant filed a reply brief, and the trial court entertained oral argument.

The court denied Defendant’s petition. Citing Smythe v. Uber Technologies, Inc. (2018) 24 Cal.App.5th 327, 332 (Smythe) for the proposition “that if arbitrability is ‘wholly groundless,’ then the Court can refuse to enforce the delegation clause,” the court concluded that the waiver of public injunctive relief in the Arbitration Provision rendered the provision invalid and unenforceable in this case. (Quoting McGill, supra, 2 Cal.5th at p. 962.)

Defendant timely appealed from the order denying its petition to compel arbitration. (Code Civ. Proc., § 1294, subd. (a).)

In its opening brief on appeal, Defendant relied on new authority that was unavailable at the time the trial court ruled. Citing Henry Schein, Inc. v. Archer and White Sales, Inc. (2019) __ U.S. __ [139 S.Ct. 524] (Henry Schein), Defendant argued “that the ‘wholly groundless’ exception to delegating arbitrability to an arbitrator[—on which the trial court relied in denying Defendant’s petition here—]is inconsistent with the FAA and with U.S. Supreme Court precedent.” (Quoting Henry Schein, at p. __ [139 S.Ct. at p. 530] [“ ‘[T]he [FAA] contains no “wholly groundless” exception, and we may not engraft our own exceptions onto the statutory text.’ ”]. )

Plaintiff submitted a one-sentence document entitled “Respondent’s Notice of Non-Opposition,” which provides: “Plaintiff . . . files this Statement of Non-Opposition in response to Appellant’s Opening Brief, filed by Defendant[.]”

In response to our inquiry regarding the parties’ intent to proceed with the appeal, they submitted a Joint Application and Request to Enter Stipulated Reversal of Order Denying Motion to Compel Arbitration (Stipulation). Among other facts, Plaintiff represents to the court that, by his prior Notice of Non-Opposition, he “acknowledged that reversal is warranted” and that by the current Stipulation, he “acknowledges that the United States Supreme Court’s decision in Henry Schein[, supra, __ U.S. __ [139 S.Ct. 524,] requires reversal of the trial court’s ruling and that an arbitrator rather than the court must decide whether the arbitration provision is enforceable under McGill[, supra, 2 Cal.5th 945].”

II. DISCUSSION

In Neary v. Regents of University of California (1992) 3 Cal.4th 273 (Neary), our Supreme Court held that “when the parties to an action agree to settle their dispute and as part of their settlement stipulate to a reversal of the trial court judgment, the Court of Appeal should grant their request for the stipulated reversal absent a showing of extraordinary circumstances that warrant an exception to this general rule. Any determination that such circumstances exist must be made on a case-by-case basis.” (Id. at p. 284.)

After Neary, the Legislature modified the appellate court’s power to accept a stipulated reversal. Section 128(a)(8) provides that an appellate court may not accept a stipulated reversal unless the court concludes both of the following: “(A) There is no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal”; and “(B) The reasons of the parties for requesting reversal outweigh the erosion of public trust that may result from the nullification of a judgment and the risk that the availability of stipulated reversal will reduce the incentive for pretrial settlement.”

The court is satisfied that there is no reasonable probability that the interests of nonparties or the public will be adversely affected by the reversal. Further, in the circumstances of this case, the reversal of the trial court’s order denying Defendant’s petition to compel arbitration does not erode the public trust or reduce the incentive for pretrial settlement.

III. DISPOSITION

The order denying Defendant’s petition to compel arbitration is reversed. The matter is remanded with directions to grant the petition and to either stay or dismiss the action, as requested in the petition. The remittitur shall issue immediately. The parties shall bear their respective costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

IRION, J.

WE CONCUR:

BENKE, Acting P. J.

HUFFMAN, J.