Filed 3/10/20 Williams v. BCI Coca-Cola Bottling Co. of Los Angeles CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

KEANE WILLIAMS,

Plaintiff and Appellant,

v.

BCI COCA-COLA BOTTLING COMPANY OF LOS ANGELES,

Defendant and Respondent.

E072139

(Super.Ct.No. CIVDS1502996)

OPINION

APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge. Affirmed.

Stevens & McMillan, Daniel P. Stevens, and Heather K. McMillan for Plaintiff and Appellant.

Littler Mendelson and Lena K. Sims for Defendant and Respondent.

I. INTRODUCTION

On December 12, 2013, Keane Williams (plaintiff) was terminated from his employment with BCI Coca-Cola Bottling Company of Los Angeles (defendant). Plaintiff filed a civil complaint in the San Bernardino Superior Court alleging causes of action pursuant to the California Fair Employment and Housing Act (FEHA) (Gov. Code § 12940, et seq.) and for wrongful termination. The matter was eventually submitted to binding arbitration and the arbitrator issued an award granting summary disposition in favor of defendant on the ground that plaintiff’s claims were time barred by the applicable statutes of limitations. The trial court denied plaintiff’s motion to vacate the arbitrator’s award and later confirmed the award, adopting all of the arbitrator’s findings and conclusions. Plaintiff appeals from the judgment confirming the award. For the reasons set forth below, we affirm the judgment.

II. FACTS AND PROCEDURAL HISTORY

On December 12, 2013, plaintiff was terminated from his employment with defendant.

On July 15, 2014, plaintiff filed a complaint against defendant with the Department of Fair Employment & Housing (DFEH) and immediately received a notice of closure and right to sue.

On March 5, 2015, plaintiff filed a civil complaint against defendant in the San Bernardino Superior Court which alleged causes of action pursuant to the FEHA for (1) discrimination; (2) failure to prevent discrimination; (3) a family medical leave violation; and (4) failure to accommodate. Plaintiff also alleged a common law claim for wrongful termination in violation of public policy.

On May 27, 2015, defendant filed a petition to compel arbitration of all the claims alleged in plaintiff’s complaint. The motion attached an executed arbitration agreement (Agreement) between plaintiff and defendant. Section 1 of the Agreement states in pertinent part: “This Agreement is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. and evidences a transaction involving commerce.” Section 5 of the Agreement further provides: “All claims in arbitration are subject to the same statutes of limitation that would apply in court. The party bringing the claim must demand arbitration in writing and deliver the written demand by hand or first class mail to the other party within the applicable statute of limitations period . . . The arbitrator shall resolve all disputes regarding the timeliness or propriety of the demand for arbitration.” Finally, section 8 of the Agreement states: “A court of competent jurisdiction shall have the authority to enter a judgment upon the award made pursuant to the arbitration.”

On August 3, 2015, the trial court orally granted defendant’s petition; ordered the superior court action stayed pending the outcome of arbitration, and set an August 2, 2016 status conference regarding the completion of arbitration. That same day, the trial court’s order was entered into the minutes. The minute order did not direct any party to prepare or submit a separate written order and instead indicated “notice waived.”

On January 15, 2016, plaintiff served a formal demand for arbitration. After selection of an arbitrator, defendant filed a motion for summary disposition on the ground that plaintiff’s claims were time barred.

On July 26, 2016, the arbitrator granted defendant’s motion for summary disposition and issued an award accompanied by a written explanation of her decision. The arbitrator made factual findings confirming that plaintiff was terminated on December 12, 2013; plaintiff filed an administrative complaint with the DFEH on July 15, 2014; plaintiff received a right-to-sue letter the same date; and plaintiff filed a civil complaint in superior court on March 5, 2015. The arbitrator also found that the trial court orally granted defendant’s petition to compel arbitration on August 3, 2015 and that plaintiff waived notice of the order, making it final as of that date. Finally, the arbitrator made a factual finding that plaintiff served his demand for arbitration on January 15, 2016. The arbitrator interpreted the language of the Agreement to exclude any tolling provisions afforded by the California Arbitration Act section 1281.12 and, on that basis concluded that plaintiff’s demand for arbitration was served untimely.

