[00:00:00] Speaker 04: organized and disciplined counsel so that's smart may please the court my name is David Merrick I'm here for the appellant and the claimant Gilbert Riley we are appealing the order from the district court [00:00:19] Speaker 04: I'm going to address the two primary things. [00:00:24] Speaker 04: One is the standard, which is whether the FAA or the CAA should apply to this solution. [00:00:30] Speaker 05: I wanted to ask you about that because does it even matter in this case? [00:00:35] Speaker 05: I was really straining to figure out how the CAA or the FAA application would make a difference. [00:00:41] Speaker 04: We don't think that it does matter very much. [00:00:43] Speaker 05: We think that the CAA... It strikes me that the CAA should apply, but are you challenging it saying, because the arbitrator said it was FAA, right? [00:00:56] Speaker 04: The arbitrator wrote the FAA. [00:00:58] Speaker 04: The district court said it was the FAA. [00:01:01] Speaker 04: We think it should be the CIA. [00:01:02] Speaker 05: Did the district court say it was the FAA as a matter of law or because he was deferring to the arbitrator? [00:01:14] Speaker 04: looked at the language in the relevant arbitration agreement and said that that language would not meet the standard of clear intent to show that the California arbitration law applies. [00:01:27] Speaker 05: That strikes me as clearly wrong, what the district court said, but the bigger question I had about this is [00:01:33] Speaker 05: The rule, as you know, I mean, you got an uphill battle. [00:01:38] Speaker 05: I don't think I'm telling you anything new to challenge because you have to show that not only was it wrong, but that the arbitrator knew what the right law was and then ignored the right law. [00:01:51] Speaker 04: Not for, respectfully, sir, not for the evident partiality standard. [00:01:56] Speaker 04: I think what you said is the standard for, let's say, manifestos in regard to the law. [00:02:00] Speaker 05: Right. [00:02:01] Speaker 05: Well, I guess what I'm wondering is whether the manifest disregard for the law applies to the CAA and the FAA issue. [00:02:09] Speaker 05: Because it seems like a legal issue. [00:02:11] Speaker 05: So what if we said, well, you got it wrong, but you doesn't meet the manifest [00:02:17] Speaker 04: Disregard the law. [00:02:19] Speaker 04: Again, if the question is, are we arguing that the arbitrator's application of the FAA itself was manifest disregard of the law, we have not raised that issue in our briefs, actually. [00:02:33] Speaker 04: The reason why, while the arbitrator did say repeatedly the FAA applies, the arbitrator never actually applied the FAA to any particular ruling. [00:02:42] Speaker 04: I see. [00:02:42] Speaker 04: So the parties consistently acted as if [00:02:46] Speaker 04: the CCP, the CAA applied, and the issues that have come up, everyone was using the CCA. [00:02:53] Speaker 04: That's why we think the CAA should apply to the vacatur standard as well. [00:02:58] Speaker 03: Can I ask, the requirement of filing a certificate and having the arbitrator sign it and serve it on the parties, is that part of the CAA or is that just a general, or is that a provision within the Code of Civil Procedure itself? [00:03:14] Speaker 04: I think the answer is both, sir. [00:03:16] Speaker 04: The CAA is a subset of the CCP. [00:03:19] Speaker 04: But that particular provision- Is part of the CAA as well. [00:03:22] Speaker 04: People typically call the CAA, I think it's like 1280 to 1294 of the CCP. [00:03:28] Speaker 04: That's 1282.4. [00:03:31] Speaker 04: The way the CAA is described, it's normally those 14 sections. [00:03:37] Speaker 03: Because it seemed to me that the party ... The actions by the parties also was a bit of a muddle whether CAA or FAA applied because if the arbitrator felt bound by this California rule, then it would seem that the arbitrator was applying the CAA at least to some extent during the arbitration proceedings. [00:03:57] Speaker 04: Yes, sir, I think there's almost no debate that the CAA applied to the arbitration proceedings to some extent. [00:04:03] Speaker 04: In fact, what the district court seems to be addressing really is if there's a heightened standard for vacatur. [00:04:10] Speaker 04: But if you read the arbitration agreement that the parties entered into, I would say it's almost cannot be seriously debated. [00:04:20] Speaker 04: I mean, we could look at that language. [00:04:23] Speaker 05: Do you think that there's a lower standard for vacatur under the CAA than the FAA? [00:04:29] Speaker 05: I got to be honest. [00:04:30] Speaker 05: I didn't see that. [00:04:31] Speaker 04: I don't really know. [00:04:32] Speaker 04: As we said, we cite to the Schaeffer case from the Northern District. [00:04:36] Speaker 04: That case says that the standards are virtually, I don't want to say they're identical, but most of the time you will get the same result. [00:04:44] Speaker 04: Certainly, if I talk about the non-disclosure issue, whether that's under the FAA, it's 10A2, and under the CAA, it's 1286A6A. [00:04:56] Speaker 05: The language is slightly different, but I couldn't tell how you'd reach a different [00:05:01] Speaker 04: That's who I feel. [00:05:02] Speaker 04: And again, I'll even add particularly here because California law applies either way. [00:05:07] Speaker 04: And so California law requires that the arbitrator follow the arbitrator, the ethics standards that the California legislator set. [00:05:15] Speaker 04: And no one can deny here that the arbitrator was required in a case of this type. [00:05:21] Speaker 04: He's bound by those arbitrator standards, the ethical standards. [00:05:24] Speaker 04: And that's where the disclosure arises. [00:05:26] Speaker 05: So can we move into the kind of the gist of the substance of your argument as to that? [00:05:31] Speaker 05: Yeah. [00:05:32] Speaker 05: I get that there was some strangeness, probably some misapplication. [00:05:39] Speaker 05: It didn't comply with the rules exactly. [00:05:44] Speaker 05: I'm not sure I understand why that leads to bias. [00:05:47] Speaker 04: