Is it Possible to Have a Valid “Dispositive” Summary Judgment or Adjudication Motion in an Arbitration Proceeding in California?

Neither the California Arbitration Act nor most administering association Arbitration Rules expressly allow Summary Judgment or Summary Adjudication in an arbitration proceeding, such as can be had in State or Federal Court proceedings .

The California statute and rules only provide for a “hearing’ as a means for resolving issues and cases.

This hearing includes the right to cross-examine all witnesses, as well as the right to subpoena witnesses to testify at the hearing.

In Summary Judgement proceedings there is no “hearing” with live witnesses, and all witness testimony is provided by a written affidavit under penalty of perjury.

If a Claimant or Respondent is permitted to use such a summary procedure in arbitration, then it would be able to frame the central and likely dispositive issue in a case as it wishes, while depriving Respondent its statutory right and contractual right under most arbitration association rules to a fair hearing, where it could cross-examine and attack the credibility of a moving party’s main witnesses.

“The parties to the arbitration are entitled to be heard, to present evidence and to cross-examine witnesses appearing at the hearing, but rules of evidence and rules of judicial procedure need not be observed. On request of any party to the arbitration, the testimony of witnesses shall be given under oath.”

“Another provision of the CAA, section 1282.2, subdivision (d), provides that, unless they agree otherwise, “[t]he parties to the arbitration are entitled to be heard, to present evidence and to cross-examine witnesses appearing at the hearing, but rules of evidence and rules of judicial procedure need not be observed. On request of any party to the arbitration, the testimony of witnesses shall be given under oath.” Section 1282.2, subdivision (d) is incorporated into section 1286.2, subdivision (a)(5) by the phrase “other conduct of the arbitrators contrary to the provisions of this title.” Both statutes codify within the CAA the fundamental principle that “[a]rbitration should give both parties an opportunity to be heard.” (Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 689 [57 Cal. Rptr. 2d 867].) The parties may be heard on the papers rather than at a live hearing (Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1105 [47 Cal. Rptr. 2d 650]), but the opportunity to be heard must be extended to all parties equitably.”

Royal Alliance Associates, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1108. (Emphasis added).

The Construction Industry Arbitration Rules of the American Arbitration Association, for example, also have a similar hearing requirement:

“The claimant shall present evidence to support its claim. The respondent shall then present evidence supporting its defense. Witnesses for each party shall also submit to questions from the arbitrator and the adverse party. The arbitrator has the discretion to vary this procedure, provided that the parties are treated with equality and that each party has the right to be heard and is given a fair opportunity to present its case.”

Similarly, R-33.(c) further explains what is needed for a full and fair hearing. The presentation of all evidence: “must still afford a full opportunity for all parties to present any evidence that the arbitrator deems material and relevant to the resolution of the dispute and when involving witnesses, provide an opportunity for cross-examination.”

The appropriateness of Summary Adjudication in arbitration proceedings is therefore still an unsettled legal question:

“In closing, we caution that our holding should not be taken as an endorsement of motions for summary judgment or summary adjudication in the arbitration context. By concluding that, under the Act and AAA rules, the arbitrator was permitted to entertain summary adjudication motions, we do not suggest that he was required to do so. Further, in any given arbitration, the propriety of summary adjudication motions will depend upon a variety of factors, including the nature of the claims and defenses, the provisions of the arbitration agreement, the rules governing the arbitration, the availability of discovery, and the opportunity to conduct adequate discovery before making or opposing a motion. Finally, especially where the arbitration lacks an explicit procedure for dispositive motions, courts must ensure (consistent with Moncharsh, supra, 3 Cal. 4th at pp. 12-13, and Hall v. Superior Court, supra, 18 Cal. App. 4th at pp. 438-439) that the party opposing such a motion is afforded a fair opportunity to present its position.”

