Broughton v. Cigna

• Citation: 21 Cal.4th 1066,90 Cal.Rptr.2d 334,988 P.2d 67
• Decision Date: 02 December 1999
• Docket Number: No. S072583.,S072583.
• Court: United States State Supreme Court (California)
• Parties: Adrian BROUGHTON, Jr., a Minor, etc., et al. Plaintiffs and Respondents, v. CIGNA HEALTHPLANS OF CALIFORNIA, Defendant and Appellant.

90 Cal.Rptr.2d 334

21 Cal.4th 1066

988 P.2d 67

Adrian BROUGHTON, Jr., a Minor, etc., et al. Plaintiffs and Respondents, v. CIGNA HEALTHPLANS OF CALIFORNIA, Defendant and Appellant.

No. S072583.

Supreme Court of California.

December 2, 1999.

Horvitz & Levy, Daniel J. Gonzalez, Lisa Perrochet, Encino; Hammond, Zuetel & Cahill, Zuetel & Cahill, Zuetel & Tomlinson, Kenneth R. Zuetel, Jr., and Cynthia L.K. Steel, Pasadena, for Defendant and Appellant.

Fred J. Hiestand, Sacramento, for the Association for California Tort Reform as Amicus Curiae on behalf of Defendant and Appellant.

Thelen Reid & Priest, Curtis A. Cole, Los Angeles, and Nicole M. Duckett for California Medical Association, California Dental Association and California Healthcare Association as Amici Curiae on behalf of Defendant and Appellant.

Arnold & Porter, Lawrence A. Cox, Brian K. Condon and Kurt Fritz, Los Angeles, for Kaiser Foundation Health Plan, Inc., as Amicus Curiae on behalf of Defendant and Appellant. O'Melveny & Myers, Martin S. Checov, San Francisco, and George C. Demos, Los Angeles, for the California Association of Health Plans as Amicus Curiae on behalf of Defendant and Appellant.

Mazursky, Schwartz & Angelo, Los Angeles, Christopher E. Angelo, Anthony Kornarens; Watkins & Stevens and Steven B. Stevens for Plaintiffs and Respondents.

The Alexander Law Firm and Richard Alexander, San Jose, for American Association of Retired Persons as Amicus Curiae on behalf of Plaintiffs and Respondents.

Simon, Kesner & Friedman and Douglas E. Friedman, Los Angeles, for the American Cancer Society and the Autism Society of America as Amici Curiae on behalf of Plaintiffs and Respondents.

Ed Howard, Beverly Hills, for Consumers for Quality Care as Amicus Curiae on behalf of Plaintiffs and Respondents.

The Sturdevant Law Firm, James C. Sturdevant, San Francisco, Jack P. Hug, Burlingame, Steven S. Kaufhold; Ian Herzog, Santa Monica; Bruce Broillet; David S. Casey, Jr., San Diego; Deborah David, Los Angeles; Douglas Devries, Sacramento; Laurence E. Drivon, Stockton; Thor Emblem, Escondido; Joseph F. Harbison III, Sacramento; Steven J. Kleifield, Los Angeles; Moses Lebovits, Los Angeles; Harvey R. Levine, Fremont; Wayne McLean, Woodland Hills; David A. Rosen, Los Angeles; Leonard Sacks, Granada Hills; Rick Simons; Daniel Smith; Chris Spagnoli; Robert B. Steinberg, Los Angeles; Thomas G. Stolpman, Long Beach; Tony Tanke, Redwood City; Lea-Ann Tratten; William D. Turley, San Diego; and Roland Wrinkle, Woodland Hills, for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Respondents.

Paul Bland; Victoria Nugent; and Sarah Posner for Trial Lawyers for Public Justice as Amicus Curiae on behalf of Plaintiffs and Respondents.

Patricia Sturdevant, Washington, D.C., for National Association of Consumer Advocates as Amicus Curiae on behalf of Plaintiffs and Respondents.

Mark Mandell; Mary Alexander; and John Vail for Association of Trial Lawyers of America as Amicus Curiae on behalf of Plaintiffs and Respondents.

MOSK, J.

In this case we consider whether a claim brought under the Consumers Legal Remedies Act, Civil Code section 1750 et seq. (CLRA or the Act), may be subject to arbitration. The Court of Appeal concluded that such a claim would not be arbitrable, principally because the CLRA authorizes permanent injunctive relief to enjoin deceptive business practices, and such a remedy is beyond the scope of an arbitrator to grant or properly enforce. We conclude that the Court of Appeal is partially correct that the injunctive relief portion of a CLRA claim is inarbitrable, although for reasons somewhat different from those found by the Court of Appeal. But we also conclude that an action for damages under the CLRA is fully arbitrable and should be severed from an injunctive relief action when, as here, a plaintiff requests both types of relief.

