Berglund v. Alsc of San Diego, Lp

• Decision Date: 22 May 2006
• Docket Number: No. D045218.,D045218.
• Citation: 43 Cal.Rptr.3d 456
• Court: California Court of Appeals Court of Appeals
• Parties: Daniel L. BERGLUND, Plaintiff and Respondent, v. ARTHROSCOPIC & LASER SURGERY CENTER OF SAN DIEGO, LP, Defendant and Appellant.

43 Cal.Rptr.3d 456

Daniel L. BERGLUND, Plaintiff and Respondent, v. ARTHROSCOPIC & LASER SURGERY CENTER OF SAN DIEGO, LP, Defendant and Appellant.

No. D045218.

Court of Appeal, Fourth District, Division 1.

May 22, 2006.

Higgs, Fletcher & Mack, John Morris, William A. Miller, San Diego, and Michael S. Faircloth, for Defendant and Appellant.

Law Office of Marc O. Stern and Marc O. Stern, La Jolla, for Plaintiff and Respondent.

McDONALD, J.

Daniel L. Berglund, in the arbitral forum, subpoenaed documents from nonparty Arthroscopic & Laser Surgery Center, L.P. (ALSC). The arbitrator ordered ALSC to produce the documents for his in camera review. ALSC brought a motion for a protective order in the superior court, which ruled it did not have jurisdiction to review the arbitrator's discovery order because the arbitrator had exclusive authority over the discovery dispute. ALSC appeals, contending the arbitrator was not authorized to enforce a discovery subpoena against it, as a nonparty to the arbitration agreement, and the court was required to exercise jurisdiction over its motion. Code of Civil Procedure sections 1283.1 and 1283.05¹ grant arbitrators authority to enforce discovery subpoenas even against nonparties in cases involving personal injury or death, but the trial court has jurisdiction to review the arbitrator's discovery ruling.

An additional issue is whether judicial review of an arbitrator's discovery decisions addressed to nonparties to an arbitration agreement is limited to the same extent as discovery decisions addressed to parties to an arbitration agreement. Courts have held that parties to an arbitration agreement may not, except on severely circumscribed grounds, challenge arbitral decisions in judicial proceedings. This strict limitation on judicial review of arbitral decisions is based on the consideration that parties to an arbitration agreement expect, in return for foregoing their right to full judicial review, they will receive a prompt and final disposition of their disputes. However, the severe limitation on judicial review of arbitral decisions may only be imposed on those who have voluntarily agreed to have their disputes arbitrated or who have some relationship with one of the parties to the arbitration agreement. (§ 1283.05, subd. (d).)

In general, under section 1283.05, subdivision (c) parties to an arbitration agreement are bound by an arbitrator's discovery decisions to the same extent they are bound by the arbitrator's disposition of the merits of their dispute. When made under the provisions of section 1283.05, an arbitrator's discovery order addressed to parties to an arbitration agreement is subject to the same limited judicial review and will not be overturned even if on its face the order is erroneous and causes substantial injustice.

However, section 1283.05, subdivision (c) does not limit judicial review of arbitrators' discovery orders addressed to persons not parties to the arbitration and not otherwise aligned with the parties. Nonparties to the arbitration may seek judicial review of an arbitrator's discovery orders without the review limitations imposed on discovery orders addressed to parties.

FACTUAL AND PROCEDURAL SUMMARY

On August 23, 2000, Daniel L. Berglund filed a complaint in the San Diego Superior Court, alleging causes of action for breach of fiduciary duty and battery against Gary Losse, M.D.; Oasis Sports Medical Group, Inc; David Chao, M.D.; Byron Kind, M.D.; Paul Murphy, M.D.; ALSC; HealthSouth Rehabilitation Center; and, SHC San Diego, Inc. (collectively defendants). ALSC generally denied the claims.

During the trial court proceedings, Berglund served on ALSC a request for production of documents relating to missing medications, prescriptions or other chemical substances for the period 1997 to 1999. ALSC objected to the request on the basis of privilege, and Berglund filed a motion to compel their production. On July 23, 2001, the trial court denied the motion.

According to Berglund's uncontradicted representation in his respondent's brief, in February 2001, the trial court granted the defendants' motion to compel contractual arbitration and a retired superior court judge, affiliated with JAMS, was appointed arbitrator. However, Berglund's case against ALSC remained in the superior court because ALSC was not a signatory to the arbitration agreement.²

On July 25, 2001, Berglund filed a first amended complaint, the operative pleading, which added causes of action for medical negligence and breach of Business and Professions Code section 17200 et seq. In October, 2003, the trial court approved the settlement of the case as between Berglund and ALSC, discharged ALSC from liability for claims by the codefendants, and dismissed with prejudice Berglund's first amended complaint against ALSC.

