Defendants petition the Court for an Order confirming the Final Arbitration Award in favor of MB and against Plaintiffs, and entering judgment thereon in MB’s favor.
Specifically, MB asks the Court to confirm the Final Award issued by Arbitrator Viggo Boserup, Esq. in the matter of Miller Barondess, LLP v. Roger Hogan, et al., JAMS Reference No. 1210037528 (the “Final Award”). Defendants contend that their Petition should be granted because the requirements to confirm the Final Award are all met. MB contends that it is beyond question that JAMS has jurisdiction because a clear, unequivocal arbitration provision is included in the fee agreement between the parties, and that this issue has been litigated and decided by the Superior Court, Hon. Melissa McCormick, and was also decided at the outset of the arbitration by Arbitrator Boserup, and that both found that the fee agreement, including its arbitration clause, was enforceable as there was no evidence of a conflict of interest pertaining to the class action, or conflicts among family members or violations of the rules of professional conduct. MB contends that Hogan repeated the same allegations about unconscionability of the fee agreement and the alleged conflict of interest with the class action at the arbitration hearing for a third time, as well as that Hogan again made these same arguments a fourth time after the Interim Award to oppose MB’s motion for attorneys’ fees, but that they were rejected. MB also provides that it has provided the Court with a redacted copy of the Final Award in Exhibit Q to the Ehrlich Declaration.
Plaintiffs filed a combined Response to the instant Petition to Confirm and a Petition to Vacate the Final Award. Plaintiffs request that the Court vacate the Final Award. Plaintiffs assert that the Final Award should be vacated because of a potential or actual conflict of interest that voids the Amended Fee Agreement (“AFA”) as well as because the Arbitrator withheld disclosures, namely that he was Chairman of the Board of JAMS, which would have led Plaintiffs to reasonably entertain a doubt as to Mr. Boserup’s ability to be impartial; because Mr. Boserup exceeded his powers; and because the AFA is an illegal contract.
In response to Plaintiffs’ purported Petition to Vacate, MB filed a “reply.” In turn, MB’s papers filed as a “reply” are considered a response to Hogan’s petition to vacate. (See ROA 490.)
Curiously, Hogan filed a “reply” in support of their petition to vacate. As part their “reply,” Hogan filed six documents:
- Response to Defendant’s Evidentiary Objections to the Declaration of Roger Hogan in Support of Response to Miller Barondess, LLP’s Petition to Confirm; Petition to Vacate Arbitration Award (ROA 517)
- Request for Judicial Notice (ROA 513)
- Reply in Support of Plaintiffs’ Petition to Vacate Arbitration Award (ROA 511)
- Notice of Lodging Unredacted Exhibits to the Declaration of Roger Hogan in Support of Plaintiffs’ Petition to Vacate Arbitration Award (ROA 515)
- Declaration of Roger Hogan in Support of Reply in Support of Plaintiffs’ Petition to Vacate Arbitration Award (ROA 519)
- Declaration of Kyle R. Hogan in Support of Reply in Support of Plaintiffs’ Petition to Vacate Arbitration Award (ROA 520)
Ironically, these filings are directly contradicted by Hogan’s prior assertions on their motion to strike MB’s reply in support of its petition to confirm final arbitration award. Indeed, Hogan previously argued that a petition and response comprise the only two documents for consideration and that a “reply” is not authorized absent stipulation of the parties, and that once a petition and response are filed, briefing is closed. (See ROA 464, Hogan’s Notice of Motion and Motion to Strike Defendants’ Unauthorized Reply in Support of Petition to Confirm Final Arbitration Award and Declaration of Justin Ehrlich in Support Thereof.) Hogan filed a combined response to MB’s petition to confirm the Final Award and petition to vacate Final Award and MB filed their response to Hogan’s petition to vacate. Hogan does not present any authorization for the filing of reply papers in support of their motion to vacate the Final Award.
Additionally, Hogan raises new arguments for the first time relating to other ways in which there was a purported conflict of interest, i.e., MB appropriating experts in favor of the class, compromising witnesses in favor of the class, choosing the Class Action over a qui tam action. “[P]oints raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before. [Citations.]” (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) No good cause for raising these new arguments.
Further, Hogan appears to submit new evidence in reply. The general rule of motion practice is that new evidence is not permitted with reply papers, which “is based on the same logic applied in the appellate courts, specifically, that ‘[p]oints raised for the first time in a reply brief will ordinarily not be considered because such consideration would deprive the respondent of an opportunity to counter the argument.’ [Citations.]” (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.) “. . . ‘[T]he inclusion of additional evidentiary matter with the reply should only be allowed in the exceptional case …’ and if permitted, the other party should be given the opportunity to respond.” (Id. at pp. 1537-1538.) Reply evidence should not address substantive issues in the first instance but only fill gaps in the evidence created by opposition. (Id., at p. 1538.)
