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Many people are shocked and amazed when they find out that the juries are susceptible to lies of unscrupulous experts or witnesses.  They often state with incredulity that the truth should come out in trial.  Unfortunately, however, the truth doesn’t always come out.  Recently, a study from Australia helped to give a better understanding why people — as voters in an election or voters on a jury — are susceptible to lies.  The simple truth:  Inherent Laziness.

“A study led by Stephan Lewandowsky of the University of Western Australia explains part of what may happen. The researchers found that ‘Weighing the plausibility and the source of a message is cognitively more difficult than simply accepting that the message is true — it requires additional motivational and cognitiveresources.’

If the subject isn’t very important to you or you have other things on your mind, misinformation is more likely to take hold, according to the researchers. They point out that rejecting false information requires more cognitive effort than just taking it in. That is, weighing how plausible a message is, or assessing the reliability of its source, is more difficult, cognitively, than simply accepting that the message is true. In short, it takes more mental work. And if the topic isn’t very important to you or you have other things on your mind, the misinformation is more likely to take hold.”  (Pyschology Today, Why You’re Likely to Believe Political Lies )

When a person does take the time and effort to question the lie, they only take limited mental resources to do so.  They ask questions such as does this fit within my understanding of the world?  Do others believe it?  Is the source reliable?  So in essence, they filter the information even when they are questioning it.  As such, in order for the truth to come out, it must first overcome the mental laziness, and then must find its way through limited mental filters.

The problem with that filtration system is that only information that is consistent with your own beliefs will come through.  So on many occassions, the filter creates a self fulfilling prophecy that the false information will be believed.  In other words a lie is given, filtered, and then believed, which then reinforces your position or belief about issues related to the lie.

Moreover, when someone tries to demonstrate factually that the developed viewpoint is wrong, the entrenched parties often become even further entrenched citing the inaccuracy of the data.  For example, “The GOP had emphasized their conviction that unemployment would remain above 8 percent — and benefit Romney’s campaign. However, following the report that unemployment dropped to 7.8 percent during September, several Republican spokesmen immediately claimed that the figures had been falsified. And despite factual corroboration that the numbers were accurately determined, some doubled-down on their allegation that a conspiracy to cook the numbers must have occurred. ” (pyschology today)

The consequences of this misinformation are dramatic for mediation and litigation.  First, this demonstrates why people might believe the statements of experts.  At first, the information seems to be plausible; second, it fits into the system of beliefs that the juror believes, and thus becomes even more plausible.  Finally, in order for a person to really break down the lie, that juror must really care.  Many jurors do care; but certainly others can’t be bothered.  They don’t care enough to break down the intricate lie.  Thus they decide to accept it.  At least this way, they can go home earlier.

Second, in mediation the problem persists with the parties.  Many times, regardless of what facts you might present to one side or the other, they simply won’t believe the facts.  Instead,  you must work to change their view within their belief system.  In other words, you must find something that they believe and apply it to convince them that the position that they have taken is contrary to their beliefs.   In order to do this you must understand the specific advocacy position as it relates to the negotiation, and then look to their interests and beliefs.

By Steven G. Mehta

One of the advantages of having a mediator is the fact that the mediator is neutral and not so closely connected to the case.  A recent study has confirmed this concept by showing that people who solve problems for others are more creative than those who are thinking of solutions for themselves.

According to Evan Polman and Kyle Emich, we’re more capable of mental novelty when thinking on behalf of strangers than for ourselves.   Studies have previously shown that the more our distance to a matter is, the more abstractly we can imagine a solution to the problem.

According to several studies done by Polman and Emich, participants were more creative in solutions across the board when they were less connected to the issue.  For example, participants drew more original aliens for a story to be written by someone else than for a story they were to write themselves.  Participants also thought of more original gift ideas for an unknown student completely unrelated to themselves, as opposed to one who they were shared the same birth month.  Finally, people were better able to create an escape route from a trapped tower if were thinking of someone else trapped in the tower, rather than themselves.

The study dealt with unknown people.  But it could be affected if we knew who the person was we were helping.  According to the researchers, it will make a difference who we think we’re solving a problem for.

As a mediator, this concept makes sense.  One of the reasons that parties come to mediators is because of the intellectual distance.  The mediator can neutrally evaluate the case and facts from a distance.  In doing so, sometimes the mediator is able to see a solution the parties might not have otherwise have seen in the first place.   As a mediator, it is also important to make sure to not get too closely aligned with one side or the other so as to maintain the ability to see the forest through the trees.

 

By Steven G. Mehta

 

For those of you interested in nursing home litigation and issues relating to arbitration, the court of appeal just issued a new ruling that supports arbitration clauses and addresses the issue of not allowing arbitration where third parties who may not be subject to arbitration exists.

The court in

LASWELL v. AG SEAL BEACH, LLC, found that although an arbitration agreement was signed by one entity, that its related entities that were being represented by the same counsel could also be deemed to be subject to arbitration; and thus were not third parties for the purposes of exercising the court’s discretion to deny arbitration.

