Wednesday, December 19, 2001
Court of Appeal Rules:
Arbitration Clause Survives Law Clerk’s Elevation to Associate
By KENNETH OFGANG, Staff Writer/Appellate Courts
A law clerk who signed an agreement to submit potential disputes with his firm to arbitration was still bound by that agreement after he became an associate, the Fourth District Court of Appeal ruled yesterday.
Div. One affirmed a summary judgment rejecting James Swiderski’s wrongful termination suit against Milberg, Weiss, Bershad, Hynes & Lerach, and overturned an order granting a new trial. The panel remanded to the San Diego Superior Court, however, for a determination as to whether the plaintiff can still pursue arbitration.
Swiderski, now a La Jolla sole practitioner, was admitted in California in December 1996 and was hired by the firm as a law clerk two months later. Although it was originally anticipated that the position would last only until May 1997, Swiderski was kept on as a clerk until January 1998 and then made an associate.
He was terminated for what the firm characterized as poor performance in April of the following year.
Swiderski sued the following October, claiming he had been terminated in violation of public policy. He rejected the firm’s request that he dismiss the suit and pursue his arbitration remedy, prompting Milberg Weiss to move for summary judgment.
Judge Thomas P. Nugent granted the motion, ruling that the arbitration agreement covered the entire length of the employment relationship and was not limited to the period of the clerkship, and that it was not unconscionable.
Swiderski then moved for a new trial, partially on the ground of newly discovered evidence. The new evidence, he asserted, would show that the American Arbitration Association—the designated resolution provider under the agreement—would impose unconscionable fees of $200 to $300 per hour that the newly unemployed lawyer could hardly afford.
Nugent granted the motion, but on a ground not raised by the plaintiff—that Swiderski had initiated arbitration by notifying the firm that he intended to pursue that remedy without waiving his right to sue.
Presiding Justice Daniel J. Kremer, writing for the appellate panel, said the motion for new trial should have been denied.
Even assuming that a new trial may be granted on a ground not set forth in the motion, the jurist said, the trial judge erred in concluding that Swiderski’s “mere initiation” of arbitration procedures was sufficient to avoid summary judgment.
It was undisputed, the jurist said, that the attorney “did not exhaust or attempt to exhaust his arbitration remedy.”
Kremer also rejected Swiderski’s argument that a triable issue existed as to whether the firm waived arbitration because its management committee failed to timely respond to Swiderski’s request for review of the termination and because the firm failed to provide requested discovery in the absence of a confidentiality agreement.
It was undisputed, the presiding justice explained, that under the language in the agreement, Swiderski’s remedy for lack of timely committee review was to proceed to arbitration. Nor was there anything in the agreement requiring the firm to provide discovery prior to initiation of arbitration proceedings, Kremer said.
Kremer agreed with Swiderski that as a matter of law, an order granting new trial may be affirmed on any ground raised by the motion, even if rejected by the trial judge. But there were no such grounds in this case, Kremer said.
Evidence of the AAA fees doesn’t qualify, the jurist said, citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. The court there held that requiring an employee to bear costs unique to arbitration is unconscionable, but that any such requirement is severable from the rest of the agreement.
Besides, Kremer said, there was no showing of due diligence, since Swiderski could have pursued a waiver of the arbitrators’ fees prior to the filing of the motion for summary judgment.
The presiding justice went on to conclude that the trial judge was correct in finding that the agreement undisputedly covered the entire length of employment and that it was not an unconscionable adhesion contract.
Kremer noted that the agreement refers several times to Swiderski’s “employment relationship” with Milberg Weiss, rather than to his clerkship. It also required him to arbitrate disputes arising under “any agreements previously or hereafter entered into between Employee and the Firm,” the presiding justice said.
The only inference that may reasonably be drawn from that language is that the arbitration agreement remained in effect after Swiderski was made an associate, the jurist concluded.
The contract was not adhesive, Kremer added, because Swiderski could have marketed his talents elsewhere if he was dissatisfied with the firm’s employment conditions. The jurist cited a declaration in which Swiderski said he turned down a similar position with another firm when Milberg Weiss offered to make him an associate.
The case is Swiderski v. Milberg, Weiss, Bershad, Hynes & Lerach, LLP, D036160.
Copyright 2001, Metropolitan News Company