Yeah, well, the first question is, was there a nondisclosure? [00:05:50] Speaker 04: I mean, if you look at, like, say, the Grabowski case that we cite. [00:05:53] Speaker 05: Let's give it that there was nondisclosure of the certificate you're saying. [00:05:56] Speaker 04: Well, no. [00:05:57] Speaker 04: It's, was there a nondisclosure of a required, of something that was required to be disclosed? [00:06:02] Speaker 04: That's the issue. [00:06:02] Speaker 04: That says the Grabowski Court, Appellate Court, frames it perfectly. [00:06:06] Speaker 04: The sole issue is, was there information that was required to be disclosed? [00:06:11] Speaker 04: That is the sole issue. [00:06:12] Speaker 04: And here, it cannot. [00:06:14] Speaker 05: And if that happens, then it's automatically biased? [00:06:17] Speaker 04: It has to be vacated. [00:06:19] Speaker 04: If he fails to disclose something that he has to disclose, then it has to be vacated. [00:06:24] Speaker 04: Now, there's questions of what does an arbitrator have to disclose? [00:06:28] Speaker 04: A lot of times, in cases this court has looked at, such as Schmitz or Woods, New Regency, the court gets into a sort of very detailed analysis of what has to be disclosed, things like [00:06:42] Speaker 04: a person whose law partner had a relationship 10 years ago with one of the parties. [00:06:46] Speaker 05: Well, but that seems different. [00:06:48] Speaker 05: I mean, what has to be disclosed? [00:06:51] Speaker 05: is different than a delayed disclosure? [00:06:56] Speaker 05: It ultimately was disclosed, right? [00:07:00] Speaker 05: Well, after the hearing. [00:07:01] Speaker 05: I understand. [00:07:02] Speaker 05: Yeah. [00:07:02] Speaker 05: But what would it have changed? [00:07:04] Speaker 05: If there was a relationship, you could go back and say, oh, no, you're biased. [00:07:08] Speaker 05: But here, it's a procedural administrative thing. [00:07:12] Speaker 04: I think that's the wrong question, is what would it have changed? [00:07:15] Speaker 04: Just like in any of these nondisclosure cases, you don't look at the outcome. [00:07:21] Speaker 04: what it would have changed is we should not be subject to an arbitrator who was willing to engage in this conduct. [00:07:27] Speaker 04: The conduct the arbitrator engaged in was plainly unethical. [00:07:30] Speaker 04: Ethics standard 14B set by the legislator makes no, no one has argued and no one can argue that that was legitimate conduct under 14B. [00:07:39] Speaker 04: 14B says that he must disclose to us anything he gets outside of our presence. [00:07:44] Speaker 05: He must- Well, hold on. [00:07:47] Speaker 05: I don't think he received anything from the parties. [00:07:51] Speaker 05: The clerk did. [00:07:54] Speaker 05: I mean, it was an administrative matter. [00:07:56] Speaker 04: No, sir. [00:07:56] Speaker 04: He makes clear, as he must, that he only looks ... He says this. [00:07:59] Speaker 04: The arbitrator says this on page 454, footnote one of the record. [00:08:05] Speaker 04: He says he only looks at things that comes through Jams Access. [00:08:08] Speaker 04: That's the same service similar to what this court has. [00:08:12] Speaker 04: So he has a point of saying to ensure that he does not see things that are ex parte, he will only look at things that come through Jams Access. [00:08:19] Speaker 04: That's also how Jams sent correspondence to the party saying everything must be served on Jams Access. [00:08:25] Speaker 04: He has his own rule that he violated. [00:08:28] Speaker 04: to ensure that this doesn't happen the fact that he violated his own rule looked at something that did not come to him on jams access something instantly that that form that he looked at also as we know is only allowed to be approved if it was served he knows it's not served because he knows [00:08:47] Speaker 03: I sort of share Judge Nelson's point of view that you're trying to create some sort of strict compliance regime out of this in a way that the cases don't suggest do that. [00:09:02] Speaker 03: For example, the arbitrator did cut back many of the attorney's fees that one of the out-of-state lawyers had spent time on. [00:09:15] Speaker 03: Why would that indicate bias if the arbitrator recognized that something had been served on the parties, but then certain parts of that fee award should be taken back? [00:09:27] Speaker 04: All of these cases talk about, it's the non-disclosure that we focus on. [00:09:31] Speaker 03: But it's a non-disclosure of, for example, a personal financial interest or an offer for employment at a law firm or other things. [00:09:37] Speaker 04: Respectfully, the California law does not say that. [00:09:41] Speaker 04: It's non-disclosure to anything that must be disclosed under the ethics standards. [00:09:45] Speaker 04: That's 1281.85. [00:09:47] Speaker 04: This court's adopted that in Johnson, and it's the law of California. [00:09:51] Speaker 03: If the legislator wanted to limit it... But is there any case that equates a technical violation of the out-of-circuit with an ethical lapse? [00:10:02] Speaker 04: No, sir, but those are two different things. [00:10:04] Speaker 03: No, I know, but so you're sort of circling around the argument, the question I'm trying to make. [00:10:12] Speaker 03: You're saying a technical violation should be enough, and you're pointing to the ethical rules, but you're not giving me a case that says that a technical violation automatically means an ethical violation. [00:10:25] Speaker 04: No, no, I just want to be clear. [00:10:27] Speaker 04: There's two distinct things. [00:10:29] Speaker 04: He violated the ethics standards because he was required to tell us anything that comes to him. [00:10:35] Speaker 04: Separately, as it turns out, the thing here that he didn't tell us was that he, in non-compliance with the law, approved 1282.4. [00:10:46] Speaker 04: There could have been a lot of things he didn't tell us. [00:10:48] Speaker 04: Here, what makes this so shocking in our mind is we literally have an arbitrator 14 days before a hearing [00:10:55] Speaker 04: who fails to tell us that he did not comply with the law to give them