Based on the foregoing, the Court declines to consider all papers filed by Hogan as a reply in support of their petition to vacate.
In its Petition and Response, MB contends that Hogan’s arguments to vacate fail. MB contends that Hogan made the same exact conflict of interest argument to this Court and the Arbitrator, which have been rejected, and that this case is nothing like Sheppard Mullin as there is no conflict and Hogan suffered no harm. MB asserts that Hogan does not come forward with any new facts, circumstances or law to warrant a different outcome this time around, and that Hogan fails to perform the requisite analysis as well as incorrectly interprets Sheppard Mullin. MB argues that Hogan merely offers his own self-serving declaration that various things constitute conflicts, which is insufficient to establish a potential conflict under RPC 3-310. MB also asserts that it is important to consider that throughout the arbitration hearing, Mr. Hogan violated his oath to tell the truth, and that the Arbitrator made a specific finding to this effect. MB additionally argues that the evidence shows that MB’s pursuit of the class action never presented a conflict under applicable law.
MB further contends that Hogan does not meet their burden to show that an objective, reasonable person would believe that Mr. Boserup was biased for or against a party based on his board seat, that it was only after Hogan lost that he set about getting Mr. Boserup disqualified, and that Mr. Boserup timely disclosed that he was an owner-panelist with JAMS, but that Hogan did not object. MB also contends that Plaintiffs’ argument that Mr. Boserup exceeded his powers fails because there is no proof showing what happened in the OC JAMS action; that Mr. Boserup did not exceed his powers, and that awarding fees under a broad fee clause is squarely within an arbitrator’s discretion.
Lastly, MB contends that Hogan’s “capping” argument fails; that Hogan lost on this same argument before Judge McCormick; that Hogan ignores the evidence showing that MB agreed to a reduced contingent fee in the AFA for several reasons having nothing to do with the Class Action; that Hogan wanted MB to file the Class Action to increase his own leverage against Toyota; that there was no quid pro quo for reducing the contingent fee from 35% to 15%; and that Hogan presents no documents showing that he was compensated for recruiting class action plaintiffs.
Timing
A petition to confirm an arbitration award must be filed within four years from the date of service of a signed copy of the arbitration award upon the petitioner and at least ten days after service of the award upon the petitioner. (CCP §§ 1288, 1288.4.) A petition to correct or vacate an award must be served and filed within 100 days after the date the petitioner was served with a signed copy of the award. (CCP § 1288; Douglass v Serenivision, Inc. (2018) 20 Cal.App.5th 376, 384 [petition to vacate award filed 125 days after petitioner was served with award was untimely].) A response requesting that an award be vacated shall be served and filed no later than 100 days after the date of service of a signed copy of the award upon the respondent if he was a party to the arbitration. (CCP § 1288.2.)
The filing and service deadline for a petition to vacate is jurisdictional: a failure to comply deprives a court of the power to vacate an award, unless the party has timely requested vacation in response to a petition to confirm, as provided in CCP § 1286.4 (Santa Monica College Faculty Ass’n v Santa Monica Community College Dist. (2015) 243 Cal.App.4th 538, 544 – court lacked jurisdiction to vacate award when petition was filed 99 days after petitioner was served with signed award, but was not served until 108 days after award was served.)
Here, the Final Award is dated February 16, 2024, and it was served on February 23, 2024. (ROA 423; Declaration of Justin P. Ehrlich, ¶¶ 31, 32, Ex. Q.) The instant Petition was filed on March 8, 2024, and was therefore, timely filed.
Hogan filed and served a combined Response to MB’s Petition to Confirm with a Petition to Vacate the Final Award on March 18, 2024.
This response and petition to vacate was timely served and filed as it was brought within 100 days after the date of service of the signed copy of the award.
Service
Pursuant to Code of Civil Procedure section 1290.4(a), “[a] copy of the petition and a written notice of the time and place of the hearing thereof and any other papers upon which the petition is based shall be served in the manner provided in the arbitration agreement for the service of such petition and notice.” If the arbitration agreement does not provide the manner in which such service shall be made and the person on whom service is to be made has previously appeared in the proceeding, service shall be made in the manner provided in Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of this code. (CCP § 1290.4(c).)