On August 8, 2016, plaintiff filed a petition to vacate the arbitration award in superior court. The trial court denied the petition on September 8, 2016.

On December 11, 2018, the trial court confirmed the arbitration award and entered a corresponding judgment in defendant’s favor.

III. DISCUSSION

A. The California Arbitration Act Governs the Scope of Judicial Review

Initially, we are required to resolve whether judicial review is governed by the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) or the California Arbitration Act (CAA). (Code Civ. Proc., § 1280 et seq.) Defendant argues that judicial review in this case is limited under the FAA, specifically section 10(a)(4) and the federal authorities interpreting its provisions, because “the [Agreement] is expressly governed by the FAA (and not the CAA).” Plaintiff disagrees, arguing that both the FAA and CAA authorize courts to vacate an award when “arbitrators exceeded their powers” and, as a result, we may apply California authorities governing judicial review. We conclude that neither party is correct, but that the CAA governs judicial review here.

Federal courts do not consider an arbitrator’s erroneous application of the statute of limitations as an act in excess of the arbitrator’s powers warranting vacatur. (United States v. Park Place Assocs. (9th Cir. 2009) 563 F.3d 907, 922 [claim that arbitration panel applied the wrong statute of limitations or incorrectly calculated limitations period cannot meet the standard for vacatur]; DeMartini v. Johns (9th Cir. 2017) 693 Fed. Appx. 534, 537 [possible erroneous application of statute of limitations by arbitrator does not meet standard for vacatur].) In contrast, the California Supreme Court has clearly expressed that California courts “need not and do not move in lockstep with the federal courts in matters of judicial review of arbitration awards.” (Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 677, fn. 3 (Pearson Dental Supplies, Inc.).) Accordingly, our Supreme Court has held that a clearly erroneous application of the statute of limitations which deprives a plaintiff of a hearing on the merits of an unwaivable statutory right constitutes an award in excess of the arbitrator’s powers under the CAA. (Id. at p. 680.) The holding in Pearson Dental Supplies, Inc. provides a clear example of our Supreme Court adopting a different interpretation of similar statutory language than interpretations adopted by federal courts. Thus, contrary to plaintiff’s contention, the fact that both statutes use similar language does not permit us to simply apply California authority on the issue if the FAA applies.

Nevertheless, we are not persuaded by defendant’s contention that the scope of judicial review is governed solely by the FAA. We acknowledge that under California law, parties to an arbitration agreement may contractually alter the scope of judicial review. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1356 (Cable Connection, Inc.); Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 25.) This includes the designation of the FAA as the governing standard for judicial review instead of state law. (Countrywide Financial Corp. v. Bundy (2010) 187 Cal.App.4th 234, 248.) However, “the FAA’s procedural provisions do not apply in state court unless the parties expressly adopt them . . . the question is not whether the parties adopted the CAA’s procedural provisions: The state’s procedural statutes . . . apply by default . . . The question, therefore, is whether the parties expressly incorporated the FAA’s procedural provisions into their agreements.” (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 177.) The FAA’s provisions for vacatur are considered part of its procedural and not substantive provisions. (Id. at pp. 173-174 [recognizing 9 U.S.C. §§ 3, 4, 10, 11 as procedural provisions].)

The resolution of this question is governed by California contract law. “[T]he FAA’s purpose is not to provide special status for arbitration agreements, but only ‘to make arbitration agreements as enforceable as other contracts, but not more so’. . . In accord with this purpose, the [United States Supreme Court] has stated that state contract rules generally govern the construction of arbitration agreements.” (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 384.) Thus, “even when the [FAA] applies, interpretation of the arbitration agreement is governed by state law principles.” (Valencia v. Smyth, supra, 185 Cal.App.4th at p. 177.)