In July 2004, Berglund, in the arbitral forum, subpoenaed documents from ALSC, including "[a]ny and all `drug logs,' memorandum or documentation[,] including but not limited to documents reflecting inventory lists of Narcotic medications which were discovered missing during the period of time from 1996 to January of 2000. For purposes of this request, `narcotic medications' is to include drug schedule II or III pain medications including, but not limited to, vicodin, percodan, percocet, lortab, norco, darvocet, codeine and/or tylenol with codeine and/or any other hydrocodone or oxycontin compound."

On August 3, 2004, ALSC, in the arbitral forum, objected to the subpoena on various evidentiary grounds, and claimed the documents sought were protected from discovery by Evidence Code section 1157; nonetheless, it agreed to produce some of the documents. On August 9, 2004, ALSC filed in the trial court a motion for a protective order to prohibit the production of documents, and reminded the trial court it previously had denied Berglund's request to compel production of some of the same documents.

On August 20, 2004, Berglund filed with the arbitrator a motion to compel from ALSC the documents sought by the subpoena. He argued the trial court had transferred jurisdiction of the case to the arbitrator two years earlier and therefore the trial court had no jurisdiction to issue a protective order. ALSC opposed the motion.

After a hearing and supplemental briefings, the arbitrator ruled on September 23, 2004, that he had jurisdiction to enforce the subpoena. The arbitrator also explained that the trial court's ruling on the privilege issue in the earlier discovery dispute was not binding on him. The arbitrator stated: "Much has happened in the ... intervening three years. The documents sought are not exactly the same, and there has been testimony by the former certifying pharmacist for [ALSC] that State regulations required [ALSC] to maintain drug logs or inventories of narcotic medications, and also to account for missing drugs. Prima facie, records kept and maintained to comply with state law would owe their origins to administrative regulations and would not emanate from committee proceedings or records under Evidence Code § 1157." The arbitrator ordered ALSC to produce the subpoenaed documents for his in camera review. The arbitrator, at the hearing on his ruling, clarified he was not requiring ALSC to produce documents protected by the attorney-client privilege.

On October 7, 2004, the trial court ruled, "The court denies [ALSC's] motion for a protective order based on improper jurisdiction. Additionally, the Court cannot rule on [ALSC's] motion to strike improper evidence and related objection. The Court does not have jurisdiction over issues relating to the subpoena production of business records. [¶] Jurisdiction lies with [the arbitrator] and the particular matter has already been decided. An arbitrator has the authority to compel production under § 1283.05(b) and has the power to rule on the admissibility of evidence."

On October 13, 2004, ALSC filed with this court a "Motion for Stay or Petition for Writ of Supersedeas, Prohibition and/or Other Appropriate Relief." That same day, ALSC filed in the superior court its notice of appeal of both the trial court's decision to deny the protective order and the arbitrator's discovery order. This court denied the writ petition on December 9, 2004.

On December 16, 2004, this court sent the parties a letter requesting they explain "why the superior court's October 7 order is appealable and why this court has jurisdiction to review an arbitration ruling that has not been confirmed or adopted by the superior court." On January 4, 2005, this court allowed a limited appeal to proceed "as to the court's October 7, 2004 order denying [ALSC's] motion for protective order."

DISCUSSION

I

Sections 1283.1 and 1283.05, read together, expand the generally limited discovery rights allowed in arbitration proceedings when, as here, the underlying claim is one "arising out of or resulting from an injury to, or death of, a person caused by the wrongful act or neglect of another." (Section 1283.1, subd. (a).) In all other arbitrations, the arbitrator may order discovery only if the parties' agreement so provides. When section 1283.1 applies, "[a]ll of the provisions of Section 1283.05 shall be conclusively deemed to be incorporated into, made a part of, and shall be applicable to, every agreement to arbitrate. . . ." (Section 1283.1, subd. (a); accord Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1088, 106 Cal. Rptr.2d 431 (Alexander).)

Section 1283.05, subdivision (a) states:

"After the appointment of the arbitrator or arbitrators, the parties to the arbitration shall have the right to take depositions and to obtain discovery regarding the subject matter of the arbitration, and, to that end, to use and exercise all of the same rights, remedies, and procedures, and be subject to all of the same duties, liabilities, and obligations in the arbitration with respect to the subject matter thereof, as...