Service of the petition was properly made. Contents
The petition must name as respondents all parties to the arbitration and may name as respondents any other person bound by the arbitration award. (CCP § 1285.) It must also:
- set forth the substance of or attach a copy of the arbitration agreement;
- set forth the name of the arbitrators; and
- set forth or attach a copy of the award and the written opinion of the arbitrators, if any. (CCP § 1285.4.)
A response to a petition shall contains the same contents as a petition. (CCP § 1285.6(a)-(c).) Here, MB’s petition names as respondents all parties to the arbitration, Roger Hogan, Hogan SRK, Inc., R&C Motor Corporation and HFP, Ltd; attaches a copy of the arbitration agreements, i.e., the initial fee agreement dated June 1, 2017, and AFA dated February 1, 2018, as Exhibits A and B to the Declaration of Justin P. Ehrlich; sets forth the name of the arbitrator, Arbitrator Viggo Boserup, Esq.; and attaches a copy of the Final Award containing the written opinion of the Arbitrator as Exhibit Q to the Ehrlich Declaration.
Merits
Any party to an arbitration in which an award has been made may petition the court to confirm, correct, or vacate that award. (CCP § 1285; see Cinel v Christopher (2012) 203 Cal.App.4th 759, 765 [prevailing party in arbitration may petition court to confirm award, while losing party may petition to modify or vacate award entirely].) “A response to a petition under this chapter may request the court to dismiss the petition or to confirm, correct or vacate the award.” (CCP § 1285.2.)
“If a petition or response under this chapter is duly served and filed, the court shall confirm the award as made, whether rendered in this state or another state, unless in accordance with this chapter it corrects the award and confirms it as corrected, vacates the award or dismisses the proceeding.” (CCP § 1286.) “The party seeking to enforce an arbitration award must prove by a preponderance of the evidence that a valid arbitration contract exists.” (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1220.) “The court may not confirm an award without first finding the parties agreed in writing to arbitrate their dispute, unless a judicial determination of the issue has already been made (e.g., by a court considering a petition to compel arbitration).” (Ibid.) If the award is confirmed, “judgment shall be entered in conformity therewith,” and the judgment so entered with the same force and effect as a judgment in a civil action, and may be enforced like any other judgment of the court in which it is entered. (CCP § 1287.4.)
“A petition to correct or vacate an award, or a response requesting such relief, must set forth the grounds on which the request for this relief is based.” (CCP § 1285.8.) A court may not vacate an award unless a petition or response requesting that the award be vacated has been duly served and filed and all petitioners and respondents are before the court or all petitioners and respondents have been given reasonable notice that the court will be requested at the hearing to vacate the award or that the court on its own motion has determined to vacate the award and all petitioners and respondents have been given an opportunity to show why the award should not be vacated. (CCP § 1286.4.)
“Code of Civil Procedure section 1286.2 lists the grounds on which a court may vacate an award,………… ” (Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 187 Cal. App. 4th 1405, 1416.)
Subject to Section 1286.4, the court shall vacate the award if the court determines any of the following:
- The award was procured by corruption, fraud or other undue means.
- There was corruption in any of the
- The rights of the party were substantially prejudiced by misconduct of a neutral
- The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy
- The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this
- An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; . . . .
(CCP § 1286.2(a)(1)-(6), emphasis added.)
Judicial review of an arbitration award is generally limited to the statutory grounds for vacating an award under Code of Civil Procedure section 1286.2, and correcting an award under Code of Civil Procedure section 1286.6. (Moshonov v. Walsh (2000) 22 Cal. 4th 771, 775.) A court may not vacate or correct an award because of the arbitrator’s legal or factual error, even if the error appears on the face of the award. (Ibid.) In addition, arbitrators do not exceed their powers within the meaning of section 1286.2(a)(4) merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the of the controversy submitted to the arbitrators. (Ibid.)
“[I]t is within the ‘powers’ of the arbitrator to resolve the entire ‘merits’ of the ‘controversy submitted’ by the parties. [Citation.]” (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 28.) “[T]he ‘merits’ include all the contested issues of law and fact submitted to the arbitrator for decision. The arbitrator’s resolution of these issues is what the parties bargained for in the arbitration agreement.” (Ibid.)
“ ‘[A]n arbitrator’s decision is not generally reviewable for errors of facts or law, whether or not such error appears on the face of the award and causes substantial injustice to the parties.’ [Citation.]” (FCM Investments, LLC v. Grove Pham, LLC (2023) 96 Cal.App.5th 545, 552.)
“The narrow grounds stated in section 1286.2 for vacating an award ‘protect against error that is so egregious as to constitute misconduct or so profound as to render the process unfair.’ [Citation.]” (Ibid.) “A party challenging an arbitration award and trial court judgment confirming that award bears the burden of establishing entitlement to relief. [Citation.]” (Ibid.)
