BROUGHTON v. CIGNA HEALTHPLANS

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Court of Appeal, Second District, Division 4, California.

Adrian BROUGHTON, Jr., a Minor, etc., et al., Plaintiffs and Respondents, v. CIGNA HEALTHPLANS of California et al., Defendants and Appellants.

No. B093517.

Decided: June 30, 1998

Hammond, Zuetel & Cahill, Kenneth R. Zuetel, Jr. and Cynthia L.K. Steele, Pasadena, for Defendants and Appellants. Mazursky, Schwartz & Angelo, Christopher E. Angelo, Los Angeles, Anthony Kornarens, Watkins & Stevens and Steven B. Stevens, Los Angeles, for Plaintiffs and Respondents.

In this appeal we are asked to determine whether an arbitration clause in a health insurance policy issued by Cigna Healthplans of California (Cigna) compels arbitration of a cause of action for violation of the California Consumers Legal Remedies Act (the Act), Civil Code section 1750 et. seq.   We hold that the anti-waiver provision of the Act precludes mandatory arbitration.   This holding is based on the basic purpose underlying the Act, which is to protect all California consumers, not just the named plaintiff, from continuing use of illegal business practices by a particular business entity.   To fulfill that purpose, the Act provides for injunctive relief to prohibit a defendant from continuing to employ business practices found to violate the Act.   Because arbitrators do not have the authority to issue and monitor injunctive relief, we conclude that arbitration does not provide an alternative, but equal, forum to resolve claims under the Act, where injunctive relief is sought, as it is in this case.   For that reason, the anti-waiver provision of the Act is inconsistent with the arbitration provision of this contract.   We conclude that the trial court properly severed the causes of action, denying arbitration with respect to the cause of action based on the Act, while compelling arbitration of the balance of the action.

FACTUAL AND PROCEDURAL SUMMARY

Plaintiffs are a minor, Adrian Broughton, Jr., through his guardian ad litem, Keya Johnson (his mother) and Ms. Johnson on her own behalf.   Adrian and his mother were covered by Medi-Cal, which had negotiated a contract with Cigna for health care coverage.   The first cause of action in the complaint against Cigna seeks damages for medical malpractice, based on severe injuries claimed to have been suffered by Adrian at birth.1  The second cause of action alleges violation of the Act, based on allegations that Cigna deceptively and misleadingly advertised the quality of medical services which would be provided to plaintiffs under its health care plan.   Specifically, plaintiffs allege that Ms. Johnson received substandard prenatal medical services, and that she was denied a medically necessary Cesarean delivery.

Cigna answered the complaint, and filed a combined motion to compel arbitration and verified petition for an order requiring plaintiffs to arbitrate the controversy.   Cigna relied on the mandatory arbitration provision in its Combined Evidence of Coverage and Disclosure Form.   That clause provides:  “Any controversy between Group, a Subscriber or Dependent Subscriber (whether a minor or an adult), or the heirs-at-law or personal representatives of a Subscriber or Dependent Subscriber and the Healthplan (including any of their agents, employees, or providers) shall be submitted to arbitration.   This applies whether involving a claim in tort, contract or otherwise.”   Cigna also relied on Code of Civil Procedure section 1281 which 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.”

Plaintiffs opposed the motion.   They argued that there was no evidence of an agreement to arbitrate between themselves and Cigna;  the case does not come within the statutes governing arbitration of medical malpractice claims;  Cigna waived the right to arbitrate by litigating motions before the trial court;  and the second cause of action under the Act is not subject to arbitration.   In support of the last argument, plaintiffs cited Civil Code section 1751,2 a part of the Act:  “Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.”   In its reply, Cigna did not address the argument that a cause of action under the Act is not subject to arbitration.

The trial court severed the causes of action, granted the motion to compel arbitration of the medical malpractice cause of action, but denied the motion as to the cause of action under the Act.   Cigna filed a timely notice of appeal from the order denying its motion to compel arbitration of the second cause of action for violation of the Act.   The order granting the motion to compel arbitration of the first cause of action is not appealable and plaintiffs have not attempted to cross-appeal.   The appeal before us is confined to review of the order denying arbitration of the second cause of action.  (See Mid-Wilshire Associates v. O'Leary (1992) 7 Cal.App.4th 1450, 1453, 9 Cal.Rptr.2d 862;  United Firefighters of Los Angeles v. City of Los Angeles (1991) 231 Cal.App.3d 1576, 1581-1582, 283 Cal.Rptr. 8.)

Following our initial decision affirming the trial court, Cigna petitioned for rehearing.   We granted the petition, and invited the parties to address the issues raised in the petition.   In particular, we asked counsel to brief “a plaintiff's right to have his or her cause of action under the Consumers Legal Remedies Act (Civ.Code, § 1750 et seq.) decided by a trial court, rather than an arbitrator.”

Both sides filed supplemental briefs on this issue.   In addition, we granted requests to file amicus curiae briefs by the Association for California Tort Reform and California Financial Services Association in support of Cigna, and by the American Association of Retired Persons and Consumers for Quality Care in support of the Broughtons.

