Morrison Law Journal


The Morrison Law Journal February 2013 Volume VIII, Edition 2 Tort Claims In An Arbitral Forum? Court of Appeal Rules That Former Student At Posh Private School Must Arbitrate Her Tort Claims Against School And Teacher Based On Arbitration Provision In Enrollment Contract Signed By Her Parents By: Edward F. Morriso n, Jr., Esq. Larry A. Schwartz, Esq.
In a case that illustrates the broad construction which is given to arbitration agreements in California, the California Court of Appeal, Sixth Appellate District, issued an opinion in Shivani Bigler v. The Harker School (2013) DJDAR 1722 ("Bigler case") wherein the Court of Appeal ruled that a former student at a posh private school must arbitrate her tort claims against the school, and a teacher at the school, where the events allegedly took place on the school campus and the student's parents had executed an enrollment contract which contained an arbitration clause. The facts of the Bigler case are somewhat complicated, but illustrate the breadth of California's arbitration scheme. In Bigler, Shivani Bigler had enrolled at The Harker School, a private school in San Jose, California, from 1999 until April 27, 2011. Each year her parents were presented with an enrollment contract for the following year. In January 2010, the Head of School at Harker enclosed a letter along with the proposed contract for the coming 2010-2011 school year. Each year, including the 2010-2011 school year, Bigler's parents had executed the enrollment contract and paid tuition. Insofar as the disputes with The Harker School, Bigler's parents (as guardians ad litem for Bigler) filed a Complaint against The Harker School and Harker teacher Peter Itokazu. By the Complaint, Bigler claimed that she was mistakenly or wrongfully accused of an honor code violation in or about April of 2011, had been provided an "undeserved" two day suspension, and further claimed that she had been belittled and humiliated in front of other students when teacher Peter Itokazu had mocked Bigler after she had earned a second place finish in a Rotary Club academic competition. Bigler asserted causes of action for breach of contract and breach of the covenant of good faith and fair dealing, as a third party beneficiary of the enrollment agreement signed by her parents, defamation occurring at the student assembly where she was accused of an honor code violation and negligent hiring, retention and/or supervision of Mr. Itokazu. She also alleged battery, defamation and negligent infliction of 1 emotional distress as against both Harker and Itokazu, arising out of Itokazu's conduct, and interference with the prospective economic advantage against Itokazu. On the same date that the Complaint was filed, Bigler's parents initiated contractual arbitration of their own claims based on the arbitration provision in the Harker enrollment contract. The Defendants in turn demanded arbitration of Shivani Bigler's claims (in addition to arbitration of the parents' claims), but the Biglers refused citing defects in Harker's Demand for arbitration. The Harker School then petitioned to compel arbitration of Shivani Bigler's claims, arguing equitable estoppel. The Biglers opposed the Petition to Compel Arbitration arguing procedural and substantive unconscionability, and also that the tort claims were not subject to arbitration. The Trial Court denied the Petition to Compel Arbitration. On appeal, the Court of Appeal ruled that the enrollment contract was neither procedurally or substantively unconscionable, and also ruled that the tort claims were arbitrable given that the alleged conduct occurred on campus and was closely related to, or transactionally related to, the enrollment contract. The Bigler case is important in that the Court of Appeal ruled that a number of defenses to the demand for arbitration would not serve to bar arbitration. In that regard, the Court of Appeal ruled that the fact that the Commercial Rules of the American Arbitration Association (referred to in the enrollment contract) were not provided to the parents was of little moment. The Court of Appeal also ruled that the fact that the arbitration provision was presented in the "same typeface and point size as all other provisions," also did not provide the basis for a finding of unconscionability. The Court of Appeal also noted that the fact that the enrollment contract excluded arbitration for disputes involving tuition was also by itself not unconscionable. The Court of Appeal further ruled that, while there may have been an unconscionable attorney fee shifting provision in the enrollment contract, since The Harker School had waived that in its Petition to Compel Arbitration, that was also not an impediment to arbitration. In addition, the Court of Appeal ruled that the tort claims, including battery, were subject to arbitration, even with the schoolteacher, because the conduct was not removed from the setting contemplated by the enrollment contract (i.e., activities on the school campus). The Court of Appeal, in that regard, distinguished Victoria v. Superior Court (1985) 40 Cal.3d.734 (case involving arbitration of a sexual assault claim by a hospital orderly) and RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511 (case involving claims arising from domestic violence between a chief executive officer of a recruiting company who had an intimate relationship with the operator of a 2 company that maintained a chain of medical facilities) on the basis that those cases focused on conduct that was so far removed from the professional relationship between the parties that the claims could not have been contemplated when the arbitration agreements were executed. It should be noted that an unusual aspect of the Bigler case, i.e., that Bigler's parents had petitioned to compel arbitration of their claims, was not a significant underpinning in the Bigler case and, instead, the analysis involving procedural and substantive unconscionability, and arbitrability of tort claims, instead, was the focus of the decision. In this regard, the Bigler case is important given that the Court of Appeal ordered the matter to arbitration in spite of a number of potential defects, or alleged defects, in the arbitration demand by The Harker School and because it ordered alleged intentional tort claims (battery) into arbitration as well. About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com. Publication Note: The Morrison Law Group wishes to disseminate this publication to all clients and colleagues of the Firm who wish to receive it. Should any recipient desire to be removed from the distribution list, or wishes to have a colleague added, please contact Jim Van Dusen at The Morrison Law Group at 213 356-5504 or vandusen@morrisonlawgroup.com. Disclaimer Note: The legal article presented above is intended to provide general information which may be of interest or use to clients and colleagues of The Morrison Law Group and should not be construed as legal advice on any matter. 3

In a case that illustrates the broad construction which is given to arbitration agreements in California, the California Court of Appeal, Sixth Appellate District, issued an opinion in Shivani Bigler v. The Harker School (2013) DJDAR 1722 ("Bigler case") wherein the Court of Appeal ruled that a former student at a posh private school must arbitrate her tort claims against the school, and a teacher at the school, where the events allegedly took place on the school campus and the student's parents had executed an enrollment contract which contained an arbitration clause.