Conflict of Interest
Initially, Plaintiffs assert that the Final Award must be vacated as a jurisdictional matter pursuant to Sheppard, Mullin, Richter & Hampton, LLP v. J-M Mfg. Co. (2018) 6 Cal.5th 59 which is directly on point. Plaintiffs argue that MB created, at minimum, a potential conflict of interest when it agreed to concurrently represent two clients in separate proceedings with directly adverse interests without attempting to advise its clients regarding the conflict or to obtain informed written consent, and that the AFA which was the basis to compel Hogan to arbitrate must be voided because MB failed to provide informed written disclosure and received no written consent of the conflict arising out of its concurrent representation of (1) a Class of consumer car buyers against Toyota, expressly implicating the Dealerships (including Plaintiffs herein) in the Class Action and (2) Plaintiffs as the Dealerships complained of in the Class Action against the same manufacturer regarding substantially the same subject matter, as required under the Rules of Professional Conduct (“RPC”), 3-310. MB either knew or should have known that, at the very least, a potential conflict requiring informed written consent existed from the inception of
MB’s decision to pursue the Class Action. Plaintiffs assert that there were several instances of MB actively choosing between the interests of their concurrent clients including the following: (1) MB simultaneously asserted the same damages on behalf of the Class Action and the Dealership Action with express language indicating an intent to recover on behalf of both, but express actions only demonstrating an intent to collect only on behalf of the Class; (2) MB provided to the Class Action co-counsel, Paul Keisel, Keisel Law, under the auspices of him being a “consultant” and without Plaintiffs’ consent, a detailed analysis by Roger Hogan and Kyle Hogan regarding issues in the Dealership Act in clear violation of the attorney’s duty of confidentiality; (3) MB subpoenaed its own client by issuing a subpoena upon Plaintiffs relating to information it needed to prosecute the Class Action.
Plaintiffs additionally argue that MB persisted in a campaign to pressure Roger Hogan personally into agreeing to the Class Action, and that Mr. Hogan made clear to MB, in writing, that he did not understand the dynamic of the Class Action in the days immediately preceding executing of the AFA, but that MB dodged the substance of the questions, refused to answer in writing, and instead requested a phone call; that MB breached its duty of loyalty; and that MB wanted the Class Action and it told Plaintiffs whatever it needed to tell them so that it could get what it wanted.
MB argues that the AFA is not void under Sheppard Mullin which was an exceptional case where the law firm ran a conflicts check; it discovered that its representation of the client would be directly adverse to another client; and then it concealed that information, ultimately leading to the firm being disqualified later. MB asserts that the circumstances that led to the conclusion that the fee agreement could not stand in that case, are not present here, and that contrary to Hogan’s assertion Sheppard Mullin does not hold that every instance of an unwaived actual or potential conflict of interest requires the fee agreement to be struck down.
MB additionally argues that the evidence shows that MB’s pursuit of the class action never presented a conflict under applicable law as MB lawyers used their knowledge and skill and concluded that there was not “a reasonable likelihood an actual conflict will arise” in bringing the class action, and law professor and legal ethics expert, John Steele, reviewed the record and explained why there was no actual/potential conflict under RPC, 3-310.
MB argues that Hogan’s assertions as to how MB’s work on the Class Action created a conflict of interest lack the requisite expertise, are unqualified and without foundation, and are undercut by the objective facts. MB asserts that the Class Action was not “directly adverse” to Hogan’s own case; that there was overwhelming proof that Mr. Hogan strongly supported the class action to advance his own position against Toyota; and that at the hearing, Hogan admitted that he supported the class action; that he wanted MB to file more class actions against Toyota; and that he agreed with the “pressure campaign” strategy, as well as that he agreed to have MB pursue the class action after he consulted with his longtime independent counsel, Marla Robinson, about it. MB argues that the record also shows that the MB lawyers consulted him every step of the way, and that Hogan offers no proof showing that a single dealership was sued in connection with the manufacturing defect that was at issue in the Class Action, or that there was any meaningful risk that a dealer could held liable for the manufacturing defect at issue.
MB also asserts that contrary to Hogan’s argument that MB is responsible for “diverting claims” from his case to the Class Action, MB did seek TCUV damages at Hogan’s trial, and not only in the class action as Dr. Mark Garmaise, Hogan’s damages expert in the Toyota case, included $590,197 worth of TCUV damages in his presentation, with the jury awarding Hogan nearly all of the damages sought in this and five other damages categories. MB contends that the only aspect of the TCUV damages that was not claimed at Hogan’s trial was the $450 fee per vehicle itself because it would not be a viable damages theory as the TCUV program was a major profit driver for Mr. Hogan’s dealerships.
