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FfLED

F. Curt Kirschner, Jr. (State Bar No. 122S02)


Matthew J. Silveira (State Bar No. 2642S0)
Kelsey Israel-Trummel (State Bar No. 282272)
JONES DAY
55S Califomia Street, 26th Floor
San Francisco, CA 94104
Telephone: (415) 626-3939
Facsimile: (415)875-5700
Email:
ckirschner@Jone$Day.com
msilveiTa^onesDay.com
kitninunel@JonesD8y.com

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tl
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mrubiSil&sibSi

, Deputy

Jeflrey A. LeVee (State Bar No. 125863)


JONES DAY
555 South Flower Street, Fiftieth Floor
Los Angeles, C A 90071
Telephone: (213) 489-3939
Facsimile:
(213) 243-2539
Email:
jlevee(^onesDay.com
AttomeysforPetitioner
CALIFORNIA HOSPITAL ASSOCIATION

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SUPERIOR COVKT OF THE STATE OF CALIFORNIA

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COUNTY OF SACRAMENTO

IS
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CaseNo.

CALtfORNIA HOSPITAL ASSOCIATION,

FETrnONER CALIFORNU
HOSPITAL ASSOCIATION'S
NOTICE OF PETITION AND
PETmON TO COMPEL
ARBITRATION; MEMORANDUM
OF POINTS AND AUTHORITIES

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Petitioner,
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V.

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SEIU, UNITED HEALTHCARE WORKERS


- WEST, and DOES 1-10,

[Filed Concurrently with Declarations of


F. Curt Kirschner, Jr. and Gail M.
Blanchard*$aiger)

Respondent

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Date: Febniaiy 25,2016


Time: SliOO mill. / 2K)0 p.m.
Dept.: 5 3 / M
Hon. David I. Brown / Hon.
Raymond M. Cadei

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Petition Filed: Januaiy 26,2016

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1

NOTICE OF PETITION ANP PETITION TO COMPEL ARBIHUTION

TO RