Motion To Compel ArbitrationMotionCal. Super. - 2nd Dist.October 26, 2018Electronically FILED by Superior Court of California, County of Los Angeles on 03/06/2019 02:01 PM Sherri R. Carter, Executive Officer/Clerk of Court, by H. Hankins, Deputy Clerk 18BECAYO007Y 1 | TROYGOULD PC Peter S. Selvin (SBN 94710) Email: pselvin@troygould.com Jennifer C. Wang (SBN 280560) Email: jwang@troygould.com 1801 Century Park East, 16th Floor Los Angeles, CA 90067-2367 Telephone: (310) 553-4441 Facsimile: (310) 201-4746 Attorneys for Defendants Marsh USA and Regina Dean ~N O N wn BA W N 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF LOS ANGELES, NORTH CENTRAL DISTRICT - BURBANK 10 | LIBERMAN BROADCASTING, INC., Case No. 18BBCV00077 EMPIRE BURBANK STUDIOS LLC, KRCA 11 [LICENSE LLC, KRCA TELEVISION LLC, RESERVATION NO. 349634998819 KZJL LICENSE LLC, LBI MEDIA 12 | HOLDINGS INC., LBI MEDIA, INC., LBI NOTICE OF MOTION AND MEMORANDUM RADIO LICENSE LLC, LIBERMAN OF POINTS AND AUTHORITIES BY 13 | BROADCASTING OF CALIFORNIA LLC, DEFENDANTS MARSH USA AND REGINA LIBERMAN BROADCASTING OF DEAN TO: 14 | DALLAS LICENSE LLC, LIBERMAN BROADCASTING OF DALLAS LLC, (1) COMPEL ARBITRATION; AND 15 | LIBERMAN BROADCASTING OF HOUSTON LICENSE LLC, LIBERMAN (2) STAY THE ACTION AS AGAINST THE 16 | BROADCASTING OF HOUSTON LLC, MARSH DEFENDANTS LIBERMAN TELEVISION OF DALLAS 17 || LICENSE LLC, LIBERMAN TELEVISION [Filed concurrently with Request for Judicial OF DALLAS LLC, LIBERMAN Notice; Declarations of Peter S. Selvin, 18 [| TELEVISION OF HOUSTON LLC, and Christopher Crawford, and Regina Dean; and LIBERMAN TELEVISION LLC, (Proposed) Order. ] 19 Plaintiffs, Assigned for All Purposes To: 20 Hon. John J. Kralik Vv. 21 Date: April 26, 2019 APPLIED UNDERWRITERS, INC., a Time: 8:30 a.m. 22 | Nebraska corporation, APPLIED Dept: B UNDERWRITERS CAPTIVE RISK 23 [| ASSURANCE COMPANY, INC. an Iowa Complaint Filed: October 26, 2018 corporation, CALIFORNIA INSURANCE Trial Date: None set 24 | COMPANY, a California corporation, MARSH USA, INC., a Delaware corporation 25 | d/b/a MARSH RISK & INSURANCE SERVICES, an entity of unknown origin, and 26 | REGINA DEAN, an individual, and DOES 1 through 20, inclusive, 27 Defendants. 28 TroyGould PC MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on April 26, 2019 at 8:30 a.m., or as soon thereafter as the matter may be heard, in Department B of the above-captioned Court, defendants Marsh USA, Inc., d/b/a Marsh Risk & Insurance Services (“Marsh”) and Regina Dean (“Dean,” and together, the “Marsh defendants”) will and hereby do move the Court for an order compelling arbitration of the Fourth Cause of Action for Professional Negligence alleged against them and staying the lawsuit as to that claim. This motion is based on the grounds that the agreement (“Agreement”) underlying this dispute contains an arbitration provision requiring that “[e]ach party to this agreement, on behalf of itself and its affiliates, agrees that any dispute, claim or controversy arising out of or relating to this Agreement or the provision of services by Marsh or its affiliates shall be resolved by binding arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association then in effect.” (Declaration of Christopher Crawford (“Crawford Decl.”), {(4, Ex. A at {9.) The motion is based on this notice, the attached Memorandum of Points and Authorities, the concurrently filed Request for Judicial Notice, and Declarations of Christopher Crawford, Regina Dean, and Peter S. Selvin, all pleadings, records, and files in this action, and such other argument and evidence as may be adduced at the hearing on this matter. Dated: March 6, 2019 TROYGOULD PC By: /s/ Peter S. Selvin Peter S. Selvin Attorneys for Defendants Marsh USA and Regina Dean 1 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC IL. III. IV. VIL INTRODUCTION coisas sree STATEMENT OF FACTS .....ooieitiiee eects eects sae seers sree eee A. Liberman Broadcasting And Marsh Enter A Binding Agreement To Arbitrate Any DISPULES ....cc.eeereiriiiinieeieeeeeee eects eee eee B. Plaintiffs File The Complaint Against Marsh And Regina Dean................. C. Plaintiffs Rebuff The Marsh Defendants’ Efforts To Voluntarily TABLE OF CONTENTS Stipulate To Arbitration ........ceevvieeiiiieeiiie eects eee esses THE COURT SHOULD COMPEL PLAINTIFFS TO ARBITRATE THEIR CLAIM AGAINST THE MARSH DEFENDANTS A. B. C. Arbitration In This Case Is Mandated Under California Procedural New York Procedural Law Applies As Directed By The Agreement’s Choice Of Law PrOVISION ..c.vuuueiiiiiiiiiiiiieieee ee eeeeteeeieee esas eeveateee esse e sessannnes The FAA Applies Because The Agreement Involved Interstate COIMUMETICE «cee eee ee eee ee eee ee ee eee ee eee ee ee eee eee seats ee ee eer ee ee enraeeeeeaaeeennnaeeee THE COURT SHOULD STAY THE CLAIM AGAINST THE MARSH DEFENDANTS PENDING COMPLETION OF ARBITRATION THE ARBITRATION AGREEMENT EXTENDS TO THE SIGNATORIES’ AFFILIATES CONCLUSION ii 03402-0008 326227.7 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC TABLE OF AUTHORITIES Page(s) Federal Cases Guerrero v. Equifax Credit Info. Servs., 2012 WL 7683512 (C.D.Cal. Feb. 24, 2012) c..uoiiiiieeiieceie cee eters esse eee ee evae esses 4 KPMG LLP v. Cocchi, 565 TLS. 18 (2011) uuiiiiiie eee eee eee eee ete sree etree etree eats ae esas ae esas ae esse ae ssse ee ssneaesaseeessneeesaseeas 6 Mitsubishi Motors v. SolerChrysler-Plymouth, ATF LTS GLE {TTBS ir ssn msnsinssssssnsiossnssvssssssson5550558 5155055005555 5505 08 HS AS HRSA AR FHSS SR 6 Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., AO0 U.S. 1 (1983). cei eee eee eerie eset te eset ae esa ae ees ae esas eases sansaeesssaesssseeesssaessseeessseeesssenas 6 United Steelworkers v. Warrior & Gulf Co., 3603 U.S. 574 (1960).....c.ueie eee eee eet ects ete settee eee e esas eae ae esas ae esssaesssaaessseaessseaessseesssseeesssenas 6 Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., AB U.S. 4608 (1989)...eiiceeiieciiiieeieee eee e ete eet ae este ee aae es aae eases eases sassae snares ssasee sarees ssseeesareeas 4 California Cases Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83 (2000) ....uveeeerie eects ects cites este eetee ere ee etree eaae etree etree erae ae srba ae erat ee erae ae eabe ee esaeeeeareeas 3 Basura v. U.S. Home Corp., 98 Cal. App. 4th 1205 (2002) ..eeouiieirieeiieeteette et rs sees eee este sete sabe ase estes sbee esse enneeenseas 5,6 Harris v. Bingham McCutchen LLP, 214 Cal. App. 4th 1399 (2013) cneeieeieeiie eee etter sees steers sates eres st ee ebae sabe ane ee eees 4 JSM Tuscany, LLC v. Superior Court, 195% Cal, App: Ah 1222 TONY cusmmsms sons osms sn esossnss sams sss 55558 545555556 5455555 345555045 SHT578S0555 55.30 555 9 Mastick v. TD Ameritrade, Inc., 209 Cal. App. 4th 1258 (2012) ceneeeiieeieeeeeeee ects seat r ebte sabes bee sbbe sabe e sees eeas 4,5 Rodriguez v. American Technologies, Inc., 136 Cal. App. 4th T1110 (20060) ....eeeiieieieeiieeeeetie eect eters eee stte este eae esses este esse anneeeneeas 7 Other State Cases Cooper v. Bruckner, 801 N.Y.S.2d 19 (N.Y. APP. Div. 2005) ..cueeeiiieeiieeieieiie siesta eters eevee esses saa ees 7 ii1 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC TABLE OF AUTHORITIES (cont.) Page(s) Knolls Co-op. Section No. 1, Inc. v. Hennessy, 150 N.Y.S.2d 713 (N.Y. SUP. Ct. 1956) ....iiiieiieeiie eee teeters eevee eee 5,8 West Side Tobacco & Confectionery Corp. v. Fidelity & Deposit Co., 156 N.Y S:2d 62 (NY. SUD: CU 1T5G) om soumsnsnnsosonss smn uss 555558 5455555:50 505455550 355555045 SH557850555 55.3055 5 Federal Statutes 9U.S.C. 8 6 8 Be 7,8 California Statutes B & P Code S 17200 cee 3 Code of Civil Procedure QL 28 I. eee tetera teeta tat -e tate teat aa te tebe ata tett rt ----_ 2 § 1281. 