The complete decision is set forth below.

Filed 11/9/10

Defendants AG Seal Beach, LLC, AG Facilities Operations, LLC and Country Villa Service Corporation appeal from the trial court’s order denying their petition to compel arbitration of plaintiff Louise Laswell’s action against them for elder abuse and related claims.  Because we conclude that the trial court erred in denying the petition to compel arbitration, we reverse the order and remand the matter for entry of a new order granting the petition.

FACTUAL AND PROCEDURAL BACKGROUND

1.  The Complaint, Answer and the Trial Court’s Grant of Trial Preference

On June 26, 2009, Laswell, by and through her daughter Susan Lyons, under a power of attorney, filed a complaint alleging that Laswell had received improper care and treatment at the 24-hour health facility in Seal Beach where she resided from October 21, 2008 to December 10, 2008.  Laswell was admitted into the facility at age 92 for post-operative rehabilitative care following hip surgery.  In her complaint, she named as defendants AG Seal Beach, LLC, the licensee and operator of the health facility doing business as Country Villa Seal Beach Healthcare Center; AG Facilities Operations, LLC, the owner of AG Seal Beach, LLC and Country Villa Seal Beach Healthcare Center; and Country Villa Service Corporation, doing business as Country Villa Health Services, the management company of Country Villa Seal Beach Healthcare Center in charge of the day-to-day operation, patient care and maintenance of the health facility (collectively, defendants).

According to the complaint, while Laswell resided at Country Villa Seal Beach Healthcare Center, she was neglected, abandoned and abused, resulting in injuries to her body, severe anemia, an infection in the coccyx area, right lower lobe pneumonia and malnutrition.  Laswell alleged causes of action against all defendants for elder abuse under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.); negligence; willful misconduct; and violation of Penal Code section 368, and an additional cause of action against AG Seal Beach, LLC, as the licensee of the health facility, for violation of Health and Safety Code section 1430, subdivision (b).[1] Laswell sought compensatory and punitive damages, statutory remedies, attorney fees and costs.

On August 13, 2009, defendants filed the operative amended answer to Laswell’s complaint, asserting numerous affirmative defenses, including that the matter is subject to binding arbitration.

Soon thereafter, on September 10, 2009, Laswell filed a motion for trial preference under Code of Civil Procedure section 36, subdivisions (a) and (d), on grounds that she was 93 years old and had been certified twice by a physician for hospice care as terminally ill with a life expectancy of less than six months and, as a result, that trial preference was necessary to preserve her interests and prevent prejudice in the matter.  After a case management conference, the trial court granted the motion, noting that Laswell was 93 years old and terminally ill, and set a trial date of February 1, 2010.

2.  The Petition to Compel Arbitration and the Trial Court’s Denial of the Petition

On or about November 19, 2009, defendants moved to compel arbitration, asserting that a valid arbitration agreement provided for arbitration of “any and all disputes or claims . . . arising out of the provision of services by the [f]acility,” defined as Country Villa Seal Beach Healthcare Center, or that “allege violations of the Elder Abuse and Dependent Adult Civil Protection Act.”  According to defendants, the arbitration agreement complied with all of the requirements specified in Health and Safety Code section 1599.81 for arbitration clauses in contracts of admission to health facilities,[2] Laswell had signed the agreement consenting to arbitration, and the agreement had never been revoked.  Defendants thus asserted the matter was required to proceed in arbitration, but Laswell refused to arbitrate the dispute.

Laswell opposed the petition, arguing, as relevant to this appeal, that (1) the arbitration agreement was invalid and unenforceable because Laswell lacked the capacity to execute it; (2) the presence of third-party defendants not subject to arbitration and the possibility of conflicting rulings on common issues of law and fact rendered arbitration inappropriate; and (3) the causes of action for elder abuse and violation of Health and Safety Code section 1430, subdivision (b), are not arbitrable.

In reply, defendants conceded that, as specified in Health and Safety Code section 1599.81, subdivision (d), the cause of action for violation of Health and Safety Code section 1430, subdivision (b), was not subject to arbitration, but argued it was a small component of Laswell’s case, could be litigated in court to determine any statutory remedies and attorney fees after arbitration and should not operate as a pleading tactic to defeat a valid arbitration agreement and undermine the public policy in favor of arbitration.  Defendants also asserted that Laswell had not demonstrated mental incapacity and that all defendants were related Country Villa entities, represented by the same counsel, and would consent to arbitration.

Although the trial court concluded that defendants had made a “prima facie case for arbitration,” it denied the petition to compel arbitration.  Viewing whether to compel arbitration as a discretionary question, the court decided that it would not “make[] sense to send the matter to arbitration” because (1) there were parties who would not participate in the arbitration given that they were not part of the agreement; (2) there were some causes of action not subject to arbitration; (3) the trial date was set for less than two months away and the case would proceed just as expeditiously in court as in arbitration; (4) Laswell was 93 years old and there need not be two proceedings under the circumstances; and (5) the question of arbitration should have been raised more promptly, such as when Laswell had moved for trial preference, although that failure was not necessarily a waiver of the right to arbitrate.