I. Statement of Facts and Procedural Background

Plaintiffs are a minor, Adrian Broughton, Jr., through his guardian ad litem, Keya Johnson (his mother), and Ms. Johnson on her own behalf. Adrian and his mother were covered by Medi-Cal, which had negotiated a contract with Cigna Healthplans of California (Cigna) for health care coverage. ` The first cause of action in the complaint against Cigna and others, not parties to the appeal, seeks damages for medical malpractice, based on severe injuries claimed to have been suffered by Adrian at birth. The second cause of action alleges violation of the CLRA, based on allegations that Cigna deceptively and misleadingly advertised the quality of medical services which would be provided under its health care plan. Specifically, plaintiffs allege that Ms. Johnson received substandard prenatal medical services, and that she was denied a medically necessary cesarean delivery. Under the second cause of action plaintiffs ask for actual damages, punitive damages, attorneys fees and "an order enjoining [Cigna's] deceptive methods, acts, and practices."

Cigna answered the complaint and filed a combined motion to compel arbitration and verified petition for an order requiring plaintiffs to arbitrate the controversy. Cigna relied on the mandatory arbitration provision in its combined evidence of coverage and disclosure form.

Plaintiffs opposed the motion. They argued that there was no evidence of an agreement to arbitrate between them and Cigna, the case did not come within the statutes governing arbitration of medical malpractice claims, Cigna waived the right to arbitrate by litigating motions before the trial court, and the second cause of action under the CLRA was not subject to arbitration. In support of the last argument, plaintiffs cited Civil Code section 1751,¹ a part of the Act: "Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void."

The trial court severed the causes of action and granted the motion to compel arbitration of the medical malpractice cause of action, but denied the motion as to the cause of action under the CLRA. Cigna filed a timely notice of appeal from the order denying its motion to compel arbitration of the second cause of action for violation of the CLRA.

The Court of Appeal affirmed the trial court's judgment. It pointed to the CLRA antiwaiver provision and to the fact that the statute authorizes the granting of permanent injunctions against deceptive business practices. The court reasoned, as explained at greater length below, that arbitrators may not issue permanent injunctions, and therefore arbitration is not an adequate forum for the resolution of CLRA claims. We granted review to decide whether CLRA claims are arbitrable, and we also requested the parties to address the question whether a conclusion that an agreement to arbitrate CLRA claims is unenforceable would run afoul of the Federal Arbitration Act (9 U.S.C. § 1 et seq. (FAA)).²

II. Discussion

We begin our discussion by recapitulating the federal statutory mandate and strong public policy in favor of enforcing arbitration agreements. Section 2 of the FAA provides: "A written provision in ... a contract evidencing a transaction involving [interstate] commerce to settle by arbitration the controversy thereafter arising out of such contract or transaction, ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2.) The FAA, and section 2 in particular, "was intended to `revers[e] centuries of judicial hostility to arbitration agreements,' [citation] by `plac[ing] arbitration agreements "upon the same footing as other contracts."'" (Shearson/American Express, Inc. v. McMahon (1987) 482 U.S. 220, 225-226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (McMahon).) Through the FAA, "Congress precluded States from singling out arbitration provisions for suspect status...." (Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 [striking down state law requiring special notice for arbitration provisions in contracts].) California has a similar statute (Code Civ. Proc., § 1281) and a similar policy in favor of arbitration. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9-10, 10 Cal.Rptr.2d 183, 832 P.2d 899 (Moncharsh).)

Over the past 15 years, the United States Supreme Court has on numerous occasions invalidated laws and judicial decisions that disfavored arbitration. The seminal case of Southland Corp. v. Keating (1984) 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (Southland) reversed one of our own cases. We had decided in Keating v. Superior Court (1982) 31 Cal.3d 584, 183 Cal.Rptr. 360, 645 P.2d 1192 (Keating) that certain claims under California's Franchise Investment Law (Corp.Code, § 31000 et seq.) were not subject to mandatory arbitration pursuant to a provision in a franchise agreement. The Franchise Investment Law had an antiwaiver provision similar to the one in this case, which we construed as an expression of a legislative intent to limit enforcement of the statute to the courts rather than arbitration. This limitation was warranted, we reasoned, because "the effectiveness of the statute `is lessened in arbitration as compared to judicial proceedings' [citation] in part because of the limited nature of judicial review [citation]." (Keating, supra, 31 Cal.3d at p. 596, 183 Cal.Rptr. 360, 645 P.2d 1192.) The United States Supreme Court held that the Franchise Investment Law, so interpreted, violated the FAA. As the court stated: "In enacting § 2 of the [FAA], Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration." (Southland, supra, 465 U.S. at p. 10, 104 S.Ct. 852.)

In Perry v. Thomas (1987) 482 U.S. 483, 107 S.Ct. 2520, 96 L.Ed.2d 426, the high court held California Labor Code section 229, which...