2(C) curuiee eee eee eee eee eee eee eee eee eee eee ae eet te ee ear tee e entrees ea atae ae ee eaaraas 3,4 Other State Statutes Nebraska’s Uniform ATIDIIEAtION ACT co... eee eee eee eee eases eee ee eee eee e ete eee eeas esas seaaeeesnanaeeennaaaaees 4 New York’s Civil Practice Law ATTICIE 75. cious eee esas teeta esas esas severe en es eeaes 7 iv MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC PETITION TO COMPEL ARBITRATION I. Plaintiff Liberman Broadcasting, Inc. (“Liberman Broadcasting”), and its wholly- owned subsidiaries, Empire Burbank Studios LLC, KRCA License LLC, KRCA Television LLC, KZJL License LLC, LBI Media Holdings Inc., LBI Media, Inc., LBI Radio License LLC, Liberman Broadcasting of California LLC, Liberman Broadcasting of Dallas License LLC, Liberman Broadcasting of Dallas LLC, Liberman Broadcasting of Houston License LLC, Liberman Broadcasting of Houston LLC, Liberman Television of Dallas License LLC, Liberman Television of Dallas LL.C, Liberman Television of Houston LLC, and Liberman Television LLC (collectively, “Plaintiffs”) seek damages against the Marsh defendants arising from Marsh’s rendition of services in the insurance market. 2 On February 26, 2012, Liberman Broadcasting signed an agreement (the “Agreement”) with Marsh setting forth the services Marsh would provide to Liberman Broadcasting in connection with placing its workers compensation insurance coverage. 3. All of Plaintiffs’ claims against the Marsh defendants arise out of, or otherwise relate to, the Agreement. 4. The Agreement provides: Each party to this agreement, on behalf of itself and its affiliates, agrees that any dispute, claim or controversy arising out of or relating to this Agreement or the provision of services by Marsh or its affiliates shall be resolved by binding arbitration pursuant to the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall be conducted by a panel of three arbitrators, with each party selecting one arbitrator and the two arbitrators selecting the third arbitrator. If the two arbitrators are unable to agree upon the third arbitrator, the third arbitrator shall be selected by the American Arbitration Association. Each of the arbitrators shall have at least fifteen years of insurance industry experience. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction. (Crawford Decl., (4, Ex. A, § 9.) 5. The Agreement also provides that “[t]he laws of the State of New York govern this Agreement.” (Id.) 6. Plaintiffs have nevertheless refused to arbitrate this matter but instead filed in this Court. Vv MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC Ts Accordingly, the Court should order Plaintiffs to submit to arbitration their claims against the Marsh defendants. Respectfully submitted, Dated: March 6, 2019 TROYGOULD PC By: /s/ Peter S. Selvin Peter S. Selvin Attorneys for Defendants Marsh USA and Regina Dean vi MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION In 2012, Liberman Broadcasting engaged Marsh to assist it in placing workers compensation insurance. Liberman Broadcasting and Marsh signed a written agreement that governed the terms of their relationship and which included a binding arbitration provision. That arbitration provision provided that each party agreed, “on behalf of itself and its affiliates,” that “any dispute, claim or controversy arising out of or relating to this Agreement or the provision of services by Marsh or its affiliates shall be resolved by binding arbitration.” (Crawford Decl., 4, Ex. A, § 9.) The provision further provides that “[t]he laws of the State of New York govern this Agreement.” (/d.) Notwithstanding that broad arbitration clause, Plaintiffs filed this lawsuit in Los Angeles Superior Court against the Marsh defendants for professional negligence in connection with the services they provided in accordance with the Agreement. Plaintiffs have ignored the Marsh defendants’ requests to submit this matter to arbitration. Accordingly, the Marsh defendants respectfully request that this Court issue an order compelling Plaintiffs to arbitrate their claims against the Marsh defendants. II. STATEMENT OF FACTS A. Liberman Broadcasting And Marsh