Opinion
No. 52468-2-I.
Filed: April 12, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 00-2-04650-2. Judgment or order under review. Date filed: 05/09/2003. Judge signing: Hon. Jay V White.
Counsel for Appellant(s), James Benjamin II Meade, Forsberg Umlauf, 900 4th Ave Ste 1700, Seattle, WA 98164-1039.
Sandra Jean Rovai, Attorney at Law, PO Box 1157, Tacoma, WA 98401-1157.
Counsel for Respondent(s), Paul Renwick Taylor, Attorney at Law, 1000 2nd Ave Ste 3800, Seattle, WA 98104-3617.
Raymond Francis Clary, Etter McMahon Lamberson Clary PS, 421 W Riverside Ave Ste 1600, Spokane, WA 99201-0406.
Kevin William Mickey, Etter McMahon Lamberson Clary, 421 W Riverside Ave Ste 1600, Spokane, WA 99201-0406.
Charles Matthew Andersen, Attorney at Law, 601 W Riverside Ave Ste 1900, Spokane, WA 99201-0627.
Stephen L. Farnell, Winston Cashatt Lawyers, 601 W Riverside Ave Ste 1900, Spokane, WA 99201-0695.
J. William Blue, Northern Blue, LLP, 1414 Raleigh Road Suite 435, The Exchange At Meadowmont, Chapel Hill, NC 27517.
Following arbitration of their Consumer Protection Act (CPA) claims under Michigan law, George and Dreama Edel brought an unsuccessful motion for injunctive relief under Washington's CPA. They argue on appeal that only a court can grant injunctive relief; thus, the trial court erred when it determined that their failure to prevail in arbitration was binding on their Washington claims. The appellants also argue that their confidentiality agreement with respondent Amway Corporation is void because it prevents them from serving a copy of their appellate brief on the attorney general, as required by RCW 26.19.095. We disagree with both contentions.
CPA claims are arbitrable; nothing in RCW 7.040.010 deprives arbitrators of the authority to award injunctive relief. And the confidentiality agreement is not void because the Edels can comply with RCW 26.19.095 by delivering a copy of their brief to the attorney general under seal. We affirm.
FACTS
The Edels filed a lawsuit alleging that Amway and several related individuals and entities had violated Washington's Consumer Protection Act and Business Opportunity Fraud Act and, in addition, were liable for fraud, misrepresentation, negligence, breach of contract, and slander. As required by RCW 19.86.095, they delivered a copy of their complaint for injunctive relief and damages to the Washington State Attorney General.
The Edels' claims were ultimately submitted to arbitration under several agreements the Edels had entered into with Amway. Those agreements were governed by Michigan law. Before the arbitration hearing, the Edels amended their complaint to delete their slander claims and to substitute Michigan's consumer protection statute for the Washington statutory claims. The Edels' amended complaint, dated April 30, 2002 and filed in JAMS Arbitration, listed five causes of action: (1) fraud/misrepresentation, (2) negligence; (3) Michigan's Business Opportunity Act, MCL sec. 455.901—922; (4) breach of contract; and (5) Michigan's Pyramid Promotion Act MCL sec. 445.1501—1546. The arbitrator found no merit to the Edels' claims and entered judgment against the Edels for counterclaim damages.
Although the Edels identified this statute as Michigan's Business Opportunity Act, MCL sections 455.901—922 are actually Michigan's Consumer Protection Act. The Edels proceeded with their claims as CPA claims, alleging that the defendants' actions constituted unfair and deceptive business practices. MCL sections 1501-1546 actually contain Michigan's franchise investment law.
After arbitration, the Edels filed a motion for injunctive relief in court. They sought an injunction to enjoin the defendants' unfair and deceptive business practices and a declaratory judgment declaring their confidentiality obligations void so that they could disclose the substance of their allegations to the federal and state attorneys general. The trial court denied the Edels' motion, and they appeal. The Edels do not contest entry of the arbitrator's final order as a judgment, but they assert that they were entitled to the injunctive relief sought in their motion.
DISCUSSION
The Edels argued in their motion that under RCW 7.40.010, the arbitrator lacked jurisdiction to grant injunctive relief; thus, the arbitrator's failure to award injunctive relief did not preclude them from seeking that relief in court. Amway argues that the Edels' request for injunctive relief fails for three reasons: (1) the arbitrator in fact had the authority to order injunctive relief; (2) res judicata bars the Edels from asserting causes of action not raised in arbitration; and (3) the Edels' request to relitigate their unfair business practices claims violates collateral estoppel. Amway is correct on all three points.