something that they want that was a great benefit to the other side. [00:11:03] Speaker 04: If I am a person and I hear that I'm going into arbitration, and it's a possibility that the arbitrator is not going to tell me that he doesn't follow the law to help one side, but that sounds- Counsel, I think that's the problem is that you made a comment of great benefit to the other side. [00:11:20] Speaker 05: I don't understand how this is a great benefit to either side. [00:11:25] Speaker 04: Sir, well, without doing that, their counsel would not be... Two weeks before the hearing, their counsel could be disqualified. [00:11:34] Speaker 05: I don't think that's right because they ultimately didn't disqualify Farron and Farron never even applied. [00:11:40] Speaker 05: No. [00:11:41] Speaker 05: I mean... Different. [00:11:44] Speaker 04: It is correct that had they never done it, it would have been fine. [00:11:47] Speaker 05: If they had never done it, we're in a different world. [00:11:50] Speaker 05: But doing it. [00:11:51] Speaker 05: OK, so we've taken you over, but I do want to ask this one last question. [00:11:56] Speaker 05: Because the statute does say shall be a basis for qualification. [00:12:03] Speaker 05: I think I. Shall be grounds. [00:12:06] Speaker 05: Shall be grounds. [00:12:08] Speaker 05: That's different than shall result. [00:12:12] Speaker 05: in disqualification. [00:12:13] Speaker 04: Sir, not if you read the sentence before it, though. [00:12:16] Speaker 04: Okay. [00:12:16] Speaker 04: The sentence before it is a may. [00:12:18] Speaker 04: It says, if the applying attorney does these things, the arbitrator may approve them. [00:12:25] Speaker 04: Failing to do these things shall be grounds for disqualification. [00:12:28] Speaker 05: Shall be grounds, but that doesn't mean... Is there a case that says you have... [00:12:34] Speaker 05: California can do whatever it wants. [00:12:36] Speaker 05: It does a lot of stuff. [00:12:38] Speaker 05: But that strikes me as a very harsh rule to not give any discretion. [00:12:43] Speaker 05: And Shelby Grounds, in my view, builds in some discretion. [00:12:48] Speaker 04: Again, sir, I'm going to yield my time. [00:12:50] Speaker 04: But I will say, from our perspective, the issue is not, that's an issue for the manifesto regarding the law. [00:12:55] Speaker 04: The issue for the non-disclosure is not getting into the details on [00:13:00] Speaker 04: How does 1284 work? [00:13:01] Speaker 04: It's simply he's required to tell us certain things, and by all accounts, the legislator of California has required arbitrators to tell us if they receive things from the other side and if they make decisions based on those things. [00:13:15] Speaker 04: He didn't tell us when he received it, he didn't tell us when he made the decision, and he didn't tell us after he made the decision and returned it to them, and that creates the impression of something less than impartiality. [00:13:27] Speaker 04: And that is the problem. [00:13:28] Speaker 04: So, again, I don't think the focus on 1284. [00:13:31] Speaker 04: I think the focus is on that he didn't tell us something. [00:13:35] Speaker 04: Again, what he didn't tell us is troubling in its own right. [00:13:37] Speaker 05: Okay. [00:13:38] Speaker 05: Thank you. [00:13:38] Speaker 04: Let me yield my time. [00:13:39] Speaker 04: I'll thank you, sir. [00:13:45] Speaker 00: Good morning. [00:13:45] Speaker 00: May it please the court? [00:13:46] Speaker 00: My name is Emmy. [00:13:47] Speaker 05: We'll have four minutes on this. [00:13:49] Speaker 00: Thank you, Your Honor. [00:13:51] Speaker 00: I wanted to talk about manifest disregard of the law, and I think we had actually sort of gotten ourselves very close to the section that I wanted to discuss with respect to 1282.4. [00:14:01] Speaker 00: The California legislature, after the decision in Baerbauer, enacts 1282.4 as a way for out-of-state arbitration counsel to be able to be admitted or to be able to represent clients in the state of California. [00:14:18] Speaker 00: And that requirement to represent a person will be that the out-of-state attorney must satisfy three things. [00:14:25] Speaker 00: One is timely service of the OSAC certificate that's described in the statute. [00:14:29] Speaker 00: Two is getting the appearance approved by an arbitrator. [00:14:32] Speaker 05: And three is filing that certificate, bearing the arbitrator's approval to the state bar and... There is a fourth, which is work under the direction of a California barred attorney. [00:14:47] Speaker 00: And what the arbitrator himself recognizes with respect to the law is when you have an attorney who appears in the case, at that point, you are no longer sort of permitted to get fees or be considered working under the California attorney. [00:15:03] Speaker 05: Right. [00:15:04] Speaker 05: But what's wrong with just saying, well, you weren't properly admitted until it was disclosed? [00:15:11] Speaker 05: You agree that at least two weeks after the decision, I understand the timing is a little odd. [00:15:17] Speaker 05: But at that point, he's admitted, because then everything was complied with, right? [00:15:24] Speaker 05: Or would you say it still wasn't complied with because it wasn't timely? [00:15:28] Speaker 05: I would argue it wasn't timely, and I would argue that the- So then let's just say that it's a null and void action, and he never did comply with going through the approval process. [00:15:43] Speaker 05: Why don't we just say, [00:15:45] Speaker 05: Yeah, but he's working under the direction of a California attorney. [00:15:48] Speaker 05: I don't understand why the minute that you filed something wrong, all of a sudden, it changes the whole picture and puts Gordon in a different bucket than Farron. [00:15:59] Speaker 00: Sure. [00:16:00] Speaker 00: Well, a few things. [00:16:01] Speaker 00: Number one, I think looking at what the arbitrator recognized as the law and then what the arbitrator applied and then disregarded is particularly important. [00:16:09] Speaker 00: In the arbitrator's decision, he recognizes that out-of-state attorneys pursuant to Beerbauer [00:16:14] Speaker 00: may not collect fees in the state of california because there is a prohibition against it he recognizes that twelve eighty two point four applies here because the california legislature enacted it as a way to be able to let out-of-state attorneys apply he also recognizes under GOLBA that when an attorney and out-of-state attorney appears in the case which as we have argued Mr. Gorman appeared in the case well no you're actually arguing he [00:16:39] Speaker 00: Well, you're appeared in the case as a California attorney or just appeared in the case He appeared in the arbitration in October when he argued a demurrer motion and at that point he had not attempted to file the certificate and he had not engaged in any compliance with 1282.4 and as a result the arbitrator working under the direction of a California and [00:17:00] Speaker 00: But even the arbitrator recognizes that as of October, his billings were uncollectible under the law of California. [00:17:06] Speaker 00: So that is why as of October to March, the arbitrator renders about $155,000 of billings as uncollectible. [00:17:15] Speaker 05: So your argument on here is really there should have been a bigger haircut on the fees, because the arbitrator awarded fees that shouldn't have been awarded. [00:17:24] Speaker 00: are yes our argument boils down to the fact that we have out-of-state attorneys that practiced in violation of the unauthorized practice of law prohibition in california why don't you get that's true they appeared in the case that i have been to you [00:17:38] Speaker 05: But you can appear in the case if you're working under the direction of a California attorney. [00:17:42] Speaker 05: I think you've got to be careful. [00:17:45] Speaker 05: You're making an allegation that they were engaged in the unauthorized practice of law. [00:17:49] Speaker 05: That's not true. [00:17:51] Speaker 05: So if you want to argue the technicalities, that's fine. [00:17:55] Speaker 05: But that's a pretty serious allegation to allege against other counsel. [00:17:58] Speaker 00: With all due respect, Your Honor, when the arbitrator found that as of October, he found that Mr. Gorman had appeared and therefore was not eligible until he was in compliance. [00:18:08] Speaker 00: For fees. [00:18:09] Speaker 00: For fees, correct. [00:18:10] Speaker 05: But that's different than the unauthorized practice of law. [00:18:12] Speaker 00: Understood. [00:18:13] Speaker 05: Well, I want to make it clear, because that's a serious allegation to push against another counsel. [00:18:18] Speaker 00: I understand. [00:18:19] Speaker 00: For fees. [00:18:19] Speaker 00: And to grant, our argument is to grant the fees to an out-of-state counsel. [00:18:25] Speaker 05: OK, fair enough. [00:18:26] Speaker 05: I think we have your argument. [00:18:27] Speaker 00: OK, thank you, Your Honor. [00:18:42] Speaker 02: Good morning. [00:18:44] Speaker 02: May it please the court, I'm Marina Sitalis, and I represent the Apoli Quantum Scape Corporation. [00:18:49] Speaker 02: As a matter of first instance, Your Honors, the issue on this appeal is whether an unserved application for admission by an out-of-state attorney, in this case, my associate, Mr. Gorman, that satisfied all of the substantive requirements and was therefore granted by the arbitrator without him knowing that it hadn't been served on opposing counsel [00:19:09] Speaker 02: constitutes a manifest disregard of the law, misbehavior, or establishes evident partiality, I would say under the standards established under the Federal Arbitration Act. [00:19:20] Speaker 02: In this appeal, the appellant doesn't challenge the application of the Federal Arbitration Act by the arbitrator. [00:19:26] Speaker 02: The issue he presents is whether the standard that was used by the district court to vacate or confirm the award should have been the FAA or the CAA. [00:19:36] Speaker 02: The law is clear that where the FAA's rules govern an arbitration, a reviewing court must also apply the FAA's standards for vacatur. [00:19:45] Speaker 02: In addition, every order that was issued by the arbitrator, every order, including in his final order, he made clear that the FAA governs this arbitration. [00:19:54] Speaker 03: Can I ask, what if we disagreed with you as looking at the agreements de novo, whether the FAA should have applied? [00:20:02] Speaker 03: Because I think there's quite a bit of a muddle between the different agreements, the consulting agreement and the separation agreement. [00:20:12] Speaker 03: And even the language within the consulting agreement seems almost at odds with each other. [00:20:17] Speaker 03: So what happens then if we thought, we think the CAA should have applied here? [00:20:24] Speaker 02: Your Honor, under the California Arbitration Act, I actually feel that the standard is somewhat more favorable. [00:20:31] Speaker 02: They are taking the position that it's 1286.2A6A, 1286.2A4, and A3. [00:20:40] Speaker 02: and really the one that they focus on is A6A. [00:20:43] Speaker 02: A6A, the party challenging the arbitration award, has the burden of proving actual awareness, not inquiry or constructive awareness. [00:20:52] Speaker 02: So it differs from the evident partiality standard under the FAA. [00:20:56] Speaker 02: The evident partiality standard under the FAA has two prongs, non-disclosure or actual bias. [00:21:02] Speaker 02: The CAA's counterpart only provides for actual bias, and that's why you saw in Grabowski [00:21:08] Speaker 02: that was a California Arbitration Act case. [00:21:11] Speaker 02: And the question was, was there evident partiality? [00:21:15] Speaker 02: And they analyzed it for purposes of actual bias. [00:21:18] Speaker 02: There wasn't an issue of non-disclosure in Grabowski because that doesn't exist under the California Arbitration Act. [00:21:24] Speaker 02: And so I would say that it's a more favorable standard, and there's really no discussion of nondisclosure for purposes of vacature under the California Arbitration Act. [00:21:32] Speaker 03: So can you then address counsel's arguments on nondisclosure grounds that the nondisclosure of the certificate