Enter A Binding Agreement To Arbitrate Any Disputes. In 2012, Liberman Broadcasting engaged Marsh to assist it in placing workers compensation insurance. (Crawford Decl., {2.) Liberman Broadcasting and Marsh signed a written agreement that governed the terms of their relationship, which included a binding arbitration provision whereby each party agreed, “on behalf of itself and its affiliates,” that “any dispute, claim or controversy arising out of or relating to this Agreement or the provision of services by Marsh or its affiliates shall be resolved by binding arbitration.” (Crawford Decl., 4, Ex. A, § 9.) The provision further provides that “[t]he laws of the State of New York govern this Agreement.” (/d.) 1 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC In accordance with the Agreement, the Marsh defendants acted to solicit quotes for a new workers compensation policy for Liberman Broadcasting, and, at Liberman Broadcasting’s request, bound coverage with the Applied Underwriters defendants. B. Plaintiffs File The Complaint Against Marsh And Regina Dean. Almost seven years later, Plaintiffs filed this lawsuit against Marsh and Dean,’ alleging a single cause of action against them for “Professional Negligence.” Specifically, Plaintiffs allege that the Marsh defendants: (i) “breached [their] professional duties to Plaintiffs in recommending” the insurance policy offered by the Applied Underwriters defendants; and (ii) refused to answer Plaintiffs’ questions about why Plaintiffs were being charged increasingly higher premiums by the Applied Underwriters defendants. (Complaint, J 46-47.) C. Plaintiffs Rebuff The Marsh Defendants’ Efforts To Voluntarily Stipulate To Arbitration. On February 26, 2019, counsel for the Marsh defendants sent a letter to Plaintiffs’ counsel enclosing the Agreement, and inquiring whether Plaintiffs would agree to submit their claim against the Marsh defendants to binding arbitration. (Declaration of Peter S. Selvin (“Selvin Decl.”), 2, Ex. D.) On February 28, 2019, counsel for Plaintiffs responded, declining to submit to arbitration. (Id. at 3, Ex. E.) Counsel for the Marsh defendants confirmed that the Marsh defendants would be asking the Court to compel arbitration. (Id. at 3, Ex. E.) III. THE COURT SHOULD COMPEL PLAINTIFFS TO ARBITRATE THEIR CLAIM AGAINST THE MARSH DEFENDANTS A. Arbitration In This Case Is Mandated Under California Procedural Law. While we demonstrate below that New York law also mandates arbitration of the claim against the Marsh defendants, California state law similarly directs this outcome. Thus, Code of Civil Procedure § 1281.2 provides in pertinent part that “[o]n petition of a party to an arbitration I" Dean is a Senior Vice President at Marsh. (Dean Decl., 1.) 2 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists ...”. Here, there is a written agreement to arbitrate-and the Liberman plaintiffs have refused to arbitrate their claim against the Marsh defendants. Accordingly, both prongs of the statute have been satisfied. While the statute lists several exceptions, only one of them is remotely pertinent to the case at bar. Code of Civil Procedure § 1281.2(c) provides that the court may decline to order arbitration where “a party to the arbitration agreement is also a party to a pending court action ...with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” Putting aside the fact that (as we discuss below) both New York law and the Federal Arbitration Act (“FAA”) preempt this provision, there is no possibility of conflicting rulings on a common issue of law or fact. This is because the Liberman plaintiffs’ sole claim against the Marsh defendants is entirely severable from the Plaintiffs’ multiple claims against the Applied Underwriters defendants. While the Liberman plaintiffs allege a single cause of action for professional negligence against the Marsh defendants, their claims against the Applied Underwriters defendants reflect entirely distinct