Defendants timely appealed.  (Code Civ. Proc., § 1294, subd. (a) [order denying petition to compel arbitration is appealable].)

DISCUSSION

1.  California Has a Strong Public Policy Favoring Contractual Arbitration and Thus Requiring Enforcement of Valid Arbitration Agreements

A trial court is required to order a dispute to arbitration when the party seeking to compel arbitration proves the existence of a valid arbitration agreement covering the dispute.  (Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263.)  Under Code of Civil Procedure section 1281.2, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that” the case falls into one of three limited exceptions.  (Italics added.)  Similarly, Code of Civil Procedure section 1281 provides, “[a] written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.”  These “‘statutes evidence a strong public policy in favor of arbitration[], which policy has frequently been approved and enforced by the courts.’”  (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 706; Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1282 [“A strong public policy favors the arbitration of disputes, and doubts should be resolved in favor of deferring to arbitration proceedings”].)

One of the limited exceptions to the enforcement of contractual arbitration provisions is where “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”  (Code Civ. Proc., § 1281.2, subd. (c).)  This exception “‘addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.’”  (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 393.)  The exception thus does not apply when all defendants, including a nonsignatory to the arbitration agreement, have the right to enforce the arbitration provision against a signatory plaintiff.  (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 709; RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1519; Rowe v. Exline, supra, 153 Cal.App.4th at p. 1290.)  The exception “‘is not a provision designed to limit the rights of parties who choose to arbitrate or otherwise to discourage the use of arbitration.  Rather, it is part of California’s statutory scheme designed to enforce the parties’ arbitration agreements . . . .’”  (Cronus Investments, Inc. v. Concierge Services, supra, 35 Cal.4th at p. 393.)

If the prerequisites of the exception exist in a particular case, i.e., there are third parties not subject to arbitration on claims arising out of the same transaction or related transactions, and a possibility of conflicting rulings on common issues of law or fact, then the trial court has discretion to deny or stay arbitration.  (Code Civ. Proc., § 1281.2, subd. (c).)  “‘The court’s discretion under [the exception, however,] does not come in to play until it is ascertained that the subdivision applies, which requires the threshold determination of whether there are nonarbitrable claims against at least one of the parties to the litigation (e.g. a nonsignatory).’”  (Molecular Analytical Systems v. Ciphergen Biosystems, Inc., supra, 186 Cal.App.4th at p. 709.)

In general, “[t]here is no uniform standard of review for evaluating an order denying a motion to compel arbitration.  [Citation.]  If the court’s order is based on a decision of fact, then we adopt a substantial evidence standard.  [Citations.]  Alternatively, if the court’s denial rests solely on a decision of law, then a de novo standard of review is employed.  [Citations.]”  (Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425.)  Specifically, whether a defendant is in fact a third party for purposes of Code of Civil Procedure section 1281.2, subdivision (c), is a matter of law subject to de novo review.  (Rowe v. Exline, supra, 153 Cal.App.4th at p. 1283; RN Solution, Inc. v. Catholic Healthcare West, supra, 165 Cal.App.4th at p. 1519.)  If the third-party exception applies, the trial court’s discretionary decision as to whether to stay or deny arbitration is subject to review for abuse.  (Molecular Analytical Systems v. Ciphergen Biosystems, Inc., supra, 186 Cal.App.4th at p. 708; see also Valencia v. Smyth (2010) 185 Cal.App.4th 153, 180.)

2.  Code of Civil Procedure Section 1281.2, Subdivision (c)’s Exception to Enforcement of Arbitration Agreements Does Not Apply Here and Thus the Trial Court Did Not Have Discretion to Deny the Petition to Compel Arbitration

Although concluding that defendants had set forth a “prima facie case for arbitration,” the trial court exercised discretion to deny arbitration, initially concluding that there were defendants who would not participate in the arbitration because they were not parties to the agreement.  The trial court thus at least implicitly concluded that the threshold requirement for application of Code of Civil Procedure section 1281.2, subdivision (c), that there were third parties not subject to the arbitration agreement was met and, as a result, it had discretion to deny arbitration.  But the trial court’s conclusion that Code of Civil Procedure section 1281.2, subdivision (c), applies was erroneous and, therefore, it had no discretion to deny arbitration.

As noted, the arbitration agreement provided for arbitration of “any and all disputes or claims . . . arising out of the provision of services by the [f]acility,” defined as Country Villa Seal Beach Healthcare Center, or that “allege violations of the Elder Abuse and Dependent Adult Civil Protection Act” and was signed by a representative of the facility.  The trial court seemingly adopted Laswell’s argument that the agreement covered only AG Seal Beach, LLC, doing business as Country Villa Seal Beach Healthcare Center—the facility where Laswell had resided—and the presence of AG Facilities Operations, LLC and Country Villa Service Corporation as defendants in the action demonstrated that there were third parties not subject to the arbitration agreement and thus invoked Code of Civil Procedure section 1281.2, subdivision (c).  This argument, however, is faulty because AG Facilities Operations, LLC and Country Villa Service Corporation are not third parties for purposes of Code of Civil Procedure section 1281.2, subdivision (c), and thus the third-party exception does not apply.

