In re Pac. Fertility Cases

• Decision Date: 03 November 2022
• Docket Number: A158155
• Citation: 85 Cal.App.5th 887,301 Cal.Rptr.3d 611
• Parties: PACIFIC FERTILITY CASES
• Court: California Court of Appeals Court of Appeals

85 Cal.App.5th 887

301 Cal.Rptr.3d 611

PACIFIC FERTILITY CASES

A158155

Court of Appeal, First District, Division 1, California.

Filed November 3, 2022

Lieff, Cabraser, Heimann & Bernstein, LLP, Elizabeth J. Cabraser, Sarah Robin London and Tiseme Gabriella Zegeye, 275 Battery Street - 29th Floor, San Francisco, CA 94111, Lieff Global, LLP, Lexi J. Hazam, 275 Battery Street, 30th Floor, San Francisco, CA 94111, San Francisco; Walkup, Melodia, Kelly & Schoenberger, Michael A. Kelly and Doris Cheng, 650 California Street, 26th Floor, San Francisco, CA 94108; Hersh & Hersh, Nancy Hersh, 601 Van Ness Ave., Suite 2080, San Francisco, CA 94102; Law Offices of Tiffany J. Gates, Tiffany J. Gates, PMB 406, 3940 Broad Street, Suite 7, San Luis Obispo, CA 93401, for Plaintiffs and Respondents.

Morgan Lewis & Bockius LLP, Thomas M. Peterson, Molly M. Lane, San Francisco, David L. Schrader and Megan A. Suehiro, Los Angeles; Faegre Baker Daniels LLP, Tarifa B. Laddon and Michael Jaeger, Los Angeles; Sheuerman, Martini, Tabari, Zenere & Garvin, Marc G. Cowden, San Jose; Swanson Martin & Bell, LLP, John J. Duffy and Kevin Ringel for Defendants and Appellants.

Galloway Lucchese Everson & Picchi, Joseph S. Picchi, 2300 Contra Costa Blvd., Suite 350, Pleasant Hill, CA 94523, Galloway, Lucchese, Everson & Picchi, Aaron T. Schult, 2300 Contra Costa Blvd. Suite 350, Pleasant Hill, CA 94523, for Defendant Pacific Fertility Center.

Galloway Lucchese Everson & Picchi, Joseph S. Picchi, 2300 Contra Costa Blvd., Suite 350, Pleasant Hill, CA 94523, Galloway, Lucchese, Everson & Picchi, Aaron T. Schult, 2300 Contra Costa Blvd. Suite 350, Pleasant Hill, CA 94523, Galloway Lucchese Everson & Picchi, Sukhwinder Kaur Bajwa, 1676 N. California Bouelvard - Suite 500, Walnut Creek, CA 94596-4142, for Defendant Eldon D. Shriock.

Morrison & Foerster LLP, Erin M. Bosman, William Francis Tarantino, Julie Yongsun Park, David Frank McDowell, Jr., 425 Market Street, Morrison & Foerster LLP, Lena H. Huges, 250 West 55th Street, New York, NY 10019-9601, MORRISON & FOERSTER LLP, Joseph R. Palmore, 2100 L. Street, NW, Suite 900, Washington, DC 20037-1888, for Defendant and Appellant Pacific MSO, LLC.

Morrison & Foerster LLP, Erin M. Bosman, William Francis Tarantino, David Frank McDowell, Jr., 425 Market Street, Morrison & Foerster LLP, Lena H. Huges, 250 West 55th Street, New York, NY 10019-9601, MORRISON & FOERSTER LLP, Joseph R. Palmore, 2100 L. Street, NW, Suite 900, Washington, DC 20037-1888, for Defendant and Appellant Prelude Fertility, Inc.

Faegre Drinker Biddle & Reath LLP, Tarifa B. Laddon, Michael Jaeger, 1800 Century Park East, Suite 1500, Los Angeles, CA 90067, for Defendant and Appellant Praxair, Inc.

Morgan Lewis & Bockius LLP, Thomas M. Peterson, Benjamin P. Smith, San Francisco, David L. Schrader and Megan A. Suehiro, Los Angeles; Sheuerman, Martini, Tabari, Zenere & Garvin, Marc G. Cowden, San Jose; Swanson Martin & Bell, LLP, John J. Duffy and Kevin Ringel, 330 North Wabash Ave., Suite 3300, Chicago, IL 60611, for Defendant and Appellant Chart Inc.

Gordon & Rees LLP, James Kenneth Holder, 275 Battery St. Ste. 2000, San Francisco, CA 94111, for Defendant and Appellant EXTRON Company.