DISCUSSION

This is the second recent case in which we have been asked to determine whether an insurer can compel arbitration of a statutory cause of action under a mandatory arbitration clause in a health insurance plan.   In Wolitarsky v. Blue Cross of California (1997) 53 Cal.App.4th 338, 61 Cal.Rptr.2d 629, we held that an insurer may compel arbitration of a cause of action for violation of the Unruh Civil Rights Act (§ 51 et seq).   The Wolitarskys alleged that they were the victims of gender discrimination within the meaning of the Unruh Civil Rights Act, and cited Civil Code, section 52, subdivision (e) in an attempt to avoid mandatory arbitration under the broad arbitration clause contained in their policies with Blue Cross.  Section 52, subdivision (e) provides:  “Actions under [the Unruh Civil Rights Act] shall be independent of any other remedies or procedures that may be available to an aggrieved party.”   We concluded:  “The statute does not provide ․ that parties may not agree to submit such claims to arbitration.   The Wolitarskys cite no case for the proposition that an Act claim does not come within a broad contractual clause under which the parties agree to submit ‘any dispute ․ regarding the decision of Blue Cross' to arbitration.”  (53 Cal.App.4th at p. 346, 61 Cal.Rptr.2d 629.)

As we did in Wolitarsky, we apply established standards of statutory construction to the issues presented in this case.  “ ‘[O]ur first task in construing a statute is to ascertain the intent of the Legislature so as to effectuate the purpose of the law.   In determining such intent, a court must look first to the words of the statute themselves, giving to the language its usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose.   A construction making some words surplusage is to be avoided.   The words of the statute must be construed in context, keeping in mind the statutory purpose, and statutes or statutory sections relating to the same subject must be harmonized, both internally and with each other, to the extent possible.   [Citations.]  Where uncertainty exists consideration should be given to the consequences that will flow from a particular interpretation.  [Citation.]  Both the legislative history of the statute and the wider historical circumstances of its enactment may be considered in ascertaining the legislative intent.  [Citations.]’  (Dyna-Med, Inc. v. Fair Employment and Housing Com. (1987) 43 Cal.3d 1379, 1386-1387 [241 Cal.Rptr. 67, 743 P.2d 1323].)”  (Ibid.)

 Whether an insurer may compel arbitration of a cause of action under the Act presents a question of first impression.   The Act was enacted in an attempt to alleviate social and economic problems stemming from deceptive business practices, which were identified in the 1969 Report of the National Advisory Commission on Civil Disorders (Kerner Commission.).  (See Reed, Legislating For The Consumer:  An Insider's Analysis Of The Consumers Legal Remedies Act (1971) 2 Pacific L.J. 1, 5-7, hereafter “Reed.”)   Section 1760 contains an express statement of legislative intent:  “This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.”

Remedies under the Act are cumulative:  “The provisions of this title are not exclusive.   The remedies provided herein for violation of any section of this title or for conduct proscribed by any section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.  [¶] ․ If any act or practice proscribed under this title also constitutes a cause of action in common law or a violation of another statute, the consumer may assert such common law or statutory cause of action under the procedures and with the remedies provided for in such law.”   (§ 1752.)

Unlike the Unruh Civil Rights Act, which we considered in Wolitarsky, 53 Cal.App.4th 338, 61 Cal.Rptr.2d 629, this Act expressly provides that its protections may not be waived by the consumer:  “Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.”  (§ 1751.)   This is the provision on which plaintiffs rely to support their argument that they cannot be compelled to arbitrate their cause of action under the Act, no matter how broad the arbitration clause in Cigna's plan.

Cigna's response is that arbitration merely provides a different neutral forum and does not limit the remedies available to plaintiffs:  “Instead of addressing the issue of the scope of the arbitration agreement, however, Respondents instead argue that the Act-in prohibiting any waiver of its provisions, which include a right to seek damages and injunctive relief-should be read to preclude arbitration of such claims.   Respondents cite no authority for such bald assertion.   Needless to say, no such authority exists.  [¶] The arbitration provision at bar neither limits the liability or obligation of Appellants, nor does it preclude an action by Respondents for damages or injunctive relief.  Beynon v. Garden Grove Medical Group [1980] Cal.App.3d 698, 707[, 161 Cal.Rptr. 146].   Instead, all the arbitration provision does is substitute ‘one neutral forum for another.’  Id .” Cigna emphasizes that there is nothing in the arbitration agreement to limit plaintiffs' rights under the Act.

Cigna must establish that all the remedies available under the Act are available in an arbitration in order to demonstrate that it is merely an alternative neutral forum.   Here, plaintiffs seek compensatory and punitive damages under section 1780, subdivisions (a)(1) and (a)(4).   They also seek injunctive relief under section 1780, subdivision (a)(2), which provides that a consumer may bring an action to obtain an order enjoining all acts and practices banned by the Act.3

 The basic problem with Cigna's position is the injunctive remedy provision of the Act.   First, a private arbitrator is not empowered to award the injunctive relief sought by plaintiffs.4  Second, the Act is intended to benefit the public by imposing a sanction against merchants who use deceptive business practices.   The remedy to assure that these practices are not repeated is injunctive relief.   This is a remedy fundamentally different from damage awards available in individual coverage disputes generally submitted to arbitration pursuant to a health insurance policy.

There is also a crucial difference between other forms of equitable remedies and injunctive relief available under the Act:  only the superior court is empowered to supervise and enforce future compliance with a permanent injunction.

The Supreme Court recognized this distinction in Sontag Chain Stores Co. v. Superior Court (1941) 18 Cal.2d 92, 113 P.2d 689.   In Sontag, some months after the trial court had permanently enjoined picketing of Sontag's place of business, the labor unions responsible for the picketing moved the superior court to vacate or set aside the injunction.   They argued that the injunction was no longer appropriate in light of a new opinion by the California Supreme Court authorizing peaceful picketing in order to obtain a union contract for a closed shop.  (C.S. Smith Met. Market Co. v. Lyons (1940) 16 Cal.2d 389, 106 P.2d 414.)   Sontag sought prohibition, asserting that the injunction was a final judgment which could not be vacated or modified.

