Timely judicial review is essential in Kirk v. Ratner

The recent decision in Kirk v. Ratner (2022) 74 Cal. App. 5th 1052 (petition for review pending), was the subject of an article appearing in the LADJ on April 27, 2022 (Judicial Review of Arbitration Injunctions, by Gary A. Watt and Patrick Burns). As co-counsel for the Appellants, Charlotte Kirk and Neil Marshall, I would note the following:

First, the appellate court did not affirm the trial court’s decisions to dismiss for lack of jurisdiction a petition to vacate an emergency arbitrator’s issuance of a preliminary injunction. Instead, the appellant court, contrary to Maplebear Inc. v. Busick (2021) 26 Cal. App. 5th 394 (holding that a dismissal of a petition to vacate is subject to appellate review pursuant to Code of Civil Procedure (CCP), section 1294(b)), dismissed the appeal ostensibly for lack of jurisdiction. The appellate court, like the trial court below, never reached the merits of appellants’ arguments.

Second, Kirk v. Ratner, does not reflect dispositive precedent. The issue of whether an emergency arbitrator’s preliminary injunction, which resolves the only controversy submitted to her and who is then “one and done,” is an “award” under CCP section 1283.4 remains one of first impression in California.

Third, the shibboleth that: “The parties bargained for arbitration, and, in turn, a different set of rules,” attempting to justify why injunctions issued by a judge are appealable and injunctions issued by arbitrators are not, is inapplicable to co-appellant Neil Marshall, who was not a signatory to any of the agreements or proposed agreements at issue in the underlying arbitration. As a non-signatory to any arbitration agreement, co-Appellant Marshall could be compelled to arbitrate, if at all, only by a superior court. Benaroya v. Willis (2018) 23 Cal. App. 5th 462, 467.

However, here the Emergency Arbitrator without a predicate court order asserted arbitral jurisdiction over Marshall and issued a preliminary injunction against him. Notwithstanding the clear holding in Benaroya, supra, the court of appeal allowed the Emergency Arbitrator’s preliminary injunction, issued in excess of her authority, to remain in place.

In Berglund v. Arthroscopic & Jones Surgery Center of San Diego LP (2008) 44 Cal. 4th 528, the California Supreme Court addressed how non-parties are afforded different protection than parties who have consented to arbitration. (In that case, the Court held that an arbitrator’s discovery order against a non-party was subject to immediate full judicial review.) The rationale for allowing full judicial review to non-parties involved in third-party discovery ordered by an arbitrator is equally as compelling here in the case of a preliminary injunction issued by an Emergency Arbitrator against a non-party over whom the Emergency Arbitrator had no jurisdiction: “The policy in favor of enforcing arbitration agreements is based on the assumption that ‘parties have elected to use [arbitration] as an alternative to the judicial process.’ But that policy does not extend to those who are not parties to the arbitration agreement and, by definition, have not consented to arbitration.” (Internal citations omitted.) Berglund, supra, 44 Cal. 4th at 539

Fourth, the only reference to provisional relief in the California Arbitration Act (CAA) is CCP section 1281.8 which permits provisional relief to be obtained from a court, not an arbitrator. The grant or denial of such relief is subject to appellate review pursuant to CCP section 904.1(a)(6)). By contrast, the court of appeal’s construction of the CAA, concluding that preliminary injunctive relief issued by an Emergency Arbitrator pursuant to JAMS Rules is immune from contemporaneous judicial review, raises serious constitutional issues when applied to a party who has not consented to arbitration: “…a statutory construction severely restricting a nonparty’s right to judicial review of an arbitrator’s discovery orders would raise serious separation-of-powers concerns insofar as it vested in a nongovernmental body (the arbitrator), and removed from the judicial branch, the authority to determine the legal rights of a person who had never agreed, contractually or otherwise, to be bound by the nonjudicial body’s decisions. The judicial power is conferred upon the courts by the Constitution and in the absence of a constitutional provision, cannot be exercised by any other body.” (Internal citations omitted.) Berglund, supra, 49 Cal. 4th at 538

Similarly, construction of CCP section 1283.4 in a manner which divests the appellate court (and the superior court) of jurisdiction improperly delegates to an Emergency Arbitrator power not granted by the State Constitution. Given the potential impact of preliminary injunctions (whether enforceable by court order or arbitral sanctions), the safeguard of timely judicial review is essential. (A petition for review is currently pending before the California Supreme Court.)

– Jerold Fagelbaum

Fagelbaum & Heller LLP