and the signature essentially amounts to a basis for vacature? [00:21:46] Speaker 02: Absolutely. [00:21:47] Speaker 02: First, there was disclosure. [00:21:49] Speaker 02: The moment the arbitrator discovered that it hadn't been served, in fact, there's a factual finding by the district court. [00:21:56] Speaker 02: Judge Freeman said there is no evidence that the arbitrator knew he was reviewing an ex parte matter. [00:22:00] Speaker 02: That's what she found in her decision. [00:22:03] Speaker 02: As Your Honor noted, the rule is subjective and discretionary. [00:22:07] Speaker 02: It provides for a reasonable period of time. [00:22:10] Speaker 02: The application has to be filed within a reasonable period of time, which is subjective. [00:22:14] Speaker 02: it says that they are grounds for disapproval of the application. [00:22:17] Speaker 02: It doesn't mandate disapproval. [00:22:19] Speaker 05: I want to ask about that, because that was the language I focused on. [00:22:23] Speaker 05: But it does say shall. [00:22:26] Speaker 05: I mean, your position is that shall be grounds means. [00:22:31] Speaker 05: The way I read it, and I want to get you is, [00:22:34] Speaker 05: If you disqualified based on that, there's no question that you could, but you're not mandated to do it. [00:22:41] Speaker 02: That's exactly right. [00:22:42] Speaker 05: Is there a case law to support that interpretation? [00:22:44] Speaker 02: I'm not aware of any case law interpreting it, Your Honor, but it doesn't say shall be disqualified or shall be disapproved. [00:22:50] Speaker 02: It says shall be grounds. [00:22:52] Speaker 02: In fact, the next sentence talks about repeated unauthorized appearances. [00:22:57] Speaker 02: the very next sentence. [00:23:00] Speaker 05: Here's the problem, and they make a good point that they could have been prejudiced here because [00:23:05] Speaker 05: Two, they didn't know this had happened. [00:23:08] Speaker 05: They could have at least made these arguments to say, hey, you shall be disqualified, and you could have made your arguments. [00:23:17] Speaker 05: No, it shall be grounds for disqualification. [00:23:19] Speaker 05: But they weren't able to make those arguments before he came in and argued before the order was issued. [00:23:30] Speaker 02: I'd say two things. [00:23:32] Speaker 02: One, the arbitrator considered the issue [00:23:34] Speaker 02: So this was disclosed on May 9th and 10th. [00:23:38] Speaker 02: It was uploaded because the arbitrator discovered it. [00:23:41] Speaker 02: They filed two opposition briefs thereafter, on May 9th and May 16th, I believe, and he issued his final decision on fees and costs in June. [00:23:50] Speaker 02: So they actually were heard on the issue as to whether fees and costs should be awarded for Mr. Gorman's participation in the arbitration [00:23:57] Speaker 02: before the arbitrator issued his final decision on fees and costs. [00:24:00] Speaker 02: The arbitrator found that Mr. Gorman and the application was in substantial compliance. [00:24:04] Speaker 02: He exercised his discretion. [00:24:06] Speaker 02: He also said the application satisfied all of the substantive requirements. [00:24:11] Speaker 05: Let me ask you, was the only, so if, this seems like it's an administrative task to load it, basically it was loading it up into jams and serving it, right? [00:24:20] Speaker 05: Yes. [00:24:22] Speaker 05: I take it the arbitrator is not personally [00:24:26] Speaker 02: I take it the same. [00:24:27] Speaker 05: But is there any evidence in the record about that? [00:24:30] Speaker 02: There is none. [00:24:31] Speaker 02: And in fact, the district court judge said in her decision, presumably, the case manager handed it to the arbitrator. [00:24:37] Speaker 02: And he reviewed it. [00:24:38] Speaker 02: And he was not aware whether it was or wasn't. [00:24:40] Speaker 05: But would the case manager, in a normal course, if he'd signed it, the arbitrator signs it, the case manager would have uploaded it? [00:24:47] Speaker 02: Yes, Your Honor. [00:24:49] Speaker 05: You know that, or you're supposing that? [00:24:51] Speaker 02: Well, I know that from the arbitrator's discovery and his written comments thereafter saying he asked his case manager to search Jam's access and couldn't find it on there and immediately directed his case manager to upload it. [00:25:04] Speaker 02: That's what happened on May 9th and 10th, and that's when the issue was discovered. [00:25:10] Speaker 03: It seems as if maybe we're letting the arbitrator off in some respects a little too easy. [00:25:16] Speaker 03: There was a period where the case manager sent an email, said, serve it on the parties, and then retracts it and says, here's the signature. [00:25:25] Speaker 03: Presumably, the case manager wasn't just flying off the handle doing this independently and had consulted with the arbitrator. [00:25:32] Speaker 03: So doesn't some of this responsibility lie with the arbitrator themselves? [00:25:37] Speaker 02: actually think presumably the case manager was just based on the arbitrators later reaction when he said it it shows his actual surprise when he said I had the case manager search the file I remembered signing one of these earlier but I can't find it [00:25:50] Speaker 02: and he had his case manager search, discovered it wasn't on Access, and directed him to immediately upload it onto Access. [00:25:57] Speaker 02: That's what the arbitrator talks about. [00:26:00] Speaker 02: And remember, the standard, too, is manifest disregard of the law. [00:26:05] Speaker 02: He applied the law. [00:26:06] Speaker 02: He found substantial compliance with the law. [00:26:08] Speaker 02: Disagreement with the way he exercised his discretion is not grounds for vacatur. [00:26:13] Speaker 02: In addition, the standard is not whether there was an advantage gained by quantum scape. [00:26:18] Speaker 02: The question is whether they were prejudiced. [00:26:20] Speaker 02: And prejudice means, was it not a fundamentally fair hearing? [00:26:25] Speaker 02: There is no evidence in the record that Mr. Gorman's participation in the hearing. [00:26:29] Speaker 