“The term ‘third party’ for purposes of [Code of Civil Procedure] section 1281.2[] must be construed to mean a party that is not bound by the arbitration agreement.”  (RN Solution, Inc. v. Catholic Healthcare West, supra, 165 Cal.App.4th at p. 1519.)  “[I]n many cases, nonparties to arbitration agreements are allowed to enforce those agreements where there is sufficient identity of parties.”  (Valley Casework, Inc. v. Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013, 1021.)  In addition, “‘“[t]he equitable estoppel doctrine applies when a party has signed an agreement to arbitrate but attempts to avoid arbitration by suing nonsignatory defendants for claims that are ‘“based on the same facts and are inherently inseparable”’ from arbitrable claims against signatory defendants.”’”  (Rowe v. Exline, supra, 153 Cal.App.4th at p. 1287.)

Although the arbitration agreement defined “facility” as Country Villa Seal Beach Healthcare Center and the agreement was signed by a representative of the “facility,” AG Facilities Operations, LLC and Country Villa Service Corporation equally are bound by the agreement and thus entitled to enforce it against Laswell.  According to Laswell’s own allegations, all of the defendants are related Country Villa entities.  AG Seal Beach, LLC, the licensee and operator of the facility doing business as Country Villa Seal Beach Healthcare Center, entered into a management agreement with Country Villa Service Corporation, doing business as Country Villa Health Services, to operate the facility.  The arbitration agreement in fact was written on letterhead of Country Villa Health Services.  AG Facilities Operations, LLC is the owner of AG Seal Beach, LLC and the facility Country Villa Seal Beach Healthcare Center.  And defense counsel stated in connection with the petition to compel arbitration that all defendants were represented by the same counsel and would participate in the arbitration proceedings.  Further, the substance of Laswell’s allegations is that all of the defendants are responsible for the improper care that she received while she resided at Country Villa Seal Beach Healthcare Center, demonstrating her claims against all defendants are based on the same facts and theory and are inherently inseparable.  Under these circumstances, AG Facilities Operations, LLC and Country Villa Service Corporation can enforce the arbitration agreement against Laswell and thus are not third parties within the meaning of Code of Civil Procedure section 1281.2, subdivision (c).  (RN Solution, Inc. v. Catholic Healthcare West, supra, 165 Cal.App.4th at p. 1520 [individual defendant who signed agreement as agent-employee of corporate defendant and was a third-party beneficiary of agreement was bound by arbitration provision and thus was not a third party for purposes of Code Civ. Proc., § 1281.2, subd. (c)]; Rowe v. Exline, supra, 153 Cal.App.4th at pp. 1284–1290 [individual defendants, although nonsignatories to the arbitration agreement, could enforce its provisions against the plaintiff because he alleged in the breach of contract cause of action that the corporation signatory was an alter ego of the individuals and equitable estoppel principles applied to the other statutory causes of action].)

Because no defendant in this case is a third party to the arbitration agreement, the discretion afforded by Code of Civil Procedure section 1281.2, subdivision (c), does not come into play and thus the trial court erred as a matter of law in denying defendants’ petition to compel arbitration.  (Rowe v. Exline, supra, 153 Cal.App.4th at p. 1290 [when nonsignatories may enforce arbitration agreement, they are not third parties within the meaning of Code Civ. Proc., § 1281.2, subd. (c), and thus the provision does not apply]; RN Solution, Inc. v. Catholic Healthcare West, supra, 65 Cal.App.4th at p. 1521[“Since all of the parties involved in the lawsuit are bound by the arbitration agreement, the fundamental precondition for the application of [Code of Civil Procedure] section 1281.2[, subdivision] (c)—a pending court action or special proceeding between a party to the arbitration agreement and a third party—is absent”]; see also Molecular Analytical Systems v. Ciphergen Biosystems, Inc., supra, 186 Cal.App.4th at pp. 706, 709, 717.)

Laswell’s reliance on Birl v. Heritage Care LLC (2009) 172 Cal.App.4th 1313 for support that Code of Civil Procedure section 1281.2, subdivision (c), applies here is unpersuasive.  In that case, the family of a deceased patient brought an action for elder abuse and related claims against several nursing facilities, a hospital and its affiliated physicians.  (Id. at pp. 1315–1317.)  One of the nursing facilities sought to enforce an arbitration agreement as to certain causes of action, while recognizing the hospital, its affiliated physicians and the two other nursing facilities were unrelated third parties not subject to the arbitration agreement.  (Id. at pp. 1317–1318.)  The appellate court affirmed the trial court’s discretionary denial of arbitration under Code of Civil Procedure section 1281.2, subdivision (c), concluding that the presence of the third-party hospital and nursing facilities invoked the provision and its other requirements were met because conflicting rulings could result against the different groups of defendants on issues such as apportionment of damages among the parties and other nondefendant health care providers based on their own separate care of the deceased patient.  (Id. at pp. 1319–1321.)  Birl v. Heritage Care LLC, therefore, involved actual third-party defendants not subject to the arbitration agreement, all of which admittedly were unrelated to the nursing facility seeking to compel arbitration.  Here, in contrast, all of the defendants are related entities, and Laswell alleges that each is responsible for her improper care at Country Villa Seal Beach Healthcare Center.