Additionally, MB contends that they did not reveal confidential information to class counsel and that there was consistent, unrebutted testimony at arbitration that MB lawyers never shared confidential information with Paul Keisel without Hogan’s consent, and that MB had “general, generic” discussions with Paul Kiesel.
Further, MB contends it did not act improperly by issuing a subpoena on the Hogan dealerships in the Class Action as there was consistent, corroborated testimony at arbitration that MB and Hogan discussed the subpoena ahead of time; that they mutually agreed that MB would serve it; and that they did so to protect Hogan’s interests. MB asserts that Hogan cites to no evidence supporting his position.
As a threshold matter, Plaintiffs devote at least 10 pages to argue that there was a potential and/or actual conflict of interest when MB agreed to concurrently represent two clients in separate proceedings with directly adverse interests without attempting to advise its clients regarding the conflict or to obtain informed written consent, violating RPC 3-310, and rendering the AFA and the basis to compel Hogan to arbitrate void, as well as that Sheppard, Mullin, Richter & Hampton, LLP v. J- M Mfg. Co. (2018) 6 Cal.5th 59 is directly on point and applies in this case. However, Plaintiffs cite to no statutory ground or other authority establishing that a ground for vacating an arbitration award is an incorrect ruling by a Superior Court on a motion to compel arbitration (ROA 423, Ex. G to Ehrlich Decl.) or an incorrect ruling by an arbitrator on a motion regarding arbitrability (ROA 423, Ex. I to Ehrlich Decl.). Plaintiffs assert that the Final Award must be vacated as “jurisdictional matter,” but fails to cite to what statutory ground upon which they rely. While Plaintiffs cite to Code of Civil Procedure sections 1286.4(a)(3), (a)(4), and (a)(6), in support of their other arguments, they do not cite to any of these in support of this argument.
Significantly, Plaintiffs’ argument that the arbitrator lacked jurisdiction because of a potential and/or actual conflict of interest which rendered the AFA void and arbitration provision unenforceable seeks reconsideration of the Superior Court’s Order dated June 9, 2022, by the Honorable Melissa R. McCormick, which granted MB’s petition to compel arbitration, and found that Defendants met their burden of demonstrating the existence of a valid arbitration agreement by the preponderance of the evidence which applied to Plaintiffs’ causes of action, and found that the record did not support a conclusion that the arbitration provisions were unenforceable as against public policy because of a violation of the rules of professional conduct, or an alleged illegality. (ROA 423, Ex. G to Ehrlich Decl.) Plaintiffs’ arguments of a conflict of interest and violation of RPC 3-310, along with other violations of the RPC and their duties of loyalty and confidentiality, including that MB disclosed confidential information to Class Counsel, Paul Keisel, and MB unethically subpoenaed Hogan were made in opposition to the MB’s petition to compel arbitration. (Ibid; ROA 423, Ex. E to Ehrlich Decl.) Plaintiffs also previously argued that the AFA was illegal. (Ibid.) Yet, Plaintiffs do not show that the Court may now revisit or reconsider an order issued by another judge, let alone at this juncture. Indeed, Plaintiffs do not discuss and ignore these prior rulings altogether. A judicial determination on the issue of whether a valid arbitration agreement exists has already been made.
Arguments not supported by authority are waived. (See Evans v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 165 [issues mentioned “without fully or properly briefing them” are waived]; Mission Shores Assn. v. Pheil (2008) 166 Cal. App. 4th 789, 796 [noting that “every brief should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived and pass it without consideration. [Citations.]”]; Amato v. Mercury Casualty Co. (1993) 18 Cal.App.4th 1784, 1794 [legal proposition not supported by authority is forfeited].)
Additionally, after being compelled to arbitration, Plaintiffs filed a motion regarding arbitrability with the arbitrator, making the same arguments made in opposition to the petition to compel arbitration, thereby submitting this contested issue of law and fact to the arbitrator for decision. (See ROA 423, Ex. H to Ehrlich Decl.) Further, Plaintiffs’ arguments that there was a potential and/or actual conflict of interest based on a violation of RCP 3-310 and because MB persisted pressured Roger Hogan personally into agreeing to the Class Action and that Mr. Hogan did not understand and had questions about pursuing the Class Action that went unanswered implicate and attack findings of fact and law made in the Final Award about Mr. Hogan’s knowledge and agreement in pursuing the Class Action, and Mr. Hogan’s lack of credibility as a witness. (See ROA 423, Ex. Q to Ehrlich Decl., Redacted Final Award at pp. 8-10, 13, 17, 27.) “As a general rule, the courts may not review an arbitrator’s decision for errors of fact or law. [Citation.]” (Cotchett, Pitre & McCarthy Universal Paragon Corp. (2010) 187 Cal. App. 4th 1405, 1416.) Plaintiffs fail to show that judicial review is available under the circumstances here.
