Mabie v. Kaplan

Filed 4/26/07 Mabie v. Kaplan CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from an order of the Superior Court of San Diego County, Luis R. Vargas, Judge. Affirmed.

This is the third appeal arising from actions brought by Michele Mabie, Ashley Burkhart, Amanda Duran, Elizabeth Subia, Jessica L. Thompson and other named plaintiffs (collectively Respondents) against defendants Kaplan Higher Education Corporation (doing business as Maric College) Kaplan, Inc., and Michael L. Seifert (collectively Maric) that allege Maric violated California's unfair competition laws (UCL) (Bus. & Prof. Code, 17200 et seq.) and Education Code, section 94700 et seq.

We ruled in a nonpublished opinion, Fletcher et al. v. Quest Education Corp.^[1](March 30, 2004, D041048) (Fletcher), the arbitration provision in the parties' contracts was not unconscionable. Fletcher is presently in arbitration regarding claims for damages.

We ruled in another nonpublished opinion, Mabie et al. v. Kaplan Higher Education Corporation, et al. (June 10, 2005, D043979) (Mabie I), that the trial court properly denied Maric's motion to compel arbitration because the plaintiffs were not signatories or third-party beneficiaries to contracts containing applicable arbitration provisions.

In the present appeal, Maric challenges the trial court's denial of its petition to compel arbitration and stay the litigation in the consolidated action brought by the Respondents none of whom signed contracts with arbitration provisions. Maric contends the trial court erroneously "allow[ed] respondents to avoid arbitration by pleading a class definition limited to students 'who did not agree to arbitrate;' " and, under Code of Civil Procedure,^[2]section 1281.4, litigation should be stayed pending the outcome of the Fletcher arbitration. We affirm the trial court's order.

FACTUAL AND PROCEDURAL BACKGROUND^[3]

On December 16, 2005, Maric filed a motion to consolidate, and a separate motion to compel arbitration and stay litigation pending the outcome of Fletcher. On March 10, 2006, the trial court granted in part Maric's motion to consolidate.^[4] The court's order stated, "To the extent the Burkhart class allegations involve different claims, these issues can be distinguished when determining the scope of class definition. The parties are not precluded from moving to bifurcate the trials at a later date." Burkhardt is the only case that is pleaded as a class action; its defined class consists of former Maric students who did not sign contracts containing an arbitration provision. The court excluded Fletcher from the consolidation order because it was in arbitration; moreover, the plaintiffs in Fletcher were not enrolled in the Patient Care Assistant/Technician (PCAT) program at Maric College. The order to consolidate is not challenged on appeal.

On April 12, 2006, the trial court denied Maric's motion to compel arbitration in the consolidated action and stay proceedings pending the outcome of arbitration in Fletcher because Maric did not provide evidence the plaintiffs in the consolidated action had signed agreements containing mandatory arbitration provisions, or authority to support the stay sought.

DISCUSSION

I.

We deny Respondents' request that we exercise our inherent authority to dismiss this appeal, which Respondent contends "is frivolous on its face and is taken solely to delay the injunctive and other relief Respondents seek." We reiterate what was stated in MabieI regarding a motion for dismissal brought on the same ground: "As a practical matter, however, 'the power summarily to dismiss a frivolous appeal is seldom exercised.' [Citation.] 'The reason is that, to determine whether the appeal is frivolous, the court usually will have to examine the record and review the merits; having done so, little is to be gained by dismissing rather than deciding the appeal on its merits.' [Citation.] Such is the case here, and thus we deny Mabie's motion and dispose of the appeal on its merits. Mabie has not requested monetary sanctions." (Mabie I, supra, at p. 6.)

II.

The trial court did not err in denying Maric's motion to compel arbitration of the consolidated action, because none of the plaintiffs signed contracts containing arbitration provisions. Remarkably, Maric claims in its reply brief that it "does not contend that former students who never signed an arbitration agreement are required to arbitrate their alleged claims;" nonetheless, Maric asserts that Respondents seek to "manipulate their purported class definition to avoid arbitration." These flatly contradictory propositions have perhaps gone unnoticed by appellants, but not by this court. Accordingly, we reject Maric's argument that Respondents' attempt to "gerrymander their purported class" "would deny the College's due process and contract rights, contradict federal and California law favoring arbitration, and conflict with principles of equity on which class action procedure is based." We reiterate what we stated in Mabie I: "Generally speaking, one must be a party to an arbitration agreement to be bound by it. 'The strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration.' "[Citations.] "Although '[t] he law favors contracts for arbitration of disputes between parties' [citation], ' "there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate . . . ." ' " (Mabie I, supra, at pp.13-14.)