claims for breach of contract, declaratory relief, and violation of B & P Code § 17200. Because none of those claims touch, much less implicate, the alleged conduct of the Marsh defendants, there is no risk of any conflicting rulings on any common issue of law or fact. California strongly favors directing civil disputes to arbitration where, as here, the parties have specifically contracted to resolve their dispute via arbitration. See Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 97 (2000) (“California law, like federal law, favors enforcement of valid arbitration agreements.”). For this reason, the Liberman plaintiffs’ sole claim against the Marsh defendants should be sent to arbitration. 3 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC B. New York Procedural Law Applies As Directed By The Agreement’s Choice Of Law Provision. We have demonstrated above that arbitration is mandated by the pertinent California statute. But, as we demonstrate below, this same outcome is directed by New York law which applies here pursuant to the Agreement’s choice of law provision. “California strongly favors enforcement of choice-of-law provisions [citation], and its courts have upheld application of other states’ internal statutes, rules, and laws to arbitration contracts.” Harris v. Bingham McCutchen LLP, 214 Cal. App. 4th 1399, 1404-1405 (2013), citing Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, 1467 (2012) (applying Texas savings clause to California statutory claims with respect to arbitration agreement between the parties); Guerrero v. Equifax Credit Info. Servs., 2012 WL 7683512, *6-7 (C.D.Cal. Feb. 24, 2012) (applying South Dakota statute where California parties to an arbitration contract invoked a South Dakota choice-of-law provision). This includes applying the selected state’s procedural rules for enforcement of arbitration agreements. Mastick v. TD Ameritrade, Inc., 209 Cal. App. 4" 1258, 1266 (2012) (finding that the trial court should have applied Nebraska’s procedural law rather than California’s procedural law in deciding whether to compel arbitration); Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 477-479 (1989) (affirming trial court’s application of state procedural rules pursuant to a general choice-of-law clause which provided that state law governed the agreement). In Mastick, the arbitration agreement included a general choice of law provision calling for the application of Nebraska law. Instead of applying Nebraska law, the trial court applied the California Arbitration Act (“CAA”), found that there was a risk of conflicting results under Section 1281.2(c) of the Code of Civil Procedure, and denied the petition to compel arbitration. The Court of Appeal reversed. The Court of Appeal recognized that, when state law is invoked in an arbitration agreement, it shall be applied by the trial court in deciding whether to compel arbitration. The court observed that Nebraska’s Uniform Arbitration Act, unlike the CAA, does not authorize a court to stay arbitration or refuse to enforce an arbitration provision to avoid 4 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC duplicative proceedings or conflicting rulings. Instead, under Nebraska’s procedural rules, the court must stay the determination of issues that are subject to arbitration pending arbitration. Accordingly, the trial court should have applied Nebraska’s procedural law in deciding whether to compel arbitration. Mastick, supra, 209 Cal. App. 4™ at 1267-68. Importantly, New York law is consistent with both the FAA and Nebraska law, as discussed above, in finding that arbitration should not be denied for the ostensible purpose of avoiding the prospect of duplicative proceedings with the potential for inconsistent results. See, e.g., Knolls Co- op. Section No. 1, Inc. v. Hennessy, 150 N.Y.S.2d 713, 716 (N.Y. Sup. Ct. 1956) (finding that a party may not “circumvent the force of the arbitration agreement” by bringing in