Based on the foregoing, Plaintiffs do to show that judicial review is available under these circumstances and that there are grounds to vacate the Final Award because of an incorrect ruling by the Superior Court or the Arbitrator on whether the AFA was void for a violation of the Rules of Professional Conduct.
Disclosures Required by Arbitrator
Plaintiffs argue that the Final Award must be vacated under Code of Civil Procedure section 1286.2(a)(6)(A) because Mr. Boserup withheld disclosures which would have led Plaintiffs to reasonably entertain a doubt as to his ability to be impartial; that Mr. Boserup’s initial disclosures did not disclose his role as chairman of the board of directors of JAMS; that it was not until August 18, 2023, 9 days after the Interim Arbitration Award was issued in favor MB, and that this was disclosed as part of a supplemental set of disclosures. Plaintiffs contend that the existence of supplemental disclosures alone warrants vacatur as a matter of law.
MB asserts that there is no requirement that an arbitrator disclose their board membership, that there is no basis to believe that Mr. Boserup was biased in favor of one party or the other because he was the Chairman, and that it was only after Hogan lost that he set about getting the Arbitrator disqualified. MB contends that Hogan bears the burden to show an objective, reasonable person would believe the Arbitrator was biased for or against a party based on his board seat, but that Hogan has not met his burden and never explains why an objective, reasonable person would think that board service made the Arbitrator biased or raise questions as to his impartiality. MB also contends that upon his appointment, Mr.
Boserup timely disclosed that he was an owner- panelist with JAMS, so that Hogan knew this information but did not object, and that this information was confirmed, again, by JAMS when it issued a detailed order denying Hogan’s request to disqualify.
A proposed neutral arbitrator “shall disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.” (CCP § 1281.9(a).) The proposed neutral arbitrator shall disclose all matters required to be disclosed to all parties in writing within 10 calendar days of service of notice of the proposed nomination or appointment. (CCP 1281.9(b).)
Code of Civil Procedure section 1281.2(a)(6)(A) mandates that a court shall vacate an arbitration award if the arbitrator “failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware.” (International Alliance of Theatrical Stage Employees, etc. v. Laughon (2004) 118 Cal.App.4th 1380, 1385- 1386.) “Vacation of the arbitrator’s award is required in those circumstances, and no prejudice need be shown. [Citation.]” (Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1311.) “The general requirement that a proposed neutral arbitrator disclose any matter that could reasonably cause a person aware of the facts to entertain a doubt that the proposed arbitrator would be impartial (§ 1281.9, subd. (a)) involves an objective test that focuses on a reasonable person’s perception of bias and does not require actual bias. [Citation.]” (Ibid.) “‘Impartiality’ entails the ‘absence of bias or prejudice in favor of, or against, particular parties or classes of parties, as well as maintenance of an open mind. [Citation.]” (Haworth v. Superior Court (2010) 50 Cal.4th 372, 389.) “[T]he appearance-of-partiality ‘standard “must not be so broadly construed that is becomes, in effect, presumptive, so that recusal is mandated upon the merest unsubstantiated suggestion of personal bias or prejudice.” ’ [Citation.]” (Ibid.) “ ‘An impression of possible bias in the arbitration context means that one could reasonably form a belief that an arbitrator was biased for or against a party for a particular reason.’ [Citation.]” (Ibid.)
Here, Mr. Boserup initially made disclosures on December 13, 2021. (ROA 454, Ex. 33 to Declaration of Roger T. Hogan (“Hogan Decl.”) Mr. Boserup then made a supplemental disclosure on August 18, 2023, which included a statement that, “Arbitrator served as Chairman of the Board of Directors from May of 2020 through April of 2023.” (ROA 454, Ex. 34 to Hogan Decl.) Regardless of whether Mr. Boserup failed to make a timely disclosure, Hogan fails to show how the mere fact that Mr. Boserup was Chairman of the Board of JAMS would cause an objective observer to reasonably entertain a doubt that he would be impartial. There is no showing that one could reasonably form a belief that Mr. Boserup was biased for or against any party here for a particular reason based on the sheer fact that he was Chairman of the Board of JAMS from May 2020 to April 2023. Hogan also fails to show that Mr. Boserup’s position as Chairman of the Board of JAMS was a required disclosure. Based on the foregoing, the Court finds that there are no grounds to vacate the Final Award under Code of Civil Procedure section 1281.2(a)(6)(a) for an arbitrator’s failure to timely disclose a ground for disqualification of which the arbitrator was then aware.