The facts of the Bigler case are somewhat complicated, but illustrate the breadth of California's arbitration scheme. In Bigler, Shivani Bigler had enrolled at The Harker School, a private school in San Jose, California, from 1999 until April 27, 2011. Each year her parents were presented with an enrollment contract for the following year. In January 2010, the Head of School at Harker enclosed a letter along with the proposed contract for the coming 2010-2011 school year. Each year, including the 2010-2011 school year, Bigler's parents had executed the enrollment contract and paid tuition.

Insofar as the disputes with The Harker School, Bigler's parents (as guardians ad litem for Bigler) filed a Complaint against The Harker School and Harker teacher Peter Itokazu. By the Complaint, Bigler claimed that she was mistakenly or wrongfully accused of an honor code violation in or about April of 2011, had been provided an "undeserved" two day suspension, and further claimed that she had been belittled and humiliated in front of other students when teacher Peter Itokazu had mocked Bigler after she had earned a second place finish in a Rotary Club academic competition. Bigler asserted causes of action for breach of contract and breach of the covenant of good faith and fair dealing, as a third party beneficiary of the enrollment agreement signed by her parents, defamation occurring at the student assembly where she was accused of an honor code violation and negligent hiring, retention and/or supervision of Mr. Itokazu. She also alleged battery, defamation and negligent infliction of

emotional distress as against both Harker and Itokazu, arising out of Itokazu's conduct, and interference with the prospective economic advantage against Itokazu. On the same date that the Complaint was filed, Bigler's parents initiated contractual arbitration of their own claims based on the arbitration provision in the Harker enrollment contract. The Defendants in turn demanded arbitration of Shivani Bigler's claims (in addition to arbitration of the parents' claims), but the Biglers refused citing defects in Harker's Demand for arbitration.

The Harker School then petitioned to compel arbitration of Shivani Bigler's claims, arguing equitable estoppel. The Biglers opposed the Petition to Compel Arbitration arguing procedural and substantive unconscionability, and also that the tort claims were not subject to arbitration. The Trial Court denied the Petition to Compel Arbitration.

On appeal, the Court of Appeal ruled that the enrollment contract was neither procedurally or substantively unconscionable, and also ruled that the tort claims were arbitrable given that the alleged conduct occurred on campus and was closely related to, or transactionally related to, the enrollment contract.

The Bigler case is important in that the Court of Appeal ruled that a number of defenses to the demand for arbitration would not serve to bar arbitration. In that regard, the Court of Appeal ruled that the fact that the Commercial Rules of the American Arbitration Association (referred to in the enrollment contract) were not provided to the parents was of little moment. The Court of Appeal also ruled that the fact that the arbitration provision was presented in the "same typeface and point size as all other provisions," also did not provide the basis for a finding of unconscionability. The Court of Appeal also noted that the fact that the enrollment contract excluded arbitration for disputes involving tuition was also by itself not unconscionable. The Court of Appeal further ruled that, while there may have been an unconscionable attorney fee shifting provision in the enrollment contract, since The Harker School had waived that in its Petition to Compel Arbitration, that was also not an impediment to arbitration.

In addition, the Court of Appeal ruled that the tort claims, including battery, were subject to arbitration, even with the schoolteacher, because the conduct was not removed from the setting contemplated by the enrollment contract (i.e., activities on the school campus). The Court of Appeal, in that regard, distinguished Victoria v. Superior Court (1985) 40 Cal.3d.734 (case involving arbitration of a sexual assault claim by a hospital orderly) and RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511 (case involving claims arising from domestic violence between a chief executive officer of a recruiting company who had an intimate relationship with the operator of a

company that maintained a chain of medical facilities) on the basis that those cases focused on conduct that was so far removed from the professional relationship between the parties that the claims could not have been contemplated when the arbitration agreements were executed.

It should be noted that an unusual aspect of the Bigler case, i.e., that Bigler's parents had petitioned to compel arbitration of their claims, was not a significant underpinning in the Bigler case and, instead, the analysis involving procedural and substantive unconscionability, and arbitrability of tort claims, instead, was the focus of the decision. In this regard, the Bigler case is important given that the Court of Appeal ordered the matter to arbitration in spite of a number of potential defects, or alleged defects, in the arbitration demand by The Harker School and because it ordered alleged intentional tort claims (battery) into arbitration as well.

About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.

Publication Note: The Morrison Law Group wishes to disseminate this publication to all clients and colleagues of the Firm who wish to receive it. Should any recipient desire to be removed from the distribution list, or wishes to have a colleague added, please contact Jim Van Dusen at The Morrison Law Group at 213 356-5504 or vandusen@morrisonlawgroup.com.

Disclaimer Note: The legal article presented above is intended to provide general information which may be of interest or use to clients and colleagues of The Morrison Law Group and should not be construed as legal advice on any matter.