Here, the Agreement provides that “This Agreement is governed by the [FAA].” It contains no other provisions specifying the choice of law governing the manner in which the arbitration proceeding itself is to be conducted or the enforcement of any arbitration award. With respect to enforcement, the agreement provides only that “[a] court of competent jurisdiction shall have the authority to enter a judgment upon the award made pursuant to the arbitration.” Under California authorities, this contractual language is insufficient to constitute an express intent to incorporate the FAA’s provisions for judicial review. (Valencia v. Smyth, supra, 185 Cal.App.4th at pp. 172, 174.) In fact, our Supreme Court considered similar language in Cable Connection, Inc. and concluded that it was not sufficient to make the FAA’s sections on judicial review applicable where the contract did not specify a choice of law for postarbitration proceedings; did not specify whether enforcement proceedings were to be brought in state or federal court; and the petition to vacate was filed, argued, and appealed in state court. (Cable Connection, Inc., supra, 44 Cal.4th at p. 1350, fn. 12 [interpreting contract language stating ‘“any arbitration conducted hereinunder shall be governed by the [FAA]”’].) Like the arbitration in Cable Connection, Inc., the contract here contained a simple introductory statement that the agreement is to be governed by the FAA; did not include any additional choice of law provisions specific to judicial review or postarbitration proceedings; did not specify whether enforcement proceedings were to be brought in state or federal court; and the underlying motion to vacate was filed, argued, and appealed in state court. We therefore conclude that absent any explicit provisions providing for a choice of law governing judicial review or postarbitration enforcement procedures, the standards for judicial review set forth in the CAA apply by default.

B. The Type Of Legal Error Alleged May Form the Basis of Vacatur

Having determined that the CAA governs the scope of judicial review, we must still determine whether plaintiff’s allegations of error in this case are subject to vacatur under California law. Plaintiff argues that vacatur is warranted because he was deprived of an opportunity to have his unwaivable statutory rights heard on the merits. We conclude that to the extent any error deprived plaintiff of a hearing on the merits of his wrongful termination claim, such error could not serve as the basis for vacatur. However, we agree that to the extent it deprived plaintiff of a hearing on his FEHA claims, such error could potentially support vacatur of the award.

“Judicial review of an arbitration award is ordinarily limited to the statutory grounds for vacating an award under [section 1286.2] or correcting an award under [section 1286.6].” (Branches Neighborhood Corp. v. CalAtlantic Group, Inc. (2018) 26 Cal.App.5th 743, 750.) Under section 1286.2, “courts are authorized to vacate an award if it was (1) procured by corruption, fraud, or undue means; (2) issued by a corrupt arbitrator; (3) affected by prejudicial misconduct on the part of the arbitrator; or (4) in excess of the arbitrator’s powers.” (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916 (Richey).) Generally, these statutory grounds do not afford a court authority to vacate an arbitrator’s decision for errors of fact or law. (Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21, 33; Pearson Dental Supplies, Inc., supra, 48 Cal.4th at p. 669) “[W]here the arbitrator has made a legal error “‘in either determining the appropriate law or applying it’”, the parties may obtain court review of the merits ‘only if the arbitration agreement expressly provided that the arbitrator’s errors of law were reviewable in court.’” (Shahinian v. Cedars-Sinai Medical Center (2011) 194 Cal.App.4th 987, 1006-1007.)

Nevertheless, the California Supreme Court has recognized a “narrow” exception to the rule, concluding that “arbitrators may exceed their powers by issuing an award that violates a party’s unwaivable statutory rights or that contravenes an explicit legislative expression of public policy.” (Richey, supra, 60 Cal.4th at pp. 916-917.) This includes an award based upon an erroneous application of the statute of limitations which results in the inability of a plaintiff to obtain a hearing on the merits of his claims pursuant to the FEHA. (Pearson Dental Supplies, Inc., supra, 48 Cal.4th at p. 680.)

Here, plaintiff brings claims for violation of the FEHA as well as a common law tort claim for wrongful termination. The wrongful termination claim is a nonstatutory common law claim, even when based upon conduct prohibited under the FEHA. (Prue v. Brady Co./San Diego, Inc. (2015) 242 Cal.App.4th 1367, 1383.) Thus, even under California law, any error by the arbitrator in applying the statute of limitations to this claim would not be a basis for vacatur. The Agreement here contains no language expressly providing for judicial review of the arbitrator’s errors of law and a common law tort claim does not involve an unwaivable statutory right subject to the “narrow exception” recognized by the California Supreme Court.