Exceeding Arbitrator’s Authority
Plaintiffs assert that the Final Award is subject to vacatur under Code of Civil Procedure section 1286.2(a)(4) which requires vacatur where an arbitrator exceeds their powers as Mr. Boserup’s Final Award granted MB’s Motion for Attorney Costs, Fees, and Interest in full thereby exceeding his powers because a significant portion of that request was comprised of fees and costs relating to a separate, already adjudicated, proceeding before a separate Arbitrator, Richard Chernick of OC JAMS.
MB asserts that this argument fails for three reasons: (1) there is no proof and Hogan’s brief and declaration never describe what happened in the OC JAMS action, never attach the OC JAMS award, and provide no authority showing why Mr. Boserup exceeded his authority in awarding fees for this work; (2) Mr. Boserup did not exceed his powers as MB’s work in OC JAMS was covered by the fee agreement’s prevailing party clause because, in large part, Hogan used the OC JAMS action to try and block critical evidence from being admissible in the arbitration pending before Mr. Boserup and Hogan was unsuccessful in OC JAMS to keep out the documents such that the OC JAMS action was directly tied to MB’s efforts to defend itself in the arbitration before Mr. Boserup, making the matter inextricably intertwined; and (3) awarding fees under a broad fee clause is squarely within an arbitrator’s discretion.
“An arbitrator exceeds her powers if (among other things) she issues an award that violates a well-defined public policy, or that violates a statutory right, or that provides a remedy not authorized by law, or that imposes a remedy that is not rationally related to the contract. [Citation.]” (Shahinian v. Cedars-Sinai Medical Center (2011) 194 Cal.App.4th 987, 1000.) “An arbitrator may exceed her powers within the meaning of this section by issuing an award that violates an explicit legislative expression of public policy.” (Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 187 Cal. App. 4th 1405, 1416, 1417.) “But this is the exception, not the rule: ‘Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny.’ [Citation.]” (Id. at p. 1417.)
Despite Plaintiffs’ argument, Plaintiffs fail to present evidence sufficient to support their assertions that a significant portion of MB’s request for attorney’s fees, costs, and interest was comprised of fees and costs relating to a separate, already adjudicated proceeding in OC JAMS such that Mr. Boserup exceeded his authority. Mr. Hogan’s declaration states that Plaintiffs “cannot attach the OC JAMS award for the Court’s consideration in this proceeding for similar reasons as both parties have filed Motions to Seal and/or Redact the Final Award from LA JAMS,” but asserts that Plaintiffs were ultimately named as the prevailing party and awarded fees and costs in their favor in the OC JAMS proceeding. (ROA 454, Hogan Decl., ¶¶ 10, 12.) Mr. Hogan also states that Mr. Boserup, “despite knowing the outcome of the OC JAMS proceeding and the fact Arbitrator Richard Chernick found Respondents to be the prevailing party – awarded MB those same fees which Arbitrator Richard Chernick already awarded to Respondents as part[] of his Final Award in the LA JAMS proceeding,” such that Mr. Boserup exceeded his powers. (Id., ¶¶ 14, 15.)
Mr. Hogan’s assertion that Plaintiffs “cannot attach” the OC JAMS award is not persuasive as other means are available for presenting the OC JAMS award to the Court while maintaining any confidentiality, and Mr. Hogan’s assertion as to OC JAMS ruling is not admissible. Based on the papers and admissible evidence submitted to the Court, the Court is unable to determine that vacating the Final Award under Code of Civil Procedure section 1286.2(a)(4) is justified.
Illegal Contract
Lastly, Plaintiffs argue that the AFA is an illegal contract as it was an agreement by which a reduction in contingent fee was exchanged for Hogan to solicit class action plaintiffs for MB’s Class Action, an act which impermissible at law under California Business and Professions Code section 6152 and RPC 3-210, and thereby, renders the AFA void. Plaintiffs also argue that California law voids any contract between an attorney and client procured by a capper under California Business and Professions Code section 6154 and RPC 1-320(B).
MB contends that Hogan lost on this same argument before Judge McCormick, and that Hogan ignores the evidence showing that MB agreed to a reduced contingent fee in the AFA for several reasons having nothing to do with the Class Action, including to resolve Hogan’s misunderstanding over the contingent fee cap, because Hogan said he was sick and wanted to leave more his estate to his children, and to keep their client happy. MB again asserts that Hogan wanted MB to file the Class Action to increase his own leverage against Toyota; that Skip Miller explained there was never a quid pro quo; that Hogan’s decision to proceed with the Class Action was made after he consulted with his long-time independent counsel; and that Professor Steele testified that “[t]his is not a runners-and-cappers case.” MB further contends that Hogan does not come forward with any documents showing that he was somehow compensated for recruiting class action plaintiffs.