The Supreme Court rejected that argument, distinguishing the rule that a final judgment may not be subject to collateral attack.  “[T]he reason for the rule ceases and the rule fails to apply in the case of a preventive injunction of the type here under review.   This is so because the decree, although purporting on its face to be permanent, is in essence of an executory or continuing nature, creating no right but merely assuming to protect a right from unlawful and injurious interference.   Such a decree, it has uniformly been held, is always subject, upon a proper showing, to modification or dissolution by the court which rendered it.   The court's power in this respect is an inherent one.   Its action is determined by the facts and circumstances of each particular case, with a view to administering justice between the litigants, and it has the power to modify or vacate its decree when the ends of justice will be thereby served.”  (Sontag Chain Stores Co. v. Superior Court, supra, 18 Cal.2d at pp. 94-95, 113 P.2d 689.)

 “It is well settled that ‘[i]ndependent of statute, a court which renders an equitable decree may appropriately reserve jurisdiction to take steps to carry it into effect․’  (7 Witkin, Cal. Procedure (3d ed.   1985) Judgment, § 81, p. 516.)․   A court possesses the inherent power to reserve jurisdiction to ensure that its injunctive orders are carried out.   The court below properly reserved jurisdiction for that purpose;  ․” (Estes v. Rowland (1993) 14 Cal.App.4th 508, 536, 17 Cal.Rptr.2d 901.)   In Estes, the Court of Appeal upheld most of the permanent injunction issued by a trial court limiting the Department of Corrections' authority to conduct random searches of prison visitors' vehicles on prison property.  (See also Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499, 509-510, 63 Cal.Rptr.2d 118 [trial court has inherent power to reserve jurisdiction to carry equitable decree into effect].)

 The parties and amici have presented a detailed discussion of the power of an arbitrator to give plaintiffs the injunctive relief they seek under the Act.   Cigna and amici in its support cite cases in which arbitrators have awarded equitable relief, although none of those cases involved injunctive relief.  (See e.g. Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 593, 19 Cal.Rptr.2d 295 [reformation of contract];  Southern Cal. Rapid Transit Dist. v. United Transportation Union (1992) 5 Cal.App.4th 416, 6 Cal.Rptr.2d 804 [arbitrator empowered to declare defendant's effort to transfer assets void];  Pacific Inv. Co. v. Townsend (1976) 58 Cal.App.3d 1, 10, 129 Cal.Rptr. 489 [declaratory relief and accounting]).   Those cases do not aid Cigna.5

In relying on cases involving other forms of equitable relief awarded in arbitration, Cigna fails to recognize the fundamental difference between injunctive relief and the power of an arbitrator to fashion a remedy which is equitable as recognized by the Supreme Court in Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 36 Cal.Rptr.2d 581, 885 P.2d 994 (hereafter Intel ).   We examine the Intel decision in some detail since in it, the court recognizes the power of arbitrators to fashion equitable remedies.

In Intel, the Supreme Court recognized the need to allow arbitrators to exercise equitable powers in fashioning a remedy:  “Fashioning remedies for a breach of contract or other injury is not always a simple matter of applying contractually specified relief to an easily measured injury.   It may involve, as in the present case, providing relief for breach of implied covenants, as to which the parties have not specified contractual damages.   It may require, also as in this case, finding a way of approximating the impact of a breach that cannot with any certainty be reduced to monetary terms.   Passage of time and changed circumstances may have rendered any remedies suggested by the contract insufficient or excessive.   As the United States Supreme Court explained in the leading case on review of arbitral remedies in the collective bargaining context, the arbitrator is required ‘to bring his informed judgment to bear to reach a fair solution of a problem․ There the need is for flexibility in meeting a wide variety of situations.   The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency.’  [Citation.]”  (Id. at p. 374, 36 Cal.Rptr.2d 581, 885 P.2d 994.)

The Supreme Court explained:  “The choice of remedy, ․ may at times call on any decisionmaker's flexibility, creativity and sense of fairness.   In private arbitrations, the parties have bargained for the relatively free exercise of those faculties.   Arbitrators, unless specifically restricted by the agreement to following legal rules, ‘ “may base their decision upon broad principles of justice and equity․” [Citations.]   As early as 1852, this court recognized that, “The arbitrators are not bound to award on principles of dry law, but may decide on principles of equity and good conscience, and make their award ex aequo et bono [according to what is just and good].’  [Citation.]”   (Moncharsh [v. Heily & Blase (1992) 3 Cal.4th 1,] pp. 10-11, 10 Cal.Rptr.2d 183, 832 P.2d 899.)   Were courts to reevaluate independently the merits of a particular remedy, the parties' contractual expectation of a decision according to the arbitrators' best judgment would be defeated.”  (Intel, supra, 9 Cal.4th at pp. 374-375, 36 Cal.Rptr.2d 581, 885 P.2d 994, fn. omitted.)   The Intel court concluded that an arbitration award must bear some rational relationship to the contract and the breach.  (Id. at p. 381, 36 Cal.Rptr.2d 581, 885 P.2d 994.)   The court acknowledged that the parties to a contract with an arbitration clause have the power to limit possible remedies by setting out limits in the arbitration clause itself.  (Id. at p. 383, 36 Cal.Rptr.2d 581, 885 P.2d 994.)