Laswell’s reliance on the presence of her nonarbitrable cause of action against AG Seal Beach, LLC, as the licensee of Country Villa Seal Beach Healthcare Center, under Health and Safety Code section 1430, subdivision (b), to avoid arbitration is equally unpersuasive.  A trial court does not have discretion to deny arbitration under Code of Civil Procedure section 1281.2, subdivision (c), absent the presence of a third party, and a plaintiff’s inclusion of a nonarbitrable cause of action in the complaint is not grounds to deny arbitration under the third-party exception.  In other words, the presence of a nonarbitrable cause of action is not sufficient by itself to invoke the trial court’s discretion to deny arbitration under Code of Civil Procedure section 1281.2, subdivision (c):  “The mere fact that some claims are arbitrable and some are not is surely not the ‘peculiar situation’ meant to be addressed by [Code of Civil Procedure section 1281.2[, subdivision] (c)[,] according to our Supreme Court.”  (RN Solution, Inc. v. Catholic Healthcare West, supra, 165 Cal.App.4th at p. 1521.)  As a result, Laswell’s nonarbitrable cause of action under Health and Safety Code section 1430, subdivision (b), which seeks statutory remedies and attorney fees based on the same alleged improper care addressed in her arbitrable causes of action, can be litigated in court after completion of the arbitration.[3]

Finally, Laswell’s advanced age and the trial court’s decision to grant her trial preference have no relevance to whether Code of Civil Procedure section 1281.2, subdivision (c), applies and, given it does not, whether to grant the petition to compel arbitration.  Nonetheless, Laswell’s advanced age should be considered by the trial court, the parties and the arbitrator in scheduling proceedings on remand.[4]

DISPOSITION

The order denying the petition to compel arbitration is reversed and the matter is remanded with directions for the trial court to enter a new order granting the petition to compel arbitration of all causes of action except that against AG Seal Beach, LLC for violation of Health and Safety Code section 1430, subdivision (b).  Defendants shall recover their costs on appeal.

CERTIFIED FOR PUBLICATION.

ROTHSCHILD, J.

We concur:

MALLANO, P. J.

JOHNSON, J.

 


[1] Health and Safety Code section 1430, subdivision (b), allows “[a] current or former resident or patient of a skilled nursing facility . . . or an intermediate care facility . . . [to] bring a civil action against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patient’s Bill of Rights in Section 72527 of Title 22 of the California Code of Regulations, or any other right provided for by federal or state law or regulation.”  Under the statute, “[t]he licensee shall be liable for up to five hundred dollars ($500), and for costs and attorney fees, and may be enjoined from permitting the violation to continue.”  The statute provides that a cause of action thereunder is nonarbitrable.

 

[2] Health and Safety Code section 1599.81 requires that “(a) All contracts of admission that contain an arbitration clause shall clearly indicate that agreement to arbitration is not a precondition for medical treatment or for admission to the facility.  [¶]  (b) All arbitration clauses shall be included on a form separate from the rest of the admission contract.  This attachment shall contain space for the signature of any applicant who agrees to arbitration of disputes.  [¶]  (c) On the attachments, clauses referring to arbitration of medical malpractice claims, as provided for under Section 1295 of the Code of Civil Procedure, shall be clearly separated from other arbitration clauses, and separate signatures shall be required for each clause.  [¶]  (d) In the event the contract contains an arbitration clause, the contract attachment pertaining to arbitration shall contain notice that under Section 1430, the patient may not waive his or her ability to sue for violation of the Patient’s Bill of Rights.”  The parties do not dispute that the arbitration agreement signed by Laswell complied with these statutory requirements.