“If a contract includes an arbitration agreement, and grounds exist to revoke the entire contract, such grounds would also vitiate the arbitration agreement. Thus, if an otherwise enforceable arbitration agreement is contained in an illegal contract, a party may avoid arbitration altogether. [Citations.]” (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 29-30.) When “the alleged illegality goes to only a portion of the contract (that does not include the arbitration agreement), the entire controversy, including the issue of illegality, remains arbitrable. [Citations.]” (Id. at p. 30.) Judicial review of an arbitrator’s ruling where a party claims the entire contract or transaction is illegal is permitted. (Id. at pp. 31-32.)
“Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny.” (Id. at p. 32 [finding judicial review of the arbitrator’s decision unavailable based on the conclusion that nothing in the Rules of Professional Conduct at issue in the case suggested that resolution by an arbitrator of an ordinary fee dispute would be inappropriate or would improperly protect the public interest].)
Business and Professions Code section 6152 provides that it is unlawful for “[a]ny person, . . . or for any firm, corporation, partnership or association to act as a runner or capper for any attorneys or to solicit any business for any attorneys………… ” (Bus. & Prof. Code § 6152(a)(1).) It is also unlawful for any person to solicit another person to commit or join in the commission of a violation of subdivision (a). (Bus. & Prof. Code § 6152(a)(2).) “A runner or capper is any person, firm, association or corporation acting for consideration in any manner or in any capacity as an agent for an attorney at law or law firm, , in the solicitation or procurement of business for the attorney at law or law firm ” (Bus. & Prof. Code § 6151(a).)
Initially, as noted by MB, Plaintiffs raised the argument that MB violated RPC, 3-210 as the AFA and reduction of the contingency fee was as quid pro quo arrangement and Business and Professions Code sections 6151 and 6152 make it illegal for a person or entity acting for consideration in any manner as an agent for an attorney or law firm in the solicitation of the business of the attorney or law firm. (See ROA 423, Ex. E to Ehrlich Decl., Hogan’s Opposition to Petition to Compel Arbitration, at p. 15.) The Superior Court granted MB’s petition to compel arbitration. (Id., Ex. G to Ehrlich Decl.)
Plaintiffs fail to present admissible evidence establishing that MB advised and had Hogan solicit customers for the Class Action in exchange for a substantial discount on the contingency fee as a quid pro quo exchange for Hogan’s assistance. Plaintiffs’ support for this argument is based on Mr. Hogan’s statement that “MB turned the Hogan family into cappers on behalf of the Class Action.” (ROA 454, Hogan Decl., ¶ 7.) Plaintiffs also cite to Exhibits 2 and 32 of Mr. Hogan’s declaration which consists of the initial fee agreement and the AFA, as well as Exhibit 19, which is “[a] true and correct copy of an email exchange between the PR Firm and MB wherein the PR Firm and MB collaborate regarding turning Respondents into cappers for the Class Action”; Exhibit 27, which is “[a] true and correct copy of an email wherein Louis “Skip” Miller tells Roger Hogan he has answers to his ‘very good questions’ by phone”; and Exhibit 29, which is “[a] true and correct copy of an email…… whereby MB is utilizing Respondents [Plaintiffs] as cappers for the Class Action.” (Id., ¶¶ 2, 3, 34, 42, 44, 47.) The foregoing statements by Mr. Hogan describing the exhibits are not admissible, nor are some of the exhibits cited. However, even considering the admissible portions of these emails, at best, they show that Plaintiffs helped with the Class Action, but they do not establish that they did so for consideration, i.e., reduced contingent fee.
Additionally, there are two agreements which provide for arbitration as it relates to MB’s legal fees—the initial fee agreement and the AFA— and Plaintiffs do not argue that the initial fee agreement was illegal; they only argue that the AFA was an illegal contract.
Based on the foregoing, the Court finds that Plaintiffs have not shown that that the AFA is an illegal contract sufficient to vacate the Final Award.
In conclusion, MB shows the existence of a Final Award, and that there exists a valid arbitration agreement based on a judicial determination of this issue on a prior petition to compel arbitration.
No grounds to vacate the award have been shown. MB’s Petition to Confirm the Final Award is GRANTED, and judgment is entered in conformity with the Final Award.