The contract construed in Intel specified rules governing arbitration.   Section 42 of the contract defined the scope of the award:  “ ‘The Arbitrator may grant any remedy or relief which the Arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract.’ ”  (Intel, supra, 9 Cal.4th at p. 368, 36 Cal.Rptr.2d 581, 885 P.2d 994.)   The Intel court observed that section 42 of the agreement was identical to rule 43 of the Commercial Arbitration Rules of the American Arbitration Association.  (Id. at p. 383, 36 Cal.Rptr.2d 581, 885 P.2d 994.)  “AAA rule 43, ․ requires only that the remedy must be one the arbitrator deems ‘within the scope’ of the agreement.   The general guidance is followed by three ‘example[s]’ of appropriate relief:  monetary damages, specific performance of the contract, and an injunction against breach.”  (Id. at p. 390, 36 Cal.Rptr.2d 581, 885 P.2d 994.)   This statement is the only reference in the Intel decision to injunctive relief in an arbitration.

The Supreme Court listed equitable remedies which have been appropriate in actions based on contract:  “In actions founded on contract, courts have available for use in appropriate cases, in addition to specific performance, equitable remedies based on reformation, excuse of conditions and rescission [citation], as well as quasi-specific performance by constructive trust [citation], and indirect enforcement of a covenant by negative decree [citation].”  (Intel, supra, 9 Cal.4th at p. 390, 36 Cal.Rptr.2d 581, 885 P.2d 994.)   Based on the inherent flexible nature of equitable remedies, the principle of arbitral finality, and the related principle that remedies available to a court are only the minimum available to an arbitrator (unless the agreement restricts the remedies), the court held the arbitrator in Intel was within his authority in awarding Advanced Micro Devices a permanent, nonexclusive and royalty-free license to any Intel intellectual property embodied in a particular computer chip, and a further two-year extension of certain patent and copyright licenses.  (Id. at pp. 370-371, 36 Cal.Rptr.2d 581, 885 P.2d 994.)

While Intel stands for the broad power of an arbitrator to fashion an equitable remedy, the Supreme Court did not address the issue presented here:  whether an arbitrator may award the type of injunctive remedy provided for in the Act.

There is no indication here that the parties incorporated the Commercial Arbitration Rules of the American Arbitration Association, as the parties had done in the contract reviewed in Intel (9 Cal.4th at pp. 383-384, 36 Cal.Rptr.2d 581, 885 P.2d 994.)   Instead, the arbitration clause here provides:  “The arbitration shall be compulsory and binding and, except as provided herein, shall be conducted and governed by the provisions of the California Code of Civil Procedure.”  Code of Civil Procedure section 1281.8, subdivision (b) provides in pertinent part:  “A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief.”

“Provisional remedy” as defined by subdivision (a) of Code of Civil Procedure section 1281.8 includes preliminary injunctions and temporary restraining orders.6  Subdivision (c) of section 1281.8 provides:  “A claim by the party opposing issuance of a provisional remedy, that the controversy is not subject to arbitration, shall not be grounds for denial of any provisional remedy.”   A party does not waive the right to arbitrate other issues if the court is asked to stay all other proceedings in the action pending the arbitration of “any issue, question or dispute which is claimed to be arbitrable under the agreement and which is relevant to the action pursuant to which the provisional remedy is sought.”  (Code Civ. Proc., § 1281.8, subd. (d).)

In Marsch v. Williams (1994) 23 Cal.App.4th 238, 28 Cal.Rptr.2d 402, the appellate court applied Code of Civil Procedure section 1281.8 in holding that an arbitration panel had no authority to appoint a receiver.   The case arose from a falling out between partners in a development project.   Marsch sued Williams for fraud, breach of fiduciary duty and other causes of action.   Williams successfully petitioned for an order compelling arbitration under the partnership agreement.   The arbitration clause provided that any dispute or claim arising out of the agreement was to be settled by binding arbitration.   A three-member arbitration panel found that Williams had breached his fiduciary duty.   The panel appointed one of its members as receiver to supervise the sale of the disputed property and the dissolution of the partnership.   The trial court confirmed the arbitration award and judgment was entered.   Marsch appealed, arguing that he, rather than the receiver, should have been given possession of the assets.

The Marsch court held:  “Arbitrators do not have the power to provide all the remedies which are available from the superior court.  (See Outdoor Services, Inc. v. Pabagold, Inc. (1986) 185 Cal.App.3d 676, 685 [230 Cal.Rptr. 73];  see also Luster v. Collins (1993) 15 Cal.App.4th 1338, 1348 [19 Cal.Rptr.2d 215].)”  (23 Cal.App.4th at p. 245, 28 Cal.Rptr.2d 402.)   The court found no statutory authority to empower the arbitrators to appoint a receiver.  (Id. at pp. 245-246, 28 Cal.Rptr.2d 402.)   It found Code of Civil Procedure section 1281.8, subdivision (b) significant because it provides that a party to an arbitration is to apply to the superior court for provisional remedies, including the appointment of a receiver.  (Id. at p. 246, 28 Cal.Rptr.2d 402.)