However, Pearson Dental Supplies, Inc. clearly holds that an award is subject to vacatur if based upon a clear legal error which deprives plaintiff of a hearing on the merits of his FEHA based claims. Thus, to the extent the arbitrator erred in applying the statute of limitations to these claims, such error could potentially serve as the basis for vacatur.

C. Any Error Was Not Prejudicial and Does Not Warrant Reversal

Having concluded that the only potential basis for vacatur would be a legal error which deprived plaintiff of the right to a hearing on his claims under the FEHA, we proceed to review the judgment confirming the award on this issue. Plaintiff argues that the arbitrator’s refusal to apply the tolling provisions of section 1281.12 constitutes clear legal error warranting vacatur of the award. We need not decide whether the arbitrator’s conclusion that section 1281.12 did not apply constitutes error because we find that, even assuming it was erroneous, any such error did not prejudice plaintiff and does not warrant reversal in this case.

“[I]n reviewing a judgment confirming an arbitration award, we must accept the trial court’s findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award . . . On issues concerning whether the arbitrator exceeded his powers, we review the trial court’s decision de novo, but we must give substantial deference to the arbitrator’s own assessment of his contractual authority.” (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087; Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 386.) Further, we “defer to the factual and legal findings made by the arbitrator . . . ‘[W]e do not review the arbitrator’s findings . . ., but take them as correct’ . . . To the extent the superior court judge made factual findings that are not inconsistent with the arbitrators’ findings, we review them for substantial evidence.” (Panoche Energy Center, LLC v. Pacific Gas & Electric Co. (2016) 1 Cal.App.5th 68, 99.) Finally, any error must be prejudicial. (See Richey, supra, 60 Cal.4th at pp. 920-921 [upholding confirmation of arbitration award even assuming arbitrator committed clear legal error where arbitrator’s factual findings supported alternative grounds for award].)

Here, the arbitrator made specific factual findings: plaintiff received his right-to-sue letter from the DFEH on July 15, 2014; that he filed his civil complaint in superior court on March 5, 2015; that the trial court made its order compelling arbitration on August 3, 2015; that plaintiff waived notice of a formal order; and that plaintiff did not serve his demand for arbitration until January 15, 2016 . On appeal, we do not review these factual findings, but take them as correct. Because the arbitrator made a factual finding that plaintiff waived notice, the decision to submit the matter to arbitration became final on the date the trial court’s order was entered into the permanent minutes.

Assuming section 1281.12 applied, the arbitrator’s factual findings would operate to toll the time in which plaintiff had to initiate arbitration by 181 days. Since an action for violation of the FEHA must be filed within one year of receipt of a right-to-sue letter from the DFEH , the additional 181 days afforded by section 1281.12’s tolling would have provided plaintiff a total of 546 days to serve a demand for arbitration from the date he received his right-to-sue letter from the DFEH on July 15, 2014. His service of a demand for arbitration on January 15, 2016 was 549 days after the date he received his right-to-sue letter and therefore untimely even if the tolling provisions of section 1281.12 applied.

Thus, we need not decide whether the arbitrator committed legal error in refusing to apply the tolling provisions of section 1281.12. Any such error could only support vacatur to the extent it deprived plaintiff of a hearing on the merits of his FEHA claims. However, it could not have had that effect here, where plaintiff’s demand for arbitration was untimely with respect to his FEHA claims even if the tolling provisions of section 1281.12 were taken into consideration. As such, any alleged error by the arbitrator did not prejudice the plaintiff and does not trigger the narrow grounds for vacatur recognized by the California Supreme Court pertaining to unwaivable statutory rights. Absent prejudice, reversal of the judgment confirming the arbitration award is not warranted.

IV. DISPOSITION

The judgment is affirmed. Appellant shall bear Respondent’s costs.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

FIELDS

J.

We concur:

MILLER

Acting P. J.

SLOUGH

J.