05: But isn't it fundamentally unfair when an argument that you may want to make, whether it's meritorious or not, you can't make? [00:26:39] Speaker 05: And maybe the argument is, well, they eventually were able to make it and, in fact, did make it after the fact. [00:26:45] Speaker 05: And I guess they'd say, yeah. [00:26:47] Speaker 05: I mean, then we're asking to unwind the whole order, so it's unfair that we weren't able to say beforehand, Gorman can't participate. [00:26:57] Speaker 02: To date, they haven't identified any grounds on which Mr. Gorman's application shouldn't have been granted. [00:27:03] Speaker 02: Well, I don't think that's true. [00:27:04] Speaker 05: I think if the arbitrator had said, we have a problem here, the arbitrator could have said, OK, you're disqualified. [00:27:12] Speaker 05: I'm not saying that that would have been the right decision, [00:27:17] Speaker 05: It was certainly a possibility, wasn't it? [00:27:20] Speaker 02: Well, they take issue with the fee award. [00:27:21] Speaker 02: That's the issue. [00:27:22] Speaker 02: Should fees have been granted? [00:27:24] Speaker 05: Well, what I heard at argument was they were also saying that Gorman shouldn't have been able to argue before the arbitrator because he should have been disqualified at that point and they weren't able to make that argument. [00:27:37] Speaker 05: I haven't looked closely at that. [00:27:38] Speaker 05: Maybe that was waived because they didn't argue that in the brief. [00:27:41] Speaker 05: But let's get to the fee award because I mean, can we just clarify one thing? [00:27:46] Speaker 05: There was no unauthorized practice of law going on here, right? [00:27:50] Speaker 02: Correct. [00:27:50] Speaker 05: Okay. [00:27:51] Speaker 02: I've been admitted for almost 30 years, your honor. [00:27:53] Speaker 02: I'm lead counsel in this case. [00:27:55] Speaker 02: I was a partner. [00:27:55] Speaker 02: This was my associate. [00:27:57] Speaker 02: I made every appearance in this case. [00:27:59] Speaker 02: I argued every motion. [00:28:00] Speaker 02: Mr. Gorman and other associates helped me. [00:28:03] Speaker 02: They took my direction as in any piece of litigation. [00:28:06] Speaker 02: And when it came time to prepare for the actual arbitration, I thought I would give Mr. Gorman an opportunity to participate as a senior associate. [00:28:13] Speaker 02: That's when he filed his application. [00:28:15] Speaker 02: It was granted. [00:28:16] Speaker 02: And only then did he appear in the arbitration hearing. [00:28:18] Speaker 05: OK. [00:28:18] Speaker 05: So thank you for clarifying that. [00:28:21] Speaker 05: I just want to be clear what we are dealing with. [00:28:24] Speaker 05: The second issue, or what we're not dealing with, the second issue that they raised is the fees, though. [00:28:31] Speaker 05: Is it true that if they're not admitted [00:28:36] Speaker 05: California, even if they are operating under the direction of a California attorney, they're not entitled to fees. [00:28:42] Speaker 02: No, Your Honor, and I would cite the decision in Golba, which essentially adopts the reasoning in Winterout, a Ninth Circuit case, that talks about someone, if you're basically partnering with an attorney who is admitted in California, that's what happened in Winterout, and that's what didn't happen in Golba, and that was why that was a problem. [00:29:01] Speaker 02: But it was the same analysis in California and before the Ninth Circuit. [00:29:05] Speaker 02: And that is, if there is a California admitted counsel who is lead counsel in the case, [00:29:11] Speaker 02: who is engaged by the client and with whom you're partnering in the litigation, it's not the unauthorized practice of law, and you are permitted to recover your fees for that time. [00:29:22] Speaker 02: Winorowd, Golba, and they both discuss Beerbauer also in those decisions, and that is the law. [00:29:28] Speaker 05: And I guess once you come down to that, one way to look at this case is [00:29:33] Speaker 05: you know, whatever mishap did occur, whether it was Mr. Gordon's fault or, you know, the arbitrator's fault or whatever, you sort of took it on the chin a little bit because you got $150,000 scaled back that, quite frankly, did not need to happen as I read it. [00:29:51] Speaker 02: That's exactly right, Your Honor. [00:29:53] Speaker 02: That's exactly right. [00:29:53] Speaker 05: Because for all of those months... So perhaps appellants should actually be grateful that they didn't have to pay $150,000 more. [00:30:00] Speaker 02: That's certainly our position. [00:30:02] Speaker 02: I mean, we did feel that that was not fair, because in all of those months, all of that work that's represented by the $150,000 was behind the scenes work. [00:30:09] Speaker 05: And that's a pretty good sanction for a mishap on not serving opposing counsel. [00:30:17] Speaker 05: I think it strikes me that the message would be received. [00:30:21] Speaker 02: Very significant, very significant penalty. [00:30:25] Speaker 02: The other thing I'll touch on, Your Honor, because my counterpart did is Ethics Standard 14. [00:30:30] Speaker 02: Ethics Standard 14 has an A and a B. A says something like you can't have ex parte communications. [00:30:36] Speaker 02: B says you can where they are administrative in nature, they were, where the judge or the arbitrator believes that there wouldn't be a tactical advantage to the other side. [00:30:47] Speaker 02: He clearly didn't, given his comments, the arbitrator. [00:30:50] Speaker 02: Where it's disclosed and there's an opportunity to be heard [00:30:53] Speaker 02: before a decision is made. [00:30:55] Speaker 02: And as I've mentioned, there were two opposition briefs that appellant filed before the final decision on fees and costs. [00:31:02] Speaker 02: And so we would say that 14B was satisfied in terms of the ethics standard. [00:31:06] Speaker 02: If they're even applicable, I understand your position that the CAA governed here, but our position is that the FAA governed based on the language of the agreement. [00:31:14] Speaker 05: Well, okay. [00:31:16] Speaker 05: How can that be? [00:31:16] Speaker 