First, RCW 7.40.010 is an express authorization to superior court judges to order injunctive relief. It states: 'Restraining orders and injunctions may be granted by the superior court, or by any judge thereof.' RCW 7.40.010. It does not preclude arbitrators from awarding such relief. Indeed, under RCW 7.04.150 and .210, arbitration awards may be confirmed by the court and entered as a judgment with the same force and effect as any other judgment entered by the court. See ML Park Place Corp. v. Hedreen, 71 Wn. App. 727, 741, 862 P.2d 602 (1993).
In Garmo v. Dean, Witter, Reynolds, Inc., 101 Wn.2d 585, 681 P.2d 253 (1984), the Washington Supreme Court expressly held that Washington CPA claims, including those for injunctive relief, are arbitrable. The basis for the Garmo decision was the federal supremacy clause if a state law purported to limit the types of claims that could be arbitrated, it would infringe on the federal Arbitration Act, which requires enforcement of arbitration clauses. Garmo, 101 Wn.2d at 590. See also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (holding that arbitrators have the authority to grant equitable relief under the federal arbitration act). Thus, the Garmo court concluded that if the CPA were interpreted to restrict the arbitrator's authority, it would conflict with the federal arbitration act, which strongly favors arbitration of disputes. Even if RCW 7.40.010 were to be construed as limiting an arbitrator's authority to award injunctive relief, the federal arbitration act would prevail.
Second, res judicata bars parties from re-litigating claims that were litigated or might have been litigated in a prior action. Loveridge v. Fred Meyer, Inc., 125 Wn.2d 759, 763, 887 P.2d 898 (1995). The Edels could have raised their Washington CPA claims in arbitration, together with a challenge to the Michigan choice of law provision, but they did not. Their failure to do so precludes them from raising them in a separate forum.
Third, re-litigation of the Edels' CPA claims would violate collateral estoppel. Collateral estoppel is the doctrine of issue preclusion. Robinson v. Hamed, 62 Wn. App. 92, 96 n. 4, 813 P.2d 171 (1991). '[I]t is well settled that in an appropriate case the decision in an arbitration proceeding may be the basis for collateral estoppel or issue preclusion in a subsequent judicial trial.' Robinson, 62 Wn. App. at 96-97. The Edels failed to prove at arbitration that the defendants' actions and methods constitute unfair or deceptive business practices. Collateral estoppel prevents them from getting a second opportunity to try their case on these facts.
The Edels next ask this court to invalidate their confidentiality agreement with Amway on public policy grounds. See Goodier v. Hamilton, 172 Wn. 60, 62-63, 19 P.2d 392 (1933) (defining contracts that violate public policy as those that tend to clearly injure the public health, public morals, and public confidence in the purity of the administration of the law).
The Amway distributorship agreement signed by the Edels in 1997 provides that all disputes between Amway and their distributors are to be confidential, with no disclosures 'to any other person not directly involved in the conciliation or arbitration process.' In accordance with that provision, the trial court and the arbitrator sealed the case records and files and ordered that the Edels abide by the confidentiality provision.
The Edels' primary argument on appeal is that they cannot comply with RCW 19.86.095 without violating their confidentiality agreement. But after the Edels filed their opening brief, this court specifically authorized service of a copy of their brief on the Attorney General under seal. The Edels have not shown that the provision is void against public policy because they have failed to show that any of the protective orders entered in this case prevent them from complying with their legal obligations under RCW 19.85.095.
On October 15, 2003, Commissioner Ellis granted defendants' motion to seal this case on appeal and expressly authorized service of the appellants' briefs on the Attorney General under seal.
Even if the protective orders did not authorize service, they could be modified to do so under Marine Power Equip Co. v. Dep't of Transp., 107 Wn.2d 872, 734 P.2d 480 (1987). In Marine Power, the Supreme Court adopted a four-part test utilized in H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 106 F.R.D. 551 (S.D.N.Y. 1985), aff'd in part, dismissed in part, 797 F.2d 85 (2d Cir. 1986), to decide whether to modify a protective order to permit disclosure to a third party. That test consists of the following inquiries: (1) the nature and purpose of the original protective order; (2) the degree of reliance upon the order by the protected party; (3) the purpose and status of the party requesting modification; and (4) the government's role in the dispute. Marine Power, 107 Wn.2d at 876. Because the protective order issued by this court does not prevent service on the attorney general, it is does not need modification. Since the Edels' sole purpose for requesting a declaratory order has been satisfied, it would serve no purpose to hold the confidentiality provision void other than to relieve the Edels of its restrictions entirely. The Edels have shown no compelling reason why this should be done, so their request is denied.
The Edels also seek to inform the United State Attorney General of their claims. Under Marine Power, it is the Edels' burden to show why such relief is warranted, but they fail to make any argument related to this request. Because the Edels fail to show that agency's role in this dispute, their request is denied.
We affirm the trial court's order denying injunctive relief.
SCHINDLER and COX, JJ., concur.