[3] Because, as noted, the presence of a nonarbitrable cause of action does not trigger Code of Civil Procedure section 1281.2, subdivision (c), Laswell’s additional contention that her elder abuse cause of action is nonarbitrable does not change our conclusion that the trial court lacked discretion to deny arbitration.  Because we direct the trial court to grant the petition to compel arbitration, we note that the elder abuse cause of action may appropriately be resolved in arbitration.  (Hogan v. Country Villa Health Services (2007) 148 Cal.App.4th 259, 263–269 [reversing order denying petition to compel arbitration because daughter had authority to bind mother to arbitration agreement for purposes of an elder abuse cause of action]; Garrison v. Superior Court, supra, 132 Cal.App.4th at pp. 257, 263–267 [daughter’s execution of arbitration agreement required arbitration of damages causes of action, including one for elder abuse].  Indeed, judicial authority on the Elder Abuse and Dependent Adult Civil Protection Act does not “give any indication that the policies favoring enforcement of arbitration agreements [citation] conflict with the policies aimed at ‘protect[ing] a particularly vulnerable portion of the population from gross mistreatment in the form of [elder] abuse and custodial neglect.’”  (Hogan, at p. 269.)  We do not agree with Laswell that Fitzhugh v. Granada Healthcare & Rehabilitation Center LLC (2007) 150 Cal.App.4th 469 stands for the proposition that an elder abuse cause of action is nonarbitrable per se, as the appellate court’s analysis in that case focused on the presence of third-party plaintiffs, who were not subject to the arbitration agreement, and their individual cause of action for wrongful death, as well as noting that the successor claim for violation of Health and Safety Code section 1430, subdivision (b), was nonarbitrable.  (Id. at pp. 473–475.)

 

[4] As noted, Code of Civil Procedure section 1281.2 contains three limited exceptions to the mandatory enforcement of valid arbitration agreements.  On appeal, Laswell primarily defends the trial court’s ruling under subdivision (c) of the statute, which we conclude does not apply here.  She also asserts in one paragraph of her respondent’s brief that the arbitration agreement is not valid because she lacked the capacity to enter into any agreement, presumably suggesting the exception in subdivision (b)—that “[g]rounds exist for revocation of the agreement”—applies.  That assertion lacks merit.  By concluding that defendants made a “prima facie case for arbitration,” the trial court necessarily found that Laswell had the capacity to enter the arbitration agreement.  Substantial evidence—based on medical reports, after she fell and broke her hip, indicating that Laswell was alert and oriented as to person, place and time, lives alone and recounted her daily routine and family illness history—supports the trial court’s finding, and we, therefore, cannot disturb it on appeal.  (Robertson v. Health Net of California, Inc., supra, 132 Cal.App.4th at p. 1425.)  Although in the trial court Laswell also argued the exception in subdivision (a) applies because defendants waived their right to compel arbitration, the trial court did not find a waiver, and on appeal Laswell does not rely on the waiver exception to defend the trial court’s denial of the petition to compel arbitration.

 

By Steven G. Mehta

Recently the topic of the mediator’s proposal came up in a topic of conversation.  Several people had different views on how the proposal should be made, if at all.  I decided that this might be a nice topic for a Mediation Roundtable.  The format of the roundtable is that I have given each mediator 5 questions.  Each mediator’s answer will be in its original form, unedited, and together.  This will provide you with several different views on one topic in one place.  As such, I am presenting to you the topic of Mediator’s Proposal Roundtable:  The Good, Bad and Ugly.

I have been honored by the participation of several prominent mediators in the field.  The mediators are listed in no particular order:

Lee Jay Berman, President of the American Institute of Mediation. (To learn more about Lee Jay on video, click here)

Richard Webb, the Principal of Healthcare Neutral, LLC

Don Philbin, an exceptional business mediator from Texas.

And, last, but certainly not least,

Jeff Thompson, N.Y. city police officer, mediator, and famous blogger.  (To see a video on Jeff, Click Here)

1.  Do you think the mediator’s proposal has value in today’s modern mediation environment?  and why?

Jeff:  Sure it has value.  When looking through the lens of “it’s their (the party’s) process, if they want a proposal we should give it to them.”  Of course, me being me, I do not think it is that simple.  We are mediators and have to make sure we do not cross certain lines.  Main pillars of mediation include, I believe, confidentiality, informality, and self-determination.  It is in self-determination where the mediator’s proposal enters the colorful area (think sort of like the ‘grey area’ but why not look at things in beautiful colors instead?!?) of possibly crossing the line and is it still mediation?

To be short and simple, I think the mediator’s proposal is like caucusing.  It should not be relied on and be used in only certain circumstances- primarily when a stalemate endures and has the potential of breaking apart the mediation.   That is also if the mediator is comfortable with even using a proposal.  Some people, including me generally, feel it is should not be used.

For those that do use it, the ‘proposal’ I think should actually be used more sparingly than the caucus as well.  If it becomes a  frequent tool in the ‘mediator’s toolbox’ the fear I have is the parties become more dependent on the ‘proposal’ compared to generating their own options.

I think it is important also to question what your definition of the mediator’s proposal is.

I think there might be different versions floating around the ADR world.  Is it spontaneous or preplanned in the agreement to mediate?  Does the mediator write up his/her proposal before?  Is it in a sealed envelope lurking on the table the entire time as a reminder? Perhaps in the inner suit jacket pocket discreetly but ceremoniously tucked away to start the mediation off.