Banke, J. Plaintiffs in these coordinated cases contracted with defendant Pacific Fertility Center (Pacific) for fertility-related services, including egg and embryo cryopreservation and long-term freezer storage.¹ They filed suit after one of the cryogenic storage tanks (Tank Four) used to preserve their eggs and embryos failed. Defendant and appellant Chart Inc. (Chart) manufactured the storage tank. Defendants and appellants Praxair, Inc., and Praxair Distribution, Inc. (collectively, Praxair² ) sold the tank to Pacific and assisted with its installation.

Plaintiffs signed informed consent agreements and arbitration agreements with Pacific, but not with Chart or Praxair. Chart and Praxair nevertheless filed motions to compel arbitration on equitable estoppel grounds, which the trial court denied.³ On appeal, they continue to press their equitable estoppel arguments. We affirm.

BACKGROUND

On engaging Pacific's services, plaintiffs signed " ‘Informed Consent and Agreement to Perform Egg Cryopreservation ’ " forms.

These forms provided in part: "In spite of reasonable precautions, any of the following may occur in the lab that would prevent the establishment of a pregnancy: [¶] ... [¶] Bacterial contamination or a laboratory accident may result in loss or damage to some or all of the eggs or embryos. [¶] Laboratory equipment may fail and/or extended power losses can occur which could lead to the destruction of eggs, sperm and embryos."

The consent forms further provided: "Dispute Resolution: Medical Claims. It is understood that any dispute as to medical malpractice, that is, as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided in a separate arbitration agreement signed by the parties." They additionally provided: "Dispute Resolution: Other Claims. Except for any claim, controversy or dispute covered by the Arbitration Agreement, any claim, controversy or dispute arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity of this Agreement ... shall be submitted to mediation in the County of San Francisco, California before a single mediator."

In addition to the informed consent forms, plaintiffs signed arbitration agreements. Article 1 of these agreements provided: "It is understood that any dispute as to medical malpractice, that is, as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration as provided by California law, and not by a lawsuit or resort to court process except as California law provides for judicial review of arbitration proceedings. Both parties to this contract by entering into it, are giving up their constitutional right to have any such dispute decided in a court of law before a jury, and instead are accepting the use of arbitration."

The arbitration agreements further provided "Patient understands and agrees that any dispute of the sort described in Article 1 between Provider and Patient will be subject to compulsory binding arbitration." It defined "Provider" as including "the undersigned doctor, nurse practitioner, nurse midwife, or other health care provider and his or her professional corporation or partnership, and any employees, agents, successors-in-interest, heirs and assigns of the foregoing individuals or entities. The provider signing this agreement signs it on behalf of all the foregoing individuals and entities, and intends to bind each of them to arbitration to the full extent permitted by law."

Chart and Praxair were not signatories to either the informed consent or arbitration agreements.

Following the failure of Tank Four, plaintiffs in these 54 coordinated cases filed a "Master Complaint" alleging numerous causes of action. As to Chart and Praxair, the complaint alleged causes of action for negligent failure to recall the tank, strict products liability (for failure to warn, manufacturing defect, and design defect based on both the consumer expectations test and the risk utility test), general negligence, and violation of the Unfair Competition Law.

After plaintiffs agreed to arbitrate their claims against Pacific, Chart and Praxair moved to compel arbitration of the claims asserted against them on equitable estoppel grounds. The trial court denied their motions, and Chart and Praxair timely appealed.

DISCUSSION

Standard of Review

"On appeal from an order denying a petition to compel arbitration, we review the trial court's factual determinations under the substantial evidence standard, and we review the legal issues independently. [Citations.] Specifically, we independently consider the question of whether and to what extent a nonsignatory may enforce an arbitration agreement." ( Jarboe v. Hanlees Auto Group (2020) 53 Cal.App.5th 539, 547, 267 Cal.Rptr.3d 640.) " ‘[W]e review the trial court's order, not its reasoning, and affirm an order if it is correct on any theory apparent from the record.’ " ( Adajar v. RWR Homes, Inc. (2008) 160 Cal.App.4th 563, 571, fn. 3, 73 Cal.Rptr.3d 17.)

Equitable Estoppel

" ‘ "Generally speaking, one must be a party to an arbitration agreement to be bound by it or invoke it." [Citations.] "There are exceptions to the general rule that a nonsignatory to an agreement cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement." ’ [Citation.] ‘ " ‘As one authority has stated, there are six theories by which a nonsignatory may be bound to arbitrate: "(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary." ’ " ’ " ( Pillar Project AG v. Payward Ventures, Inc. (2021) 64 Cal.App.5th 671, 675, 279 Cal.Rptr.3d 117.)

"Equitable estoppel generically ‘ "precludes a party from asserting rights ‘he otherwise would have had against another’ when his own conduct renders assertion of those rights contrary to equity." ’ [Citations.] [¶] So, if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement. In other words, a signatory to an agreement with an arbitration clause cannot ‘ "have it both ways" ’ the signatory ‘cannot, on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration's applicability because the defendant is a non-signatory.’ " ( ...