The hearings in the arbitration proceedings are required to be oral hearings before the arbitrator(s) with the statutory right to be heard, to cross-examine witnesses and to compel third party participation at the hearing, as well as similar rights afforded by the AAA Rules:

“All evidence shall be taken in the presence of all of the arbitrators and all of the parties, except where:

1. any of the parties is absent, in default, or has waived the right to be present, or
2. the parties and the arbitrators agree otherwise.” R-35(b). (Emphasis added).

The statutory procedural due process guarantee of a full and fair hearing is one of the only checks on an arbitrator’s expansive discretion.

“[A] petition to vacate [an arbitration award] is proper where, in the course of arbitration proceedings, a party is “denied a fair opportunity to present his position.”

“[A] rbitration procedures that interfere with a party's right to a fair hearing are reviewable on appeal. As explained in Azteca Construction, Inc. v. ADR Consulting, Inc. (2004) 121 Cal.App.4th 1156, 1165 [18 Cal. Rptr. 3d 142]: “Precisely because arbitrators wield such mighty and largely unchecked power, the Legislature has taken an increasingly more active role in protecting the fairness of the process. [Citation.]” (See also Haworth v. Superior Court (2010) 50 Cal.4th 372, 395 [112 Cal. Rptr. 3d 853, 235 P.3d 152] (dis. opn. of Werdegar, J.) [explaining that while the finality of arbitration awards is an important principle, “[a]n equally vital principle, however, is that with such limited judicial review the arbitration system must have—and must be seen to have—sufficient integrity that parties can be confident they will receive a fair hearing and an impartial decision from the arbitrator”].) Because the rules of evidence and judicial procedure do not apply to arbitration proceedings absent the parties' agreement, “[a]rbitration procedures violate the common law right to a fair hearing ‘only in the clearest of cases, i.e., when the applicable procedures essentially preclude the possibility of a fair hearing.’ [Citation.]” (Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 177 [90 Cal. Rptr. 3d 818].)”

The only way to accord Respondent a fair “hearing” in compliance with the right of cross- examination under California statutes and Arbitration Rules would be to allow the party opposing Summary Judgment or Adjudication to take party or third party depositions and to subpoena the third party witnesses, as needed, for use as testimony or as a possible substitute for the statutory right of cross-examination in the motion for Summary Judgment/Adjudication.

Otherwise, the party resisting Summary Judgment, Adjudication would have no effective means to challenge or impeach statements or assertions made in moving party’s declaration or affidavit.

This is not a discovery matter, but rather concerns a Respondent’s fundamental right to cross-examine and present evidence, in order to receive a fair hearing on the factual issues raised by the motion.

But where the Arbitration Agreement or applicable arbitration association procedural rules do not include Code Civil Proc. § 1283.05 or do not otherwise allow party or third party depositions for discovery or testimonial purposes, Summary Judgement or Adjudication might thus prevent the Cross-Examination of witnesses providing who have provided declarations in support of such a Motion, and thus could effectively deprive the opposing party of the statutory and/or contractual right to Cross-Examine witnesses as required by the California Arbitration Act and many association arbitration rules.

This lack of the right of cross-examination could thus endanger the validity of any arbitration award based in whole or in part on such a Summary Judgment or Adjudication Motion, and could be grounds for vacating the Award under Code Civil Proc. § 1286.2.

Testimonial depositions of third parties could be taken by subpoena to provide evidence in opposition to such a Summary Judgment Motion, or as a substitution for Cross-examination of third parties who have provided an affidavit in support of Summary Judgment/Adjudication motions, but that might not be sufficient to preserve the validity of the award where there are affidavits provided by parties who cannot be deposed/cross-examined via depositions under Code Civil Proc. § 1283 or otherwise.

“On application of a party to the arbitration, the neutral arbitrator may order the deposition of a witness to be taken for use as evidence and not for discovery if the witness cannot be compelled to attend the hearing or if exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally at the hearing, to allow the deposition to be taken . . .”

Rule 36 of the Construction Industry Arbitration Rules also requires that a party or non-party witness must be made available for cross-examination at an arbitration hearing when that witness has provided a written declaration or witness statement.