Lee Jay: Yes, I think any mediator technique that helps resolve a difficult case with entrenched parties has a place.  While I don’t typically use them, and caution against the over-use that some mediator practice, they are handy on rare occasion



Richard:  Yes, it has value, if used effectively to reach a settlement that would otherwise slip away.  Sometimes, parties or their counsel, despite their best efforts, cannot bring themselves to take the last step towards the
outcome that is staring them in the face. Sometimes they don’t want to “give in” or “lose.” Sometimes there is a strange reluctance to end the battle that has become such an important part of their lives. If the mediator can
help them make that final leap, that’s a good result, in my view.

Don:  Yes.  They can be effective impasse breakers late in the game.  But they can also be the right answer at the wrong time, which is the wrong answer.



2. Is the mediator’s proposal being overused or not used enough by mediators?

Richard:  I can’t say with any certainty, but my impression from my own legal practice and talking to lawyers is that it is being overused incorrectly. By this I mean the tendency of many mediators, particularly retired judges, to “size
up the case” and tell the parties “how this is going to come out in court.” Although I reject this approach as inconsistent with the true spirit of mediation, I must also admit that some cases are settled after this sort of
“mediator’s proposal” is offered. Other than this overuse, I believe mediator’s proposals are being made, but usually upon request of the parties.

Jeff: Well, (and I laugh as I type this), I don’t use it. Actually, from my recollection, I used it in an informal approach once.

In the particular situation, two parties were discussing the issue of a 5 figure sum of money and one party possibly owing the other the amount.  The two (along with my assistance of course!) narrowed it down to roughly $300 dollars difference.  As one party got up to leave, he/she said, “That’s it, we can’t work it out.  Jeff, thanks, it’s not your fault but I have to go.”

What I did was spur of the moment and asked the person to sit down.  My very brief comment included some stroking, a splash of reality testing and an unplanned mediator’s proposal.  I realized each did not want to give in so I drew (again) on a large piece of paper (by the way, the topic of including visuals is grounds for another whole discussion!) where each started, how far they each have come and how small the difference had become now.  I finally gasped, and said flat out, “Why don’t you both just split the last amount and each come $150 closer together?” After a further brief discussion, they decided… well the end does not matter, right?

Don:  Don’t know.  Since it risks impartiality and has other consequences, I leave it at the bottom of my toolbox.  I will use it, but don’t reach for that tool in round two.




Lee Jay:  It depends on the mediator.  I define the mediator’s proposal as the exact point in time where the mediator ran out of skills.  Some mediators will exhaust their entire toolbox by 1pm, others will continue to call upon skills and techniques until the wee hours of the night.  So, mediators who don’t read about mediation, who don’t take training courses or attend conferences to learn more skills tend to over-use the proposal because they just don’t have that many arrows in their quiver.  I see it also overused by mediators who think the process is all about them, rather than the parties and their lawyers.  Some mediators use it as a tool of self-importance in a way that says, “Here, I’ll resolve this for you.”

3.  What circumstances are necessary before you would consider making a mediator’s proposal?

Lee Jay: All efforts to reach a mutually agreeable resolution have failed, collaborative win-win negotiation is no longer possible, we’re just talking straight compromise and just about the money, and there is nothing that the mediator has left to do except put their own suggestion on the table.  Also, when lawyers have very difficult or proud clients, or insurance adjusters who need to go and get more authority, then the mediator’s proposal sometimes helps those clients (and lawyers) save face.  After all, when people say, “Why don’t you give us your proposal?” what they’re really saying is, “We want to move more, but we can’t find a way to do it through traditional negotiation, so we’ll move, but only to a number that you set.”  Sometimes, too, parties don’t want to give in anymore to the other party, but they will do so for the mediator or because the mediator says that they need to do so.

Jeff:  I think it is important in most cases, contrary to my approach mentioned above, to have the conversation with the parties during intake/prescreening.  Find out what their wants and expectations are.  If you come out of left field with the proposal, your good intentions could be like expecting to go for a stroll on Mount Wai-‘ale’ale and not expect to get wet!


Don:  Other impasse breakers have not worked and I am comfortable that the proposal will be viewed by all parties as a workable, if not perfect, solution.



Richard: I would offer a mediator’s proposal only upon the request of both parties, and after substantial efforts to resolve the dispute through mediation. I see it as a last step in the mediation process, a way to bridge a final
impasse, based upon the efforts and movement of the parties prior to that moment.  By its nature, the mediator’s proposal leaves the mediator with no place to go if it is not accepted by both parties.

4. Do you feel that the parties (or their counsel) are taking advantage of the mediator’s proposal process?

Jeff:  I have been asked frequently the question of, “What do I think,” and other similar questions all mediators experience.  I do not have the mediator’s proposal as part of my agreement forms and it is not brought up during intake so for me, it is tough to gauge if the party is really attempting to take advantage of me or the proposal as there is no formal proposal hanging from the chandelier.