02: Here's how. [00:31:19] Speaker 02: the separation of the law infidelity federal in value selling associates versus temple that was firm by this court says that you have to explicitly state your intent to incorporate not just california law or the ccp [00:31:34] Speaker 02: but California law or the CCP as it relates to arbitration. [00:31:38] Speaker 05: But Johnson, Johnson didn't go that far and we held that the CAA applied. [00:31:44] Speaker 05: I read this language is showing far more intent to be bound by the CAA than in Johnson. [00:31:53] Speaker 02: In Johnson, the language was the arbitration is to be conducted and subject to enforcement pursuant to CCP sections 1280 through 1295. [00:32:02] Speaker 02: That is the California Arbitration Act. [00:32:04] Speaker 01: So just to be clear, the position that you're advocating is that the provision in the party's contract has to expressly reference the CAA provisions in order to overcome the presumption. [00:32:14] Speaker 01: Yes, Your Honor. [00:32:16] Speaker 03: Well, let me ask you this, because the consulting agreement has that expressed language in it. [00:32:22] Speaker 03: Before the sentence follows with, the Federal Arbitration Act shall continue to apply with full force and effect, notwithstanding the application of procedural rules set forth in the Act, and the Act there is referring to the California Code of Civil Procedure. [00:32:36] Speaker 03: Explain how you read those two things together because the sentence right above is exactly the same type of specific provision that we found in Johnson to apply to the CAA. [00:32:48] Speaker 02: It is, it's a hybrid. [00:32:51] Speaker 02: It does reference the specific provisions of the California Arbitration Act, but then says notwithstanding, the Federal Arbitration Act applies with full force and effect. [00:33:00] Speaker 02: The district court, Judge Freeman said in her decision that the parties agree that the consulting agreement standing alone [00:33:07] Speaker 03: shows the party's intent for the FAA to apply to proceedings related to... Yeah, and I didn't understand that, because the separation agreement says the arbitrator shall administer and conduct any arbitration in accordance with California law, including the California Courts of Procedure [00:33:22] Speaker 03: and the arbitrator shall apply substantive and procedural California law to any dispute or claim. [00:33:28] Speaker 03: So that covers the gamut, right? [00:33:31] Speaker 03: Substantive and procedural, which would include the CAA. [00:33:34] Speaker 03: And then the consulting agreement says the CAA shall apply procedurally, but then the FAA will apply. [00:33:40] Speaker 03: It's a muddle in my mind. [00:33:43] Speaker 03: So I didn't understand how the district court got to this FAA clearly applies. [00:33:47] Speaker 02: Understood, Your Honor. [00:33:48] Speaker 02: I'll just say one more thing. [00:33:49] Speaker 05: I know that my time is up. [00:33:53] Speaker 05: Let me ask this question, because what did the arbitrator do, in your opinion? [00:33:57] Speaker 05: Did the arbitrator apply to CAA or the FAA? [00:33:59] Speaker 02: The arbitrator applied California Substantive Law and the Federal Arbitration Act. [00:34:03] Speaker 02: That doesn't mean that there aren't provisions of the CCP that help regulate the arbitration process, like 1286.2 on basically out-of-state admissions. [00:34:14] Speaker 02: But the fact that portions of the CCP were applied, and almost always by the jams rules refer to the CCP, [00:34:20] Speaker 02: without reference to what the parties agreed to in their contract. [00:34:23] Speaker 02: It fills in, it helps regulate the matter, but it isn't grounds to vacate the arbitration. [00:34:29] Speaker 05: I'm asking a more basic question because in my mind I still am grappling with even if the arbitrator made an error, it's not clear to me he [00:34:39] Speaker 05: that the arbitrator did make an error because it sounds like he applied the CAA in most circumstances. [00:34:46] Speaker 05: But to the extent he applied the FAA, and we think he shouldn't, and I don't know where we come out on that, wouldn't you still apply the manifest standard and say, well, it's still not, even if the arbitrator made an error, [00:35:04] Speaker 05: We can't reverse it based on that because there's no manifest intent to ignore the law. [00:35:11] Speaker 02: That's exactly right. [00:35:12] Speaker 02: Manifest disregard is you identify the law and you cast it aside. [00:35:15] Speaker 02: You say, I'm ignoring that. [00:35:16] Speaker 02: I'm not complying with it. [00:35:18] Speaker 02: If you get it wrong, if you interpret it a different way, that's not manifest disregard as a matter of law. [00:35:24] Speaker 05: But it seems to me that we need to make this clear to the district courts, because I got to be honest, after Johnson, [00:35:31] Speaker 05: I would have a hard time seeing why this wouldn't be the CAA. [00:35:34] Speaker 02: And so the district court saying that suggests that there's still some confusion out there. [00:35:46] Speaker 02: was not specific enough, right? [00:35:47] Speaker 02: And that's true even though the California Arbitration Act is part of California law. [00:35:52] Speaker 05: So even though... But it has to be more expressed. [00:35:54] Speaker 02: It has to be more explicit based on the case law, value selling and others. [00:35:59] Speaker 02: It has to be... There's a strong presumption that the FAA governs. [00:36:04] Speaker 02: And to dislodge it, to supplant it with the CAA, the parties have to express a clear intent that that's what they mean to do. [00:36:11] Speaker 02: And just by saying CCP or California law, [00:36:14] Speaker 02: is not enough without a specific reference to either the California Arbitration Act or to those provisions of the CCP that constitute it. [00:36:21] Speaker 03: So can you, then I go back to my earlier question, how do you, can you explain to me how the consulting agreement should be interpreted in that case with those, with the specific provision referring to the CAA and then followed by the sentence about the