Opinion
G049838
10-03-2017
SHARON McGILL, Plaintiff and Respondent, v. CITIBANK, N.A., Defendant and Appellant.
Stroock & Stroock & Lavan, Julia B. Strickland and Marcos D. Sasso for Defendant and Appellant. Capstone Law, Raul Perez, Melissa Grant, Glenn A. Danas, Katherine W. Kehr, Ryan H. Wu and Liana Carter for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. RIC1109398) OPINION Appeal from an order of the Superior Court of Riverside County, John W. Vineyard, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed and remanded. Stroock & Stroock & Lavan, Julia B. Strickland and Marcos D. Sasso for Defendant and Appellant. Capstone Law, Raul Perez, Melissa Grant, Glenn A. Danas, Katherine W. Kehr, Ryan H. Wu and Liana Carter for Plaintiff and Respondent.
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Defendant and appellant Citibank, N.A. (Citibank) appealed from the trial court's order on its petition to compel plaintiff and respondent Sharon McGill to arbitrate her class action claims on an individual basis. The trial court granted the petition as to McGill's monetary damages and restitution claims, but denied it as to her injunctive relief claims. In an earlier opinion, we reversed the order on the injunctive relief claims and remanded for the court to order all claims to arbitration.
The Supreme Court, however, granted McGill's petition for review and reversed our judgment because the Court concluded the arbitration provision was unenforceable to the extent it waived McGill's right to seek public injunctive relief in any forum. In doing so, the Supreme Court identified a potential issue regarding the severability of the waiver provision, and remanded the matter to this court for further proceedings.
We invited supplemental briefing from the parties on what appellate issues, if any, remain before remanding the matter to the trial court. Both sides agree there are no issues for us to decide at this time, and therefore we should remand the case to the trial court so it may resolve the severability claim and any other issues in the first instance. We therefore affirm the trial court's order denying in part and granting in part Citibank's petition to compel arbitration, and remand for further proceedings consistent with the Supreme Court's opinion.
I.
DISCUSSION
Citibank is a national banking association that offers consumers a variety of financial services, including credit card accounts and credit insurance plans. Under its "Credit Protector" plan, Citibank defers or credits certain amounts on a consumer's Citibank credit card account when one or more qualifying events occur, such as long-term disability, unemployment, divorce, military service, and hospitalization. Citibank charges consumers who purchase the Credit Protector plan a monthly premium based on the consumer's credit card balance.
In 2001, McGill opened a Citibank credit card account and purchased the Credit Protector plan. At that time, the "Citibank Card Agreement" (Agreement) did not include an arbitration provision. In October 2001, Citibank sent McGill a "Notice of Change in Terms Regarding Binding Arbitration to Your Citibank Card Agreement" (2001 Notice) that amended the Agreement to add an arbitration provision. The provision stated, "Either you or we may, without the other's consent, elect mandatory, binding arbitration for any claim, dispute, or controversy between you and us (called 'Claims')."
The provision further provided, "All Claims relating to your account or a prior related account, or our relationship are subject to arbitration, including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision. All Claims are subject to arbitration, no matter what legal theory they are based on or what remedy (damages, or injunctive or declaratory relief) they seek. This includes Claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; . . . and Claims made independently or with other claims. . . . Claims and remedies sought as part of a class action, private attorney general or other representative action are subject to arbitration on an individual (non-class, non-representative) basis, and the arbitrator may award relief only on an individual (non-class, non-representative) basis. [¶] . . . [¶] . . . This arbitration provision is governed by the Federal Arbitration Act (the 'FAA'). [¶] . . . [¶] . . . Claims must be brought in the name of an individual person or entity and must proceed on an individual (non-class, non-representative) basis. The arbitrator will not award relief for or against anyone who is not a party. If you or we require arbitration of a Claim, neither you, we, nor any other person may pursue the Claim in arbitration as a class action, private attorney general action or other representative action, nor may such Claim be pursued on your or our behalf in any litigation in any court."
Under the 2001 Notice, McGill could have refused to accept the arbitration provision by sending Citibank written notice within 26 days of the closing date for her next account statement. If McGill opted out, she could have continued to use her credit card under the existing terms "until the end of [her] current membership year or the expiration date on [her] card(s), whichever is later." McGill did not opt out of the arbitration provision.
In February 2005, Citibank sent McGill a "Notice of Change in Terms, Right to Opt Out, and Information Update" (2005 Notice) informing her of changes to the arbitration provisions and other aspects of the Agreement. The 2005 Notice again provided McGill the opportunity to opt out of the arbitration provision, but she did not do so. In January 2007, Citibank sent McGill a complete copy of the Agreement, which included the same arbitration provision.
In 2011, McGill filed this class action based on Citibank's marketing of the Credit Protector plan and the manner in which Citibank administered McGill's claim under the plan when she lost her job in 2008. The operative complaint alleged claims against Citibank for (1) violation of California's unfair competition law (Bus. & Prof. Code, § 17200 et seq.; UCL); (2) violation of the false advertising law (id. at § 17500 et seq.; FAL); (3) violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.; CLRA); and (4) improper sale of insurance (Ins. Code, § 1758.9). The relief McGill sought included restitution, monetary and punitive damages, attorney fees and costs, and injunctive relief enjoining Citibank from continuing to engage in its allegedly illegal and deceptive practices.