third parties); West Side Tobacco & Confectionery Corp. v. Fidelity & Deposit Co., 156 N.Y.S.2d 62, 64 (N.Y. Sup. Ct. 1956) (the presence of third parties “does not deprive a contracting party from obtaining the right to arbitration where there exists a present controversy which was the intended scope of arbitration at the time of the contract”-’[w]hen the contracting parties did not themselves agree to limit the function of the arbitration machinery between them, it is not the province of the court to rewrite the contract”). C. The FAA Applies Because The Agreement Involved Interstate Commerce. As demonstrated above, California law and New York law both dictate that Plaintiffs’ claims against the Marsh defendants should be adjudicated in arbitration. The result is the same under the FAA. When an arbitration agreement involves interstate commerce, the CAA is preempted by the FAA. Basurav. U.S. Home Corp., 98 Cal. App. 4th 1205 (2002) (finding that the CAA was “preempted by the FAA because the undisputed facts indicate the instant agreements involve interstate commerce”). In Basura, the court of appeal reversed a trial court order denying a petition to compel arbitration under the CAA, and found that the FAA applied because the underlying agreement involved interstate commerce. The court found that the defendants amply established “interstate commerce” where the underlying agreements involved the receipt and use of building materials and 3 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC equipment which had been manufactured in states outside of California, but then shipped to California. Basura, supra, 98 Cal. App. 4th at 1208. Here, just as in Basura, the Agreement between Liberman and Marsh involves interstate commerce, and therefore the Agreement is governed by the FAA: e As reflected in the Agreement, Marsh, a Delaware corporation which is headquartered in New York, agreed to assist Liberman Broadcasting, a company headquartered in Burbank California, in procuring workers compensation insurance coverage. (Crawford Decl., 4.) e In assisting Liberman Broadcasting to procure coverage, Marsh solicited quotes from insurance agents on a nationwide basis. (Dean Decl., Ex. 3.) e Ultimately, coverage was bound with Applied Underwriters, a corporation with divisions formed in Nebraska and lowa. (Complaint, {{ 2, 3.) Importantly, the FAA “provides that written agreements to arbitrate controversies arising out of an existing contract ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” KPMG LLP v. Cocchi, 565 U.S. 18, 21 (2011), quoting 9 U.S.C, § 2. To mandate arbitration, a complaint’s factual allegations need only “touch matters” covered by the contract containing the arbitration clause, and all doubts are to be resolved in favor of arbitrability. Mitsubishi Motors v. SolerChrysler-Plymouth, 473 U.S. 614, 624 n. 13 (1985) (when the “allegations underlying the statutory claims touch matters covered by the enumerated articles, [we] properly resolve any doubts in favor of arbitrability”). Moreover, federal policy favors arbitration. Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) (remarking that “Section 2 is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary”). “An order to arbitrate should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” United Steelworkers v. Warrior & Gulf Co., 363 U.S. 574, 582-83 (1960). 6 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC Here, Section 9 of the Agreement requires that “any dispute, claim or controversy arising out of or relating to this Agreement or the provision of services by Marsh or its affiliates shall be resolved by binding arbitration.” (Crawford Decl., {4, Ex. A, § 9, emphasis added.) The allegations supporting the single cause of action against the Marsh defendants arise directly from the Agreement and fall squarely within the scope of its arbitration provision. Plaintiffs are suing the Marsh Defendants for “Professional Negligence” (Fourth Cause of Action), claiming that Marsh “breached its professional duties to Plaintiffs in recommending the EquityComp program.” (Complaint, §47.)2 For this reason, the Complaint goes far beyond “touching matters” covered by the Agreements. Rather, the causes of action against the Marsh defendants are squarely based on the services described in the Agreement. Because the Agreement contains a mandatory arbitration clause and the claims arise out of the Agreement, this Court should stay the claims against the Marsh defendants so that they can proceed in arbitration.’ Accordingly, whether under California law, New York law, or the FAA, the result is the same-the dispute between the Liberman plaintiffs and the Marsh defendants should be submitted to arbitration. Iv. THE COURT SHOULD STAY THE CLAIM AGAINST THE MARSH DEFENDANTS PENDING COMPLETION OF ARBITRATION Section 3 of the FAA requires that courts, on motion, stay judicial proceedings and compel arbitration. Rodriguez v. American Technologies, Inc., 136 Cal. App. 4th 1110, 1122 (2006) To the extent Plaintiffs disagree that the professional negligence claim is within the scope of the arbitration clause, that is an issue for the arbitrator to decide under the delegation clause in the Agreement. (Crawford Decl., 4, Ex. A, § 9.) As we discuss further below, the result is the same if this Court finds that New York law applies pursuant to the choice-of-law language in the Agreement. Pursuant to Article 75 of New York’s Civil Practice Law and Rules (“CPLR”), “the court shall direct the parties to arbitrate” “where there is no substantial question whether a valid agreement was made or complied with.” N.Y. C.P.L.R. 7503, emphasis added. See also, Cooper v. Bruckner, 801 N.Y.S.2d 19, 20 (N.Y. App. Div. 2005) (“New York public policy favors enforcement of contracts for arbitration”). 7 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC (“Section 3 of the FAA mandates that, if suit is brought in a court ‘of the United States’ upon an issue ‘referable to arbitration,” the court must, upon a party’s application, stay the judicial proceeding until the arbitration is completed.”).* Therefore, the Court must stay this action as to the Marsh defendants until the arbitration is completed. V. THE ARBITRATION AGREEMENT EXTENDS TO THE SIGNATORIES’ AFFILIATES Although Liberman Broadcasting and Marsh are the signatories to the Agreement, Liberman Broadcasting’s wholly-owned subsidiaries are bound by the arbitration provision. This is so because those subsidiaries are undeniably “affiliates” of Liberman Broadcasting. The Agreement was signed by plaintiff Liberman Broadcasting, but not by its co-plaintiffs. Nevertheless, as shown below, Liberman Broadcasting’s co-plaintiffs are also bound by the arbitration provision. At the threshold, the plain language of the Agreement binds Liberman Broadcasting’s “affiliates.” (Crawford Decl., 4, Ex. A, § 9.) Furthermore, Plaintiffs are judicially estopped from arguing that they are not affiliates of Liberman Broadcasting. On November 21, 2018, plaintiff Liberman Broadcasting filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. (Request for Judicial Notice (“RIN”), Ex. A.) In its voluntary petition, Liberman Broadcasting explained that all of its co-plaintiffs in this action are wholly-owned subsidiaries and hence “affiliated entities.” (RIN, Ex. A, p. 19-22.) The bottom line is that because the plaintiffs are all wholly-owned subsidiaries of signatory Liberman Broadcasting, they are bound by the terms of the Agreement. The rule is “particularly true where ... all of the plaintiffs, signatory and nonsignatory, are related entities. A nonsignatory can be compelled to arbitrate when a preexisting relationship The rule is the same under New York law. Knolls Co-op. Section No. 1, Inc. v. Hennessy, 150 N.Y.S.2d 713, 716 (N.Y. Sup. Ct. 1956) (recognizing that under New York law, the code section providing for a stay of lawsuits where arbitration has been contracted for “is substantive and mandatory”). 