Maric relies on Net2Phone, Inc. v. Superior Court (2003) 109 Cal.App.4th 583, 589 for its contention the plaintiffs in this action should be required to arbitrate their claims, which Maric argues are asserted on behalf of class members who did sign arbitration agreements. In Mabie I, the holding in Net2Phone was explained as follows: "[T]he court held 'that where a private plaintiff which has itself suffered no injury files a representative action under [the UCL] alleging that certain of defendant's contractual provisions subject its customers to an 'unlawful, unfair or fraudulent business . . . practice' and the contract contains a forum selection provision, the plaintiff is bound to that provision just as defendant's customers would be bound had they filed the action themselves.' [Citation.] The court explained, 'Consumer Cause is 'closely related' to the contractual relationship because it stands in the shoes of those whom it purports to represent. Its argument to the contrary is inconsistent with its position as a representative plaintiff. Were we to hold otherwise, a plaintiff could avoid a valid forum selection clause simply by having a representative nonparty file the action.' " (Mabie I, supra, at p. 14.)

Here, Net2Phone is inapplicable. "An arbitration clause, however, is entirely different in this context. An arbitration clause must be consented to by the person against whom it is enforced; there is no authority that the 'closely related' test that applies to forum selection clauses applies to arbitration clauses. Both the case law and relevant statute require actual consent. Thus, Net2Phone fails as an analogy, and because it would conflict with the fundamental principle that arbitration requires consent, its holding cannot and should not be extended to arbitration clauses." (Lee v. Southern CaliforniaUniversity for Professional Studies Cal.Rptr.3d ___, 2007 WL 778818.) Moreover,

the Burkhart matter alone among the consolidated cases is pled as a class action; therefore, the plaintiffs in the other cases are not suing in a representative capacity. In any event, none of the plaintiffs, including those in Burkhart, are bound by arbitration provisions. Finally, the trial court ruled that the Burkhart matter may be bifurcated at a later date if necessary.

III.

Maric unavailingly relies on the stay provision of section 1281.4, which provides: "If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies."

"[I]t is settled that: 'A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.' " (Denham v. Superior Court ( 1970) 2 Cal.3d 557, 564.) Here, the trial court's ruling to sever Fletcher is not explicitly mentioned in its order denying the motion to stay the proceedings,but we are permitted to infer the court took it into consideration. Therefore, based on the concluding paragraph of section 1281.4, which states, "If the issue which is the controversy subject to arbitration is severable the stay may be with respect to that issue only," the trial court did not abuse its discretion in refusing to stay litigation in the consolidated action. "We point out that under these circumstances, the trial court is not required to stay all proceedings against the defendants who are not entitled to arbitration; the court may, in its discretion, sever the action ... or limit any stay to those issues subject to arbitration." (Madden v. Kaiser Foundation Hospitals (1975)

17 Cal.3d 699, 714.)^[5]

DISPOSITION

The order is affirmed. Respondents are awarded costs on appeal.

O'ROURKE, J.

WE CONCUR:

McCONNELL, P. J.

AARON, J.

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^[1] Quest Education Corp. was purchased by Kaplan Higher Education, Corp.

^[2] All further statutory references are to the Code of Civil Procedure unless otherwise stated.

^[3] We will not duplicate the factual and procedural summary from our previous opinions; instead, we present the facts necessary for the disposition of this appeal.

^[4] Pursuant to the consolidation order, the following actions were consolidated with the Mabie, et al vs. Kaplan Inc., et al. (GIC 820089) action: Ashley Burkhart, et al. v. Kaplan Higher Education Corporation, et al. (GIC 854195); Amanda Duran, et al. v. Kaplan Higher Education Corporation, et al. (GIC 851953); Elizabeth Subia, et al. v. Kaplan Higher Education Corporation, et al. (GIC 855141); Jessica L. Thompson v. Kaplan Higher Education Corporation, et al. (GIC 853565).

^[5] We note that in Maric's demurer to Mabie's first amended complaint, it had argued, "In addition to violating [Maric's] due process with repeated suits, Mabie seeks to represent all the public but only asserts remedies with respect to some namely only those who did not sign arbitration provision." The court in MabieI stated, "Moreover, Maric attempts to raise arguments regarding the effect of Fletcher on this case, which the court resolved against Maric in overruling its demurrer to the complaint. The demurrer ruling, however, is not on appeal." (Mabie I, supra, at pp. 17-18.)