Citibank filed a petition to compel McGill to arbitrate her claims on an individual basis as required by the Agreement's arbitration provision. The trial court granted the petition in part and denied it in part. Specifically, the court severed and stayed the claims for injunctive relief under the UCL, FAL, and CLRA, and ordered McGill to arbitrate all her other claims, including claims for restitution and damages under the UCL, FAL, CLRA, and Insurance Code. The trial court refused to order arbitration of the injunctive relief claims based on the "Broughton-Cruz rule" that the California Supreme Court established in Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, and Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303. Under that rule, arbitration provisions are unenforceable as against public policy if they require arbitration of UCL, FAL, or CLRA injunctive relief claims brought for the public's benefit. Citibank appealed the trial court's order on the injunctive relief claims, but McGill did not challenge the order on the monetary damages and restitution claims.
In our earlier opinion, we reversed the trial court's order refusing to compel McGill to arbitrate her injunctive relief claims, and remanded for the court to order McGill to arbitrate all of her claims. Our opinion joined several federal court decisions in concluding the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) preempts the Broughton-Cruz rule based on the United States Supreme Court holding in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333. In AT&T Mobility, the Court declared the FAA preempts all state-law rules that prohibit arbitration of a particular type of claim because an outright ban, no matter how laudable the purpose, interferes with the FAA's objective of enforcing arbitration agreements according to their terms. We concluded the Broughton-Cruz rule fell prey to AT&T Mobility's sweeping directive because it is a state-law rule that prohibits arbitration of UCL, FAL, and CLRA injunctive relief claims brought for the public's benefit.
The Supreme Court granted McGill's petition for review and later issued its opinion reversing our judgment. (McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 967 (McGill).) Focusing on an argument McGill did not raise until oral argument in our court, the Supreme Court concluded the Broughton-Cruz rule was not at issue here because Citibank's arbitration provision did not merely purport to require McGill to arbitrate her public injunctive relief claims on an individual basis. (McGill, at p. 956.) Rather, the provision "purport[ed] to preclude McGill from seeking public injunctive relief in arbitration, in court, or in any forum." (Ibid.) In other words, the dispositive issue was the validity of McGill's waiver of her right to seek public injunctive relief in any forum, not whether she could be compelled to arbitrate her public injunctive relief claims on an individual basis.
Based on this waiver, the Supreme Court concluded Citibank's arbitration provision is unenforceable as against public policy because "'a law established for a public reason cannot be contravened by a private agreement.'" (McGill, supra, 2 Cal.5th at p. 962.) As the Court explained, the UCL, FAL, and CLRA authorize consumers to seek injunctive relief on the public's behalf to prevent a business or individual from continuing to violate those laws. (McGill, at pp. 954-955.) The Court also noted the prohibition against waiving a law established for a public reason is a generally applicable contract defense that the FAA does not preempt. (McGill, at p. 962.)
The Supreme Court concluded its opinion with the following paragraph: "Our invalidation of the arbitration provision insofar as it purports to waive McGill's statutory right to seek public injunctive relief in any forum gives rise, under the terms of the parties' agreement, to the following question: Is the rest of the provision enforceable? The arbitration provision contained in the 2001 Notice stated: 'If any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall nevertheless remain in force.' (Italics added.) However, the arbitration provision set forth in the 2005 Notice and the 2007 account agreement states: ' If any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall not remain in force.' (Italics added.) Because the parties have not mentioned, let alone discussed, this language, we do not decide whether, in light of our holding, it renders the remainder of the arbitration provision unenforceable. But because our holding raises this question, we need not detail each respect in which McGill's injunctive relief request constitutes a request for public injunctive relief. We leave these issues to the Court of Appeal on remand, should the parties raise them and should the court find it necessary to decide them." (McGill, supra, 2 Cal.5th at pp. 966-967.)
Based on this paragraph, we invited the parties to submit supplemental briefing that (1) identified what, if any, further proceedings are required in this court before we remand the matter to the trial court, and (2) addressed the merits of any issue we must decide. Both sides agreed there are no issues for us to consider, and therefore we should remand the matter to the trial court for further proceedings consistent with the Supreme Court's decision.
Accordingly, although the trial court refused to order McGill's injunctive relief claims to arbitration based on the Broughton-Cruz rule, we affirm the court's order based on the result it reached and remand to the trial court for further proceedings. (Goles v. Sawhney (2016) 5 Cal.App.5th 1014, 2021 ["'[i]t is established that on appeal we review the decision of the trial court rather than its reasoning, and thus ". . . a ruling or decision correct in law will not be disturbed on appeal merely because it was given for the wrong reason"'"].) As the Supreme Court noted, its decision gives rise to additional issues relating to the enforceability of Citibank's arbitration provision to the extent the parties seek to raise them. Those issues include whether the arbitration provision's waiver of McGill's statutory right to seek public injunctive relief is severable, and also whether McGill waived the right to challenge the trial court's order sending all of her other claims to arbitration by failing to appeal from the court's original order. We express no opinion on any of these issues, but rather reserve them for the trial court to decide in the first instance should the parties pursue them.
II.
DISPOSITION
The order is affirmed and the matter remanded for the trial court to conduct further proceedings consistent with the Supreme Court's decision. McGill shall recover her costs on appeal.
ARONSON, J. WE CONCUR: BEDSWORTH, ACTING P. J. THOMPSON, J.