“At a date agreed upon by the parties or ordered by the arbitrator, the parties shall give written notice for any witness or expert witness who has provided a written witness statement to appear in person at the arbitration hearing for examination. If such notice is given, and the witness fails to appear, the arbitrator may disregard the written witness statement and/or expert report of the witness or make such other order as the arbitrator may consider to be just and reasonable.”

Further, subsection (c) of Rule 36 states that where witness’ testimony is presented by a party affidavit, his or her appearance at on arbitration hearing then:

“either party may request that the arbitrator order the witness to appear in person for examination before the arbitrator at a time and location where the witness is willing and able to appear voluntarily or can legally be compelled to do so. Any such order may be conditioned upon payment by the requesting party of all reasonable costs associated with such examination.”

An arbitrator shall issue a subpoena requiring a witness deposition where a party opposing Summary Judgment/Adjudication makes an application to depose a witness for evidentiarypurposes, in order to allow the party to take third party depositions for testimonial purposes, or a possible substitute for cross-examination, for use in opposing Summary Judgment, if needed.

“(a) A subpoena requiring the attendance of witnesses, and a subpoena duces tecum for the production of books, records, documents and other evidence, at an arbitration proceeding or a deposition under Section 1283, and if Section 1283.05 is applicable, for the purposes of discovery, shall be issued as provided in this section. In addition, the neutral arbitrator upon his own determination may issue subpoenas for the attendance of witnesses and subpoenas duces tecum for the production of books, records, documents and other evidence.”

This right to depose declarants is especially important where the proposed “Summary Judgment” hearing could more or less determine the outcome of the whole arbitration.

An arbitrator’s power to order the deposition of a non-party for evidentiary purposes is derived from Code Civil. Proc. section 1282.6 and section 1283.

Specifically, where a party makes an application to depose a non-party - for evidentiary purposes under section 1283 - a subpoena requiring the attendance of a witness at a section 1283 deposition shall be issued by the arbitrator pursuant to section 1282.6.

The Construction Arbitration Rules likewise vests an arbitrator with this authority:

“An arbitrator or other person authorized by law to subpoena witnesses or documents may do so upon the request of any party or independently. Parties who request that an arbitrator sign a subpoena shall provide a copy of the request and proposed subpoena to the other parties to the arbitration simultaneously upon making the request to the arbitrator.”

As noted above, the Arbitration Act nor most Arbitration Rules expressly allow such a Summary Judgment or Summary Adjudication procedure, and the validity of such motions in arbitration is still an open question in California due to the lack of an evidentiary “hearing” and the possible deprivation of the right to Cross-Examine all witnesses/declarants.

Caution is consequently advisable in attempting to employ any such “summary” procedure.

In the Schlessinger decision, mentioned above, the arbitrator allowed the taking of depositions by both parties, one set of contention interrogatories and a set of document demands before the Motion was filed.

In support of his Motion and in opposition to RM&S's motion, Schlessinger submitted, among other things, evidence consisting of two declarations from himself, a declaration from a certified public accountant, a declaration from his attorney, excerpts from the two depositions he had taken, and portions of his own deposition. The evidence supporting RM&S's summary motion consisted primarily of declarations from the two partners whom Schlessinger had previously deposed and of Schlessinger's own deposition testimony. See, Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1102.

Thus, in Schlessinger by allowing those depositions and other discovery, the arbitrator effectively did allow the parties to cross-examine - at depositions - the witnesses for the other party, and the statutory right of cross-examination at a “hearing” was not materially interfered with.

Parties opposing any such Summary motions in arbitration proceedings must be similarly afforded the right to cross-examine for testimonial and evidentiary purposes at a deposition or otherwise any party or non-party witness who provides a supporting declaration on the Motion, and further must be allowed to subpoena to a deposition - to be used for testimonial or evidentiary purposes, as a substitute for cross-examination those parties or third parties whose testimony on cross- examination may be relevant to the issues raised by such a motion, just as the opposing party would be entitled to at an oral arbitration hearing on the merits, or on a Summary Judgment/Adjudication Motion in Court.