The Marsch court went on to hold that the power to appoint receivers is unique and that the parties may not extend that power to arbitrators by agreement absent legislative action.  (Ibid.) It reasoned:  “[T]he importance of the trial court's role in supervising a receiver cannot be understated.  ‘The receiver is but the hand of the court, to aid it in preserving and managing the property involved in the suit for the benefit of those to whom it may ultimately be determined to belong.’  [Citations.]  ‘[A] receiver is an agent of the court, not of the parties, and the receivership estate consisting of property which is properly in his hands is under the control and continuous supervision of the court.’  [Citation.]  Given the continuing nature of a receiver's duties and the court's supervision, any addition to the type of tribunals empowered to appoint and supervise receivers would represent a fairly profound change in our receivership law.”  (Id. at p. 248, 28 Cal.Rptr.2d 402, emphasis added.)

The Marsch court relied upon Luster v. Collins, supra, 15 Cal.App.4th 1338, 19 Cal.Rptr.2d 215, which addressed the power of an arbitrator to enforce an injunction by awarding damages for future violations.   In Luster, two neighbors had an ongoing dispute over an easement along the border of their properties.   The easement burdened Collins's property.   The first part of the easement was paved, the second part was a dirt road leading to a cul de sac, and the final part, which was unimproved, ended at the north line of the Luster property.   Luster sued Collins claiming that Collins had interfered with his usufruct by putting up a barbed-wire fence, trees, and irrigation equipment on the easement.   The parties settled the dispute, with the help of a retired superior court judge.

The written settlement set out rules to govern use of the easement.   It also “acknowledged the likelihood of future conflict and confirmed the parties' mutual desire to use arbitration as ‘a ready and inexpensive means for resolving’ potential disagreements, specifying all disputes concerning ‘the road improvement, the removal and replacement of the fence, administration of locked gates, use of the easement and other related matters' would be submitted to binding arbitration.   The arbitrator was granted broad authority to proceed ‘in accordance with procedures as determined by the arbitrator which shall be appropriate for the specific dispute.’ ”  (Luster v. Collins, supra, 15 Cal.App.4th at p. 1343, 19 Cal.Rptr.2d 215.)   Later the parties stipulated that each arbitration would be governed by the provisions of Code of Civil Procedure section 1280, et seq.  (Ibid.)  They also stipulated that the arbitrator would be empowered to grant equitable relief.

Subsequently, an arbitration hearing was held and an extensive arbitration award was issued.   The arbitrator made numerous injunctive orders, including an order that Collins was to remove all trees and signs located in certain portions of the easement.   A supplemental hearing resulted in a supplemental award.   The arbitrator ordered Collins to remove all trees and signs located on the easement below the cul-de-sac area and to pay $50 per day for each day that he did not do so.   Collins sought to vacate only the supplemental arbitration award imposing the sanction of $50 per day per tree and per sign.   Luster petitioned to confirm or modify both awards.

The Court of Appeal concluded that the arbitrator acted within the scope of the parties' agreement when he ordered Collins to remove the trees in the easement and to make sure the entrance gate was locked each night.  (Luster v. Collins, supra, 15 Cal.App.4th at p. 1347, 19 Cal.Rptr.2d 215.)   As we have noted, the parties in Luster expressly stipulated that the arbitrator could grant equitable relief.   But the court held the arbitrator did not have the power to order Collins to pay $50 per tree for each day he failed to cut them down and to pay $50 for each day he failed to remove signs from the easement.   The court reasoned:  “The award's language makes clear the per diem award reflects the arbitrator's attempt to enforce his orders by imposing a sanction for future violations of the orders․ [¶] At the time of the hearing the arbitrator's responsibility was to determine whether Collins had wrongfully placed trees on the easement and, if so, how those wrongful acts could be rectified.   Consistent with his responsibility the arbitrator found Collins improperly burdened Luster's use of the easement and ordered removal of specific trees.   This should have been the extent of his decision unless he was statutorily empowered or the parties agreed he could include self-executing provisions to insure its enforcement as part of the award.”  (Id. at p. 1348, 19 Cal.Rptr.2d 215.)

The Luster court found no statutory authorization for an arbitrator to include economic sanctions.   It pointed out that the Legislature enacted Code of Civil Procedure section 1283.05, subdivision (b) which gives the arbitrator power to enforce discovery orders by using the same sanctions available to the superior court in a civil action.  (Ibid.)  But the court pointed out there was no counterpart to this provision giving the arbitrator the statutory power to enforce the award.  (Ibid.)

The omission was understandable in light of other provisions of the Code of Civil Procedure allowing a party to seek court confirmation of an arbitration award, which results in the entry of judgment.  (Code Civ. Proc., §§ 1285, 1287.4.)   Under these statutes, once a party obtains a judgment confirming the arbitration award, the judgment may be enforced like any other civil judgment.   The Luster court recognized that the Legislature addressed the complexities associated with enforcing judgments by enacting the Enforcement of Judgments Law, Code of Civil Procedure section 680.010 in 1982.  (Luster v. Collins, supra, 15 Cal.App.4th at p. 1349, 19 Cal.Rptr.2d 215.)   These provisions authorize courts to punish violations of a provision of a judgment as contempt.  (Code Civ. Proc., § 717.010.)   In light of the comprehensive Enforcement of Judgments Law, the Luster court concluded that there was no need to furnish an arbitrator additional authority for enforcement purposes post-judgment.  “Such authority would not only conflict with judicial power, but absent carefully prescribed procedures potentially interfere with the respective rights of the parties.   We therefore hold the arbitrator lacked the statutory authority to order Collins to pay $50 daily for each tree and for each sign he failed to remove.”  (15 Cal.App.4th at p. 1349, 19 Cal.Rptr.2d 215.)

