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Volume XII, Number 136

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Dispositive Motions in Commercial Arbitration Proceedings in California

1. Introduction

The purpose of California’s Arbitration Act (Code Civ. Proc., §§ 1280 -1294.2) (the “Act”) is to promote contractual arbitration as a more expeditious and less expensive means of resolving disputes than by litigation in court.[1] If summary judgment is not available in a commercial arbitration proceeding, however, depending on the case, the arbitration may in fact last longer and be more expensive than a civil suit.[2] Participants in commercial arbitration proceedings in California should therefore give serious consideration to filing dispositive motions in those proceedings.[3] 

2. Availability of Dispositive Motions in Arbitration
a. Arbitration Services’ Rules
The rules regarding granting dispositive motions are not uniform among the various arbitration services. For example, Judicial Arbitration and Mediation Services (“JAMS”) expressly authorizes parties to file motions seeking “summary disposition” of claims or issues in all types of arbitration proceedings. Specifically, JAMS Rule 18 provides, in pertinent part: “The Arbitrator may permit any Party to file a Motion for Summary Disposition of a particular claim or issue, either by agreement of all interested Parties or at the request of one Party, provided other interested Parties have reasonable notice to respond to the request.”[4] 
 
The same is true of ADR Services, Inc., whose Rule 18 provides, in part: “A party or representative of a party may make a motion for summary adjudication of a particular claim or issue to be decided by the arbitrator either by agreement of all interested parties or at the request of one party.”[5] 
 
By contrast, the Arbitration Rules of Alternative Resolution Centers (“ARC”)[6] and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”)[7] do not grant parties the express authority to file, or the arbitrator express authority to entertain, dispositive motions in commercial arbitrations. Interestingly, however, AAA expressly authorizes dispositive motions in construction industry arbitrations.[8] In any event, both AAA and ADR Services allow arbitrators to grant relief which would expedite the proceedings.[9]
 
b. Case Law
 
In California, if the parties to a commercial arbitration have had an opportunity for adequate discovery, an arbitrator may entertain a dispositive motion during the course of the arbitration.[10] The motion may be entertained even if the arbitration forum in question does not expressly authorize the filing of such a motion.[11]
 
This is in line with cases from other jurisdictions which hold that arbitrators do not exceed their authority when they entertain and grant summary judgment motions in commercial arbitration proceedings.[12] Different rules may apply in securities arbitrations, however.[13] 
 The propriety of a dispositive motion in a California commercial arbitration “will depend upon a variety of factors, including the nature of the claims and defenses, the provisions of the arbitration agreement, the rules governing the arbitration, the availability of discovery, and the opportunity to conduct adequate discovery before making or opposing a motion.”[14] Significantly, however, an arbitrator cannot entertain a dispositive motion if the parties’ agreement forbids it.[15]
 
In Schlessinger v. Rosenfeld, Meyer & Susman, Plaintiff Schlessinger, an attorney, and his former law firm, could not agree on the payment due Schlessinger upon his resignation from the partnership.  Under the partnership agreement, the dispute proceeded to arbitration before AAA. The arbitrator then invited, but did not require, the parties to “present initial summary judgment motions, tendering any issues framed by the pleadings which, in the judgment of counsel, can be resolved on declarations.”[16] During the preliminary hearing, Schlessinger's counsel objected to the summary adjudication procedure, but the arbitrator overruled Schlessinger's objection and urged both parties to bring motions for summary judgment,[17] which they did. The arbitrator subsequently disposed of the principal issues by granting two summary adjudication motions in the law firm’s favor, and ultimately rendered an award in favor of the law firm.[18]
 
Schlessinger then petitioned the superior court to vacate the arbitration award, claiming that the Act required the arbitrator to conduct a hearing at which witnesses appeared and presented live testimony, thus precluding the use of summary adjudication motions. The trial court dismissed the petition, and the appellate court affirmed.
 
Although the appellate court recognized that the parties’ agreement, the Act, and the AAA rules did not incorporate California’s summary adjudication statutes, the court concluded that “the arbitrator had implicit authority to rule on such motions.”[19]  The court also noted that the arbitrator's obligation “to hear evidence” under Section 1286.2(e) “does not mean that the evidence must be orally presented or that live testimony is required.”[20] The court similarly rejected arguments that the parties had the right cross-examine witnesses at in an arbitration.[21] Moreover, the court noted that, before the second round of dispositive motions had been filed, the arbitrator permitted the parties to engage in discovery, and Schlessinger had submitted “considerable evidence from several sources” and had even deposed witnesses.[22]
 
3. Simpler Timing and Format Requirements  
 
Dispositive motions in arbitration are not held to the same timing and format rules as their judicial counterparts.[23] For example, the California Code of Civil Procedure requires at least 75 days’ advance notice of a motion for summary judgment, and the motion generally cannot be heard within 30 days of trial.[24] Significantly, trial courts do not have the ability to shorten the 75-day advance notice period.[25] Moreover, a motion for summary judgment filed in court must be accompanied by a Separate Statement of Undisputed Material Facts, which must meet stringent format requirements.[26] The party opposing the motion must file a similar statement.[27] These requirements do not exist in arbitration proceedings.
 