8 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC existed between the nonsignatory and one of the parties to the arbitration agreement, making it equitable to compel the nonsignatory to arbitrate as well.” JSM Tuscany, LLC v. Superior Court, 193 Cal. App. 47 1222, 1240 (2011). Here, as in JSM Tuscany, each of the plaintiffs had a pre-existing relationship with the signatory when the Agreement was entered into-they were all wholly-owned subsidiaries of Liberman Broadcasting. (Dean Decl., {{4, Ex. C; RIN, Ex. A.) Indeed, the claim Plaintiffs bring against the Marsh defendants is “inextricably intertwined” with the Agreement because Plaintiffs are suing the Marsh defendants for purported professional negligence in connection with the services they provided in accordance with the Agreement. As Liberman Broadcasting’s co-plaintiffs are bound by the arbitration provision, the claim against the Marsh defendants should be sent to arbitration. VIL CONCLUSION For the foregoing reasons, the Marsh defendants respectfully request that the Court stay the action as against them and compel plaintiffs to resolve their sole claim against the Marsh defendants in arbitration. Dated: March 6, 2019 TROYGOULD PC By: /s/ Peter S. Selvin Peter S. Selvin Attorneys for Defendants Marsh USA and Regina Dean 9 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TroyGould PC PROOF OF SERVICE I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is 1801 Century Park East, 16th Floor, Los Angeles, CA 90067-2367. On March 6, 2019, I served the within document(s) described as: NOTICE OF MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES BY DEFENDANTS MARSH USA AND REGINA DEAN TO: (1) COMPEL ARBITRATION; AND (2) STAY THE ACTION AS AGAINST THE MARSH DEFENDANTS on the interested parties in this action as stated below: Larry J. Lichtenegger Shand S. Stephens The Lichtenegger Law Office Amanda L. Morgan 3850 Rio Road, #58 Jeanette Barzelay Carmel, CA 93923 DLA Piper LLP P: 831.626.2801 555 Mission Street, Suite 2400 F: 831.886.1639 San Francisco, CA 94105 E: lawyer @mbay.net T: 415.836.2500 F: 415.836.2501 E: shand.stephens @dlapiper.com; amanda.morgan @dlapiper.com; jeanette.barzelay @dlapiper.com (BY MAIL) By placing a true copy of the foregoing document(s) in a sealed envelope addressed as set forth above. I placed each such envelope for collection and mailing following ordinary business practices. Iam readily familiar with this Firm’s practice for collection and processing of correspondence for mailing. Under that practice, the correspondence would be deposited with the United States Postal Service on that same day, with postage thereon fully prepaid at Los Angeles, California, in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. (BY E-MAIL) By transmitting a true copy of the foregoing document(s) to the e-mail addresses set forth above. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on March 6, 2019, at Los Angeles, “ri Sandra Anderson Vda 4 I Nidh- (Type or print name) “(Signature) 7 MOTION BY DEFENDANTS MARSH USA AND REGINA DEAN TO COMPEL ARBITRATION 03402-0008 326227.7 Court Reservation Receipt | Journal Technologies Court Portal Journal Technologies Court Portal Court Reservation Receipt Reservation Reservation ID: 349634998819 Reservation Type: Motion to Compel Arbitration Case Number: 18BBCV00077 Filing Party: Marsh USA, Inc. (Defendant) Date/Time: April 26th 2019, 8:30AM Fees Description Motion to Compel Arbitration Credit Card Percentage Fee (2.75%) TOTAL Payment Amount: $61.65 Account Number: XXXX6002 < Back to Main I= Print Page Copyright © Journal Technologies, USA. All rights reserved. Status: RESERVED Number of Motions: 1 Case Title: LIBERMAN BROADCASTING, INC, et al. vs APPLIED UNDERWRITERS, INC. et al. Location: Burbank Courthouse - Department B Confirmation Code: CR-PFZSCOS4A6RAXG342 Fee Qty Amount 60.00 1 60.00 1.65 1 1.65 $61.65 Type: Visa Authorization: 115215