We agree with the Luster court that an arbitrator's efforts to enforce an arbitration judgment would conflict with power given to the judiciary.   The Luster court went on to say that the parties could stipulate to give the arbitrator such powers:  “We are unaware of any legal impediment precluding the parties from agreeing the arbitrator could concurrently impose economic sanctions to effect performance of the award.”  (15 Cal.App.4th at p. 1349 [, 19 Cal.Rptr.2d 215].)   Unlike Luster, in the present case, there is a legal impediment to a stipulation to give an arbitrator such powers:  the anti-waiver provision of the Act, section 1751.

The problems inherent in that scenario are illuminated in Swan Magnetics, Inc. v. Superior Court (1997) 56 Cal.App.4th 1504, 66 Cal.Rptr.2d 541, cited by Cigna.  Swan was decided after our initial opinion in this case.   Cigna cites it for the proposition that arbitrators may award injunctive relief.   The court in Swan was not asked to address and did not discuss the fundamental question presented here:  whether an arbitrator has the power to grant injunctive relief.   The opinion examined only the power to modify or dissolve an injunction issued by an arbitrator.

Swan sued Antek, claiming it breached the non-competition clause by allowing Mitsumi Electric Co. to use the computer technology licensed to Swan.   The action was referred to binding arbitration pursuant to the licensing contact.   The arbitrator found Antek had breached the clause and awarded Swan a permanent injunction prohibiting Antek from directly or indirectly developing, producing, manufacturing, or selling the drive which was the basis for Swan's suit.

Within a month of notice of entry of judgment, Antek moved for a new trial, or to vacate the judgment on the ground that the facts had changed.   The trial court granted Antek leave to conduct discovery regarding the agreement between Swan and Mitsumi based on its conclusion that it had authority to modify the injunction awarded by the arbitrator.   Swan brought a petition for writ of mandate challenging the court's order.

The Swan court recognized the power of the trial court to modify or dissolve final injunctions which we discussed above.   It cited section 3424, subdivision (a), which provides:  “Upon notice and motion, the court may modify or dissolve a final injunction upon a showing that there has been a material change in the facts upon which the injunction was granted, the law upon which the injunction was granted has changed, or that the ends of justice would be served by the modification or dissolution of the injunction.”  (56 Cal.App.4th at p. 1508, fn. 2, 66 Cal.Rptr.2d 541.)   The court said:  “This statute codifies a long-settled judicial recognition of the inherent power of the court to amend an injunction in the interest of justice when ‘․ there has been a change in the controlling facts upon which the injunction rested, or the law has been changed, modified or extended, or where the ends of justice would be served by modification.’  [Citations.]”  (Id. at p. 1509, 66 Cal.Rptr.2d 541.)

But the statutory arbitration scheme under review in Swan “contains no indication that this settled rule of modifiability is inapplicable in an arbitrated controversy.”  (56 Cal.App.4th at p. 1509, 66 Cal.Rptr.2d 541.)   The court rejected Swan's argument that the arbitration award was final and could not be disturbed.   This holding was based on Sontag Chain Stores Co. v. Superior Court, supra, 18 Cal.2d 92, 113 P.2d 689, which addressed the finality of court-ordered injunctions.

The Swan court reasoned:  “[A] judicial decision on the continuing appropriateness of an injunction would inevitably require resolution of the merits of the parties' continuing dispute and invite reexamination of facts the arbitrator had previously determined.   To thus permit renewal of litigation in the judicial arena would contravene the parties' expectation that their differences be resolved solely through the arbitration process and would bypass the policy favoring this alternative method of dispute resolution.   The issue of the continued appropriateness of the arbitrator's remedy is therefore not properly before the superior court.   If Antek believes that new facts warrant a different result, it may initiate a new arbitration proceeding for that purpose.”  (56 Cal.App.4th at pp. 1511-1512, 66 Cal.Rptr.2d 541.)

The court in Swan emphasized:  “[T]he arbitrator's authority to act in these circumstances arises from the inherent modifiability of injunctions and the agreement of the parties to arbitrate their disputes rather than litigate them in court.   Should Antek renew its request in the proper forum, the resulting arbitration will be a new proceeding, not a reopening of a final determination.”  (56 Cal.App.4th at p. 1512, 66 Cal.Rptr.2d 541.)   Footnote 5 to the quoted passage explains why a new arbitration must be brought:  “Unless otherwise provided by the parties' agreement, an arbitrator may amend an award only on limited grounds and conditions specified by statute ( [Code Civ. Proc.,] §§ 1284, 1286.6).   Once the period has expired for making corrections to the award, the matter is beyond the power of the arbitrator to act upon further.”  (Id. at p. 1512, fn. 5, 66 Cal.Rptr.2d 541.)   Based on the conclusion that the superior court could not modify the injunction, the Court of Appeal held that court-ordered discovery was inappropriate.  (Id. at p. 1512, 66 Cal.Rptr.2d 541.)   Because, as we have explained, we conclude that the arbitrator cannot grant such injunctive relief, we cannot agree with the analysis of the Swan court.

Moreover, we think the result we reach is compelled by problems inherent in an arbitrator's enforcement of an injunction.   Having concluded that the superior court may not modify the arbitrator's injunction, the Swan court was faced with the limited statutory power of the arbitrator to modify his or her award.  Code of Civil Procedure section 1284 provides that an arbitration award may be corrected upon the grounds set forth in Code of Civil Procedure section 1286.6, subdivisions (a) and (c) “not later than 30 days after service of a signed copy of the award on the applicant.”  Section 1284 also provides that the application must be made within 10 days after service of a signed copy of the award on the applicant.