However, because an arbitrator must consider all material evidence in the arbitration,[28] a party to an arbitration proceeding who is considering filing a dispositive motion should raise that issue at the earliest possible opportunity, so that the arbitrator provides the parties a sufficient opportunity to conduct discovery and thereafter considers the material evidence before ruling on the motion. Of course, even if the motion is denied, the losing party will at least have had the opportunity to educate the arbitrator about the salient issues. Moreover, the parties should consider submitting Separate Statements of Facts to the arbitrator, especially where the arbitrator is a retired judge who would therefore be accustomed to reviewing them.
 
4. Conclusion
 
Motions for summary judgment and summary adjudication can be, and in appropriate cases should be, filed in commercial arbitrations in California, even if the arbitration forum’s rules do not specifically authorize such motions. As long as the parties have had a sufficient opportunity to conduct discovery, and as long as the arbitrator has considered all the material evidence before ruling on such motions, the motions can expedite the arbitration process and potentially minimize expenses, and will serve to educate the arbitrator about the salient issues.
 
[1] Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9. 
[2] See, Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1105-06 (cited with approval in Lewis v. Superior Court (1999) 19 Cal.4th 1232, 1248).
[3] For ease of reference, motions for summary judgment and summary adjudication are collectively referred to as “dispositive motions.”
[8] See AAA Construction Industry Arbitration Rules, Rule R-31(b) (“The arbitrator shall entertain motions, including motions that dispose of all or part of a claim, or that may expedite the proceedings”) (available at http://www.adr.org/sp.asp?id=22004#R31). Also note that AAA is considering potential changes and additions to its Commercial Arbitration Rules. See http://www.adr.org/sp.asp?id=28780.
[9] See ARC Arbitration Rules, Rule 9 (“Once an arbitrator is selected, the parties may request, or the arbitrator may require, that a pre-hearing conference or case management meeting be scheduled to arrange for the exchange of information, stipulations as to uncontested facts, or other matters which will expedite the arbitration proceeding” (emphasis added) and AAA Commercial Rules, Rule R-30(b) (“The arbitrator, exercising his or her discretion, shall conduct the proceedings with a view to expediting the resolution of the dispute and may direct the order of proof, bifurcate proceedings and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case”) (emphasis added).
[10] Schlessinger,40 Cal.App.4th at pp. 1111-1112.
[11] Id.at p. 1104.
[12] See, e.g., Sherrock Brothers, Inc. v. DaimlerChrysler Motors Co. (3d Cir. 2008) 2008 WL 63300 (Jan. 7, 2008); Barnes v. Washington Mut. Bank (N.Y. App. Div. 2007) 40 A.D.3d 357; Martindale v. Sandvik, Inc., (N.J. Super. A.D. 2006), 2006 WL 1450586 (May 26, 2006); see also Schlessinger, 40 Cal.App.4th at p. 1107-08 (citing non-California labor arbitration cases).   
[13] An Oklahoma federal court has held that a securities arbitration panel was guilty of misconduct and exceeded its powers when it refused to hear pertinent evidence by granting a motion to dismiss an arbitration without a hearing. Prudential Securities, Inc. v. Dalton, 929 F. Supp. 1411, 1417 (N.D. Okla. 1996). In 2003, however, the General Accounting Office of the United States Government noted that NASD securities arbitration “rules do not prohibit either of the parties in arbitration from filing or the arbitrators from granting prehearing motions to dismiss.” U.S. General Accounting Office, Follow-up Report on Matters Relating to Securities Arbitration, GAO-03-162R (April 11, 2003), p. 2 (available at http://www.gao.gov/new.items/d03162r.pdf). See also Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359, 1368 (securities arbitrator has implicit authority to grant prehearing motion to dismiss).
[14] Schlessinger, 40 Cal.App.4th at p. 1112. 
[15] See California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 944 (“[A]lthough an arbitrator generally enjoys substantial discretion to determine the scope of his or her contractual authority, courts are bound to uphold the parties' express agreement to restrict or limit that authority”).
[16] Schlessinger, 40 Cal.App.4th at p. 1101.
[17] Id. fn. 4.
[18] Id. at p. 1101-1103.
[19] Id. at p. 1104.
[20] Id. at p. 1105.
[21] Id. at p. 1106-07. 
[22] Id. at p. 1111.
[23] Id.at p. 1108 (noting that rules of civil procedure generally do not apply in arbitration proceedings).
[24] Code Civ. Proc., § 437c(a).
[25] Urshan v. Musicians’ Credit Union (2004) 120 Cal.App.4th 758, 764-765.
[26] Cal. Rules of Court, rules 3.1350(c)(2), (d). 
[27] Cal. Rules of Court, rules 3.1350(e)(2), (f).
[28] Code Civ. Proc., § 1286.2(e).
© Copyright 2007-2009 - All Rights Reserved by Valensi Rose, PLC.National Law Review, Volume , Number 302
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About this Author

David Krol, Valensi, real estate lawyer
Associate

David is an associate with the firm who specializes in construction, real estate, entertainment, and employment litigation and arbitration.  With over 13 years of legal experience in both New York and California, David is well aware of the costs which can be associated with the litigation and arbitration process, and he therefore tries to find cost-effective ways to resolve legal disputes. He focuses his practice in the areas of construction, real estate, employment and entertainment law.

(310) 277-8011
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