DRIVETIME CAR SALES COMPANY, LLC, ET AL. VS JAMES LEE HUBERT

Tentative Rulings

Case Number: *******4273 Hearing Date: January 13, 2023 Dept: 52

Petitioners DriveTime Car Sales Company, LLC, d/b/a DriveTime and BridgeCrest Acceptance Corporation’s Petition to Vacate Contractual Arbitration Award

Petitioners DriveTime Car Sales Company, LLC, d/b/a DriveTime and BridgeCrest Acceptance Corporation petition to vacate an arbitration award entered in favor of respondent James Lee Hubert. In response, Hubert requests that the court confirm the award.

“If a petition or response under this chapter is duly served and filed, the court shall confirm the award as made, whether rendered in this state or another state, unless in accordance with this chapter it corrects the award and confirms it as corrected, vacates the award or dismisses the proceedings.” (CCP 1286.)

Courts have limited authority to vacate an arbitration award. “A court’s power to correct or vacate an erroneous arbitration award is closely circumscribed.” (Heimlich v. Shivji (2019) 7 Cal.5th 350, 367.) “An arbitrator’s legal or factual error in determining which party prevailed may not be reversed.” (Ibid.) “It is within the power of the arbitrator to make a mistake either legally or factually. When parties opt for the forum of arbitration they agree to be bound by the decision of that forum knowing that arbitrators, like judges, are fallible.” (Id. at p. 370, internal quotes and alterations omitted.)

Petitioners argue the arbitrator exceeded her powers by issuing an award including a public injunction against them. The award provides, “DriveTime is prohibited from using the Buy Option Summary Form in California unless and until DriveTime (1) revises the Buy Option Summary for to include an Itemization of Amount Financed as set forth in Civil Code section 2982(a) and (2) institutes policies and procedures whereby DriveTime will provide the customer with a copy of his or her signed Buy Option Summary form before delivering the vehicle to the customer.” (Walser-Jolly Decl., Ex. G, Final Award, p. 33.)

Petitioners rely on a doctrine known as the Broughton-Cruz rule. In Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066, 1084, the California Supreme Court held “a CLRA injunctive relief action is not subject to arbitration.” Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 316 held the same for injunctive relief that would benefit the general public under Business and Professions Code sections 17200 and 17500.

The Ninth Circuit, however, held that the Federal Arbitration Act “preempts the Broughton-Cruz rule.” (Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 937 (Ferguson).) “By exempting from arbitration claims for public injunctive relief under the CLRA, UCL, and FAL, the Broughton–Cruz rule similarly prohibits outright arbitration of a particular type of claim,” and therefore conflicts with the FAA. (Id. at p. 934)

Moreover, as respondent argues, Broughton and Cruz considered whether a party could enforce an agreement to arbitrate claims for injunctive relief. That is not the same question as whether an arbitrator has the power to issue a public injunction. Neither case held that an arbitrator exceeds her powers by doing so. Their language discussing that subject is dicta. As Ferguson stated, “[I]n creating the Broughton–Cruz rule, the California court was motivated by its conclusion that the public injunction sought by the plaintiffs was ‘beyond the arbitrator’s power to grant.’ [Citation.] But that premise is not necessarily true. Corinthian concedes, and we agree, that an arbitrator generally has the authority to enter injunctive relief against a party that has entered into an arbitration agreement.” (Ferguson, supra, 733 F.3d at p. 937.)

Here, the parties’ arbitration agreement provides that it is governed by the FAA and that “[t]he arbitrator is authorized and given the power to award all remedies that would apply if the action were brought in court.” (Herman Decl., Ex. 1, p. 4.) Those remedies include a public injunction.

Petitioners contend that McGill v. Citibank, N.A. (2017) 2 Cal.5th 945 (McGill) reaffirmed the Broughton-Cruz rule and therefore binds this court, as opposed to the persuasive authority from the Ninth Circuit in Ferguson. McGill did not reaffirm the Broughton-Cruz rule. As the California Supreme Court stated, “[T]he Broughton-Cruz rule is not at issue in this case.” (Id. at p. 956.)

Instead, the question was whether a contract could waive the substantive right to a public injunction as a remedy—not whether an agreement could waive the procedural right to seek that injunction in court. The Court relied on the principle that “a provision in any contract—even a contract that has no arbitration provision—that purports to waive, in all fora, the statutory right to seek public injunctive relief under the UCL, the CLRA, or the false advertising law is invalid and unenforceable under California law.” (McGill, supra, 2 Cal.5th at p. 962.) Moreover, like Broughton and Cruz, in McGill the California Supreme Court addressed the enforceability of a contract—not the enforceability of an arbitrator’s award.

The arbitrator did not exceed her powers. The final award does not contravene any well-defined and dominant public policy.

Respondent’s Request for Attorney Fees

In his response, Hubert seeks $5,685.50 in attorney fees and costs. The prevailing party may recover costs on a petition to vacate or confirm an arbitration award. (CCP 1293.2.) Such costs include attorney fees when permitted by statute, contract, or law. (CCP 1033.5(a)(10).) As the arbitrator found, Hubert “is the prevailing party and is entitled to an award of attorney fees” under Civil Code section 2983.4. (Walser-Jolly Decl., Ex. G-B, Post-Interim Award Regarding Attorney Fees, p. 2.) Hubert prevailed on this petition and is therefore entitled to recover his expenses, including attorney fees.

Disposition

The petition to vacate arbitration award is denied. The court hereby confirms the arbitration award. The court will sign the proposed judgment submitted by respondent James Lee Hubert.