Code of Civil Procedure section 1286.6 provides the grounds for correction of an arbitration award by the trial court:  “Subject to Section 1286.6, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as correct if the court determines that:  [¶] (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;  [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted;  or [¶] (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”

The Swan court resolved this obstacle by ruling that a party seeking to modify an arbitrator's injunction must bring a new arbitration proceeding.   That is a cumbersome procedure, potentially requiring an open-ended number of proceedings.   It is not consistent with the injunctive remedy in the context of the Act.   As the court observed in Sontag Chain Stores Co. v. Superior Court, supra, 18 Cal.2d 92, 113 P.2d 689:  “[An injunctive decree] although purporting on its face to be permanent, is in essence of an executory or continuing nature, creating no right but merely assuming to protect a right from unlawful and injurious interference.   Such a decree, it has uniformly been held, is always subject, upon a proper showing, to modification or dissolution by the court which rendered it.'  [Citations.]”  (Id. at pp. 1509-1510, 66 Cal.Rptr.2d 541, emphasis added.)   Section 1760 of the Act directs us to liberally construe the Act and to apply it in a manner which promotes its underlying purposes, which are:  “to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.”   We do not think it either efficient or economical to require a new arbitration proceeding to enforce an injunction every time a defendant repeats a business practice which was found to violate the Act.

In Badgley v. Van Upp (1993) 20 Cal.App.4th 218, 24 Cal.Rptr.2d 406, the Court of Appeal observed that provisional relief, in the form of a preliminary injunction and appointment of a receiver, is ordinarily unavailable in a contractual arbitration.   The Badgley court applied the rule that a defendant may not assert the right to arbitrate as an affirmative defense where the complaint raises issues not susceptible to arbitration.   For that reason, the trial court properly overruled the defendant's demurrer on the ground that the dispute should have been arbitrated.  (Id. at pp. 221-222, 24 Cal.Rptr.2d 406.)

When a plaintiff seeks to enjoin deceptive business practices under the Act, an arbitrator is not in a position to award injunctive relief or to perform the critical function of monitoring any violations of the injunction by the defendant.   The trial court must be available to the plaintiff if it becomes necessary to take further steps to obtain enforcement of the terms of the injunction.

Cigna's reliance on Beynon v. Garden Grove Medical Group (1980) 100 Cal.App.3d 698, 161 Cal.Rptr. 146 is misplaced.   The passage cited by Cigna is actually from a discussion of Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 131 Cal.Rptr. 882, 552 P.2d 1178:  “[W]hile the Madden court determined that the Kaiser plan lacked the basic attributes of an adhesion type contract and that therefore the plaintiff state employee was bound by the arbitration provision even though she had no actual knowledge that it had been made a part of the contract, the court emphasized that the arbitration provision of the Kaiser plan was one which bore equally on both parties, did not limit the insurer's liability or obligation, and was one which merely substituted one neutral forum for another.”  (100 Cal.App.3d at p. 707, 161 Cal.Rptr. 146.)

Madden was an action for medical malpractice brought by a state employee who was a member of a Kaiser health care plan through her employment.   There is no indication that she sought injunctive relief in addition to damages.   In rejecting the plaintiff's argument that the arbitration clause was an unenforceable contract of adhesion, the Supreme Court emphasized that, unlike the contractual provisions considered in prior contract of adhesion cases, the Kaiser arbitration clause impacted both Kaiser and its insureds equally.  “It does not detract from Kaiser's duty to use reasonable care in treating patients, nor limit its liability for breach of this duty, but merely substitutes one forum for another.  [Citation.]”  (17 Cal.3d at p. 711, 131 Cal.Rptr. 882, 552 P.2d 1178.)

As we have seen, when the plaintiff brings a cause of action under the Act and seeks injunctive relief, compelling arbitration would deprive the plaintiff of that remedy because an arbitrator is without the power to grant it.  Madden therefore is not controlling.

In addition, the Legislature's intent under section 1751 that a plaintiff cannot waive the right to injunctive relief is clear.   Section 3513 provides:  “ ‘Anyone may waive the advantage of a law intended solely for his benefit.   But a law established for a public reason cannot be contravened by a private agreement.’ ”   This maxim is used as an aid to the application of statutory law, but it is not inflexible.  (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1048, fn. 4, 68 Cal.Rptr.2d 758, 946 P.2d 427.)

The Supreme Court recently addressed the waiver issue in Bickel v. City of Piedmont, supra, 16 Cal.4th 1040, 68 Cal.Rptr.2d 758, 946 P.2d 427.   The issue in that case was whether the Permit Streamlining Act (Gov.Code, § 65920 et seq.) prohibited an applicant's waiver of time limits within which a government agency must either approve or disapprove an application for a development project.   In concluding that it did not, the Supreme Court set out the test to determine whether rights under a statutory scheme may be waived.  “The term ‘waiver’ means the intentional relinquishment or abandonment of a known right.  [Citations.]  A person may waive the advantage of a law intended for his or her benefit [citation], but ‘a law established for a public reason cannot be waived or circumvented by a private act or agreement.’   [Citations.]  ‘The doctrine of waiver is generally applicable to all the rights and privileges to which a person is legally entitled, including those conferred by statute unless otherwise prohibited by specific statutory provisions.’   [Citation.]  Accordingly, to determine whether in this case the Act bars application of the waiver doctrine, we must ascertain (1) whether the Act's time limits are for the benefit of applicants or are instead for a public purpose, and (2) whether there is any language in the Act prohibiting a waiver.”  (Id. at pp. 1048-1049, 68 Cal.Rptr.2d 758, 946 P.2d 427, emphasis added.)