Richard:  I know there is some thought that savvy counsel are using the mediator’s proposal to leverage their client’s position; that is, intentionally mediating towards impasse rather than towards settlement with the hope that
the mediator’s proposal will be more favorable than a negotiated outcome. This was the subject of John DeGroote’s post in his blog, Settlement Perspectives:
http://www.settlementperspectives.com/2008/12/the-mediators-proposal-a-great
-tool-for-yesterdays-disputes/
; to which I replied in my Healthcare Neutral ADR blog at:
http://www.healthcareneutraladrblog.com/2008/12/articles/healthcare-mediation/the-mediators-proposal-too-much-of-a-good-thing/ Unfortunately, I think many counsel looking for a mediator’s proposal are more lazy than savvy. They either don’t understand or are not willing to work at the mediation process as it is intended, and prefer to have some third party conform their client’s expectations to a final result.

Don:  They are under pressure to keep costs down and speeding up the process is one way to do that.





Lee Jay: Yes, I think it’s often one of two things, either it is conditioning from judges conducting settlement conferences that way that has “trained” lawyers that this is how it is done, or it is people who are averse to prolonged distributive bargaining (2-3 moves, and then they ask for the mediator’s proposal), and sometimes, that person is the mediator!

Sometimes, though, I think seasoned negotiators will play for the proposal. By that, I mean they will architect an impasse that is bracketed where they want it so that the mediator will make a proposal near the midpoint (as many mediators will do), and they will get their way. By way of illustration, if the plaintiff is at $200,000 and the defendant is at zero, the defendant may pretend to have topped out at $60,000 and see how far they can get the plaintiff to continue to reduce their demand with the hopes of setting up an impasse between $60,000 and $80,000 or $90,000, enabling them to set up a potential mediator’s proposal at $75,000 or $80,000. Plaintiffs do it too, stopping their declining demands at $135,000 or something in that ballpark to see if the defendant will come up to $100,000, setting up a mediator’s proposal at $115,000 or $120,000. This is the concern about medator’s proposals – that they can be manipulated. If we’re assuming that the mediator’s proposal is intended to pick a number (assuming all other terms have been agreed to) where the case is most likely to settle, rather than a number that represents the mediator’s perception of the “true value” of the case (like a non-binding arbitration), then we mediators leave ourselves open to being gamed by skilled actors, pretending they have run out of room to move and forcing our hand to pick a number.

5. Each mediator does things differently.  What do you think is the ideal way to introduce a mediator’s proposal into a negotiation?


Don:  Wait until the parties are close, other impasse breakers have failed, both parties want to get a deal, but neither wants to blink.  Use it as an extension of the “What if” testing – “if this case could settle for ____, would that work for you?”


Lee Jay: When the parties are absolutely stuck and they have both dug their heels in and have refused to move another inch, yet they’re counting on me to pull a rabit out of a hat to help them settle, then I generally pull the attorneys aside into a separate room or reconvene a joint session with everyone and tell them that it’s my impression that we are stuck, that nobody is willing to move any more and I’ll ask them what they want to do (usually reminding them that it is completely non-economic to go to trial over the small amount that separates them at this point). Generally, that’s when they ask or I finally suggest the concept of a mediator’s proposal. I then explain (usually just to the clients) how I do it – double blind, where neither gets to know the other’s answer unless they both say “yes”, and we discuss whether we’re going to do it right there on the spot, or whether we need to give people 24 or 48 hours to consider them and report back. I find that if we’re not going to collect their answers immediately, then giving people through a weekend is effective, so that the parties can go home, talk with spouses and others, and see the big picture perspective more clearly, in which case a $10,000 difference on a six-figure settlement takes its rightful place as minutia.

The dangers I see with mediators’ proposals, other than the manipulation described above, is that some mediators mis-use them by offering them too soon when the parties are too far apart and aren’t yet invested in them, or that mediators use them in most every case, where they become predictable, opening the mediator up to further manipulation.

Mediators’ proposals have a place and time, like every other tool that mediators use. And different mediators will use them at different times. It’s just important to remember when using a mediator’s proposal that the right answer at the wrong time is indeed the wrong answer.

Richard:  To me, the mediator’s proposal comes only upon request of both parties, when it is clear to the mediator that settlement will not occur otherwise. I differentiate this from a mediator’s brainstorming proposals and reality
testing, which can be used early and often, in that the mediator’s proposal carries with it the mediator’s sense of judgment and credibility. It is to be used sparingly.


Jeff:  As already mentioned above, perhaps the standard should be the proposal is discussed prior to the mediation.  Of course there are acceptations to the rule but I think that instead of it actually being a rule, it is more like a guide for the mediator.  Also, I think the idea of even bringing it up should depend on the type of case you might be mediating.  Would a mediator’s proposal be more likely in a case between two former partner attorneys compared to a mediation over a type of quality of life issue such as a noise dispute between neighbors?  Sure, I think so, but then again, using the analogy of everything is different shades of different colors, I think everyone will find out for themselves, and find their own ‘color’ and groove which is most comfortable for their mediation style.  One final thing I would add is I think one’s training affects their use of the mediator’s proposal as well as their background (i.e. an attorney or arbitrator).

Thank you all for your wonderful contribution to this topic.

Steve’s Book

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