FAA? [00:36:36] Speaker 03: What was the arbitrator supposed to do in that sense? [00:36:39] Speaker 02: The arbitrator was supposed to have the FAA govern the arbitration and the CC California substantive law, which is what he said in every decision, and the jams rules. [00:36:49] Speaker 02: That's what every one of his orders said. [00:36:51] Speaker 03: But this says notwithstanding the application of procedural rules set forth in the act referring to the CAA. [00:36:58] Speaker 02: But there are plenty of procedural rules that are not the CAA. [00:37:02] Speaker 02: there are rules on demurs, on summary judgment, on expert disclosures. [00:37:05] Speaker 02: He cited all of those. [00:37:07] Speaker 02: So there are plenty of the provisions of the CCP that can govern in any arbitration that's to be determined under the FAA. [00:37:14] Speaker 05: Does any of this matter at the end of the day? [00:37:17] Speaker 02: It doesn't because the standards are similar and where they differ, as I began, I believe they're to our benefit because there's no nondisclosure prong of the evident partiality piece of the CAA. [00:37:31] Speaker 05: Yeah, thank you. [00:37:32] Speaker 05: We've taken you over, unless there's any other questions, but thank you so much. [00:37:37] Speaker 05: We'll give you three minutes for rebuttal. [00:37:48] Speaker 04: I want to just bring it back to what I think is the most important thing, which is this would be the first decision to hold that we can find federal, certainly state, where there was a required disclosure by an arbitrator that was not made and the case was not vacated. [00:38:04] Speaker 04: This happened 14 days before the hearing. [00:38:06] Speaker 04: the reason that I appreciate that there's a focus on what was not disclosed, and I, we think that's a big deal. [00:38:16] Speaker 05: Look, counsel, it's more than just what was not disclosed. [00:38:21] Speaker 05: It's who didn't disclose it. [00:38:23] Speaker 05: And it's not clear to me that the arbitrator did this. [00:38:27] Speaker 05: Like, if there was evidence that the arbitrator said, I'm gonna sign this, but don't tell other counsel, [00:38:34] Speaker 05: Okay, we've got a different case, but that's not what happened here. [00:38:38] Speaker 05: I mean, can you show me? [00:38:39] Speaker 05: I mean, what about the questions about this? [00:38:42] Speaker 05: Is the arbitrator the one who uploads things to jams or is it the case manager or you don't know? [00:38:47] Speaker 04: We don't know who uploads, but that's not even, respectfully, I don't think that's the point. [00:38:53] Speaker 04: This isn't about somebody getting uploaded jams. [00:38:55] Speaker 04: It was counsel's obligation to upload its jams. [00:38:59] Speaker 04: The law is unequivocal. [00:39:01] Speaker 04: Counsel has to serve that, not the arbitrator. [00:39:03] Speaker 04: The arbitrator is not permitted [00:39:06] Speaker 05: Okay, but that's even worse for you. [00:39:08] Speaker 05: That's even worse for you because that it's not non-disclosure. [00:39:13] Speaker 05: You're arguing non-disclosure by the other side, not non-disclosure by the arbitrator. [00:39:17] Speaker 04: No sir, let me explain it because that's not right. [00:39:20] Speaker 04: The other side is required by law to serve it. [00:39:23] Speaker 05: I understand it. [00:39:24] Speaker 04: Jams require service on access. [00:39:26] Speaker 04: The arbitrator stated unequivocally to avoid violating section 14, to avoid ex parte communication, he says this, it's at 454 footnote one, I only look at things on access. [00:39:40] Speaker 04: That's the problem for him and for them. [00:39:44] Speaker 04: He can't, we don't, we're not in his mind, but we know. [00:39:48] Speaker 03: So the case manager then brings a certificate and he signs it and that is, or that's tantamount to a reason to vacate. [00:39:57] Speaker 03: Yes. [00:39:57] Speaker 03: Just that one thing. [00:39:58] Speaker 03: It violates. [00:39:59] Speaker 03: Whether he knows, does it matter whether he knows that this was ex parte or not? [00:40:05] Speaker 03: No, no, that's the question. [00:40:07] Speaker 04: He does know by his own admission [00:40:10] Speaker 04: because he says I only look at- Does it matter? [00:40:13] Speaker 03: So is it a prerequisite for him to know that what was handed to him was ex parte? [00:40:19] Speaker 04: No, it's not. [00:40:20] Speaker 04: In any event, what the California legislator has said and what every case has consistently agreed with is if he was required to tell us something here before he signed it and again after he signed it, and he didn't tell us, [00:40:35] Speaker 04: That's the lynchpin. [00:40:37] Speaker 04: As my colleague before me just said when she talked about 14B, even administrative things, which this is not, even if it was the most banal scheduling item we could have, before he decides he must tell us and let us be heard, that is the critical thing that he did not do. [00:40:55] Speaker 04: And the reason I get so agitated about it is it's not about [00:41:00] Speaker 04: Well, could we have solved the OSAC and could Mr. Gorman have still appeared? [00:41:05] Speaker 04: Fine. [00:41:06] Speaker 04: What shows the impartiality, and this is directly out of Grabowski, is a willingness to violate ethical obligations to help one side. [00:41:16] Speaker 04: And my last point is, please look at footnote four, page 455. [00:41:22] Speaker 04: When he explains why he did this, he said, I realize Mr. Gorman did not qualify under the statute. [00:41:30] Speaker 04: But, and I realize you were denied your right to be heard, which is fundamental, but I've decided I think he's qualified anyway. [00:41:39] Speaker 04: Now listen, I'm not here to debate whether Mr. Lorman might or might not be a fine lawyer, but he clearly was not qualified under this program, and the arbitrator said, I don't care, I'm just gonna do it, and then he hid that from us. [00:41:54] Speaker 04: Hiding that from us is not appropriate. [00:41:57] Speaker 05: Counsel, thank you. [00:41:59] Speaker 05: Thank you to both counsel for your arguments. [00:42:01] Speaker 05: The case is now submitted.