The Supreme Court found nothing in the language of the Permit Streamlining Act that prohibits an applicant from voluntarily waiving the right to an agency decision within the statutory time limits.  (Bickel v. City of Piedmont, supra, 16 Cal.4th at p. 1052, 68 Cal.Rptr.2d 758, 946 P.2d 427.)   It also concluded that the Act was primarily for the benefit of applicants seeking agency approval of proposed development projects, with some incidental public benefit.  (Id. at p. 1049, 68 Cal.Rptr.2d 758, 946 P.2d 427.)

Applying the test stated in Bickel, we conclude that plaintiffs could not waive the provisions of the Act.   Taking the second prong first, section 1751 is an explicit statutory prohibition on waiver.   The first prong, whether the Act is for a public purpose, is also satisfied.   As we noted at the beginning of our discussion, the Act was adopted in an effort to alleviate social and economic problems stemming from deceptive business practices, which were identified in the 1969 Report of the National Advisory Commission on Civil Disorders (Kerner Com.).  (See Reed, Consumer Legislation (1971) 2 Pacific L.J. pp. 5-7.)   The Legislature codified its intent in section 1760:  “This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.”   Injunctive relief under the Act is intended to halt deceptive business practices to protect all California consumers.   It is for the public benefit.

We conclude that the trial court was correct in severing the two causes of action and in denying Cigna's motion to compel arbitration of the second cause of action for violation of the Act.   In light of that decision, we need not, and do not, address the other challenges to the trial court's order.

DISPOSITION

The order of the trial court is affirmed.   Respondents are to have their costs on appeal.

FOOTNOTES

1.   Additional defendants were named, but they are not parties to this appeal.

2.   All further statutory references are to the Civil Code unless otherwise stated.

3.   Section 1780 provides in pertinent part:  “(a) Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against such person to recover or obtain any of the following:  [¶] (1) Actual damages, ․ [¶] (2) An order enjoining such methods, acts, or practices.  [¶] (3)․  [¶] (4) Punitive damages.”

4.   Indeed, even municipal courts lack the power to issue a permanent injunction.  (See Code Civ. Proc., § 86, subd. (a)(8).)

5.   The amicus brief in support of Cigna filed by the Association for California Tort Reform argues that California courts have ordered to arbitration actions that sought injunctive relief.   The cases are distinguishable.   In California State Council of Carpenters v. Superior Court (1970) 11 Cal.App.3d 144, 89 Cal.Rptr. 625, a contracting firm with a collective bargaining agreement brought an action against the union alleging that the union was refusing to supply competent workers and engaged in work slow-downs in violation of the collective bargaining agreement.   The court issued a preliminary injunction.   The case was controlled by section 301 of the Labor Management Relations Act (29 U.S.C. § 185(a)):  “Federal law ‘․ commands a state court to order arbitration unless, after resolving all doubts in favor of that procedure, it can determine “with positive assurance” that the dispute is not covered by the arbitration clause’.  [Citation.]”  (Id. at p. 153, 89 Cal.Rptr. 625.)   The court concluded state courts have the power to grant injunctions to enjoin a strike called in violation of the compulsory arbitration provisions of a collective bargaining agreement.  (Id. at pp. 154-155, 89 Cal.Rptr. 625.)   This result was compelled by federal labor relations law, which does not apply here.   The Association also cites Pacific Inv. Co. v. Townsend, supra, 58 Cal.App.3d 1, 129 Cal.Rptr. 489.   That case involved a partnership dispute.   In their first cause of action, plaintiffs sought damages, punitive damages, an accounting, appointment of a receiver, injunctive relief, and declarations of constructive trusts.   The partnership agreement required arbitration of disputes under the rules of the American Arbitration Association.   The Court of Appeal ordered the cause of action to arbitration because the clause was broad enough to encompass the allegations of that cause of action.  (Id. at pp. 9-10, 129 Cal.Rptr. 489.)   There was no discussion of the power of the arbitrator to award injunctive relief or to appoint a receiver.   A case is not authority for a proposition not considered or addressed.  (People v. Nunn (1996) 50 Cal.App.4th 1357, 58 Cal.Rptr.2d 294.)   Finally, the Association cites Don daRoza, Inc. v. Northern Cal. etc.   Hod Carriers Union (1965) 233 Cal.App.2d 96, 43 Cal.Rptr. 264.   That was an action for damages, not injunctive relief.

6.   Code of Civil Procedure section 1281.8 provides:  “As used in this section, ‘provisional remedy’ includes the following:  [¶] (1) Attachments and temporary protective orders issued pursuant to Title 6.5 (commencing with Section 481.010) of Part 2.[¶] (2) Writs of possession issued pursuant to Article 2 (commencing with Section 512.010) of Chapter 2 of Title 7 of Part 2.[¶] (3) Preliminary injunctions and temporary restraining orders issued pursuant to Section 527. [¶] (4) Receivers appointed pursuant to Section 564.”

EPSTEIN, Associate Justice.

CHARLES S. VOGEL , P.J., and HASTINGS, J., concur.

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