By Jonathan Marz, Diepenbrock Elkin Gleason LLP
In arbitrations, as in court actions, interim decisions or “awards” can be rendered that are unfavorable to a party. Can a party upset by an arbitrator’s interim or “partial final award” seek immediate judicial review of the decision? Not according to the appellate court in Maplebear v. Busick (Cal. 1st App., Div. 2, August 21, 2018, Case No. A151677).
In that case, Busick filed a class action arbitration demand against Maplebear dba “Instacart” (the same-day grocery delivery service) alleging violations of California’s employment laws. The parties’ arbitration agreement provided that arbitration would be conducted by JAMS under its rules and procedures, and that the arbitrator had no “power or authority to commit errors of law or legal reasoning.” A threshold issue in the arbitration was whether the arbitration agreement allowed Busick to seek certification of a claimant class within the arbitration. The arbitrator decided Busick could and issued a “partial final award” to that effect, without deciding the merits of the certification or underlying claim. Instacart immediately petitioned the superior court to vacate the award, but was unsuccessful on trial and on appeal.
Instacart contended the court had jurisdiction to consider the petition because the parties’ arbitration agreement allowed judicial review of “legal error,” and because the JAMS rules governing the arbitration contemplated immediate superior court review of partial final awards. The appellate court was unpersuaded. While the California Arbitration Act permits a party to an arbitration to petition the superior court to confirm, correct, or vacate an arbitrator’s “award,” such an award must “include a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy” pursuant to Code of Civil Procedure section 1283.4. The “controversy” that Busick placed before the arbitrator raised a “host of issues beyond the question whether the Agreement permits classwide arbitrations,” none of which are “addressed in the arbitrator’s partial final award,” which award “resolves only a preliminary issue.”
The court was similarly unpersuaded by Instacart’s argument that the parties agreed the arbitrator could not commit legal error, and that JAMS’ rules contemplate immediate review of its arbitrators’ partial final awards. The appellate court stated, “In the face of section 1283.4, which defines ‘award’ as ‘a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy,’ parties to an arbitration agreement cannot confer jurisdiction on courts to review arbitrator’s rulings by agreeing to proceed under a private organization’s rules that purport to allow immediate review of some interim awards.” Thus, the superior court lacked statutory jurisdiction to review the arbitrator’s partial final award, and neither the parties’ agreement nor JAMS’ rules expanded that jurisdiction.
This decision is an important reminder that, while arbitration agreements and an arbitrator’s powers may be negotiated by contract, the court’s jurisdiction regarding private arbitrations cannot. Therefore, parties considering an arbitration agreement should be mindful that, regardless of how they craft their agreements, they are unlikely to be able to obtain immediate judicial review of interim arbitration awards, and whether that affects their interest in agreeing to submit disputes to arbitration. If you have questions about what your arbitration agreements say about judicial review during the arbitration process, please contact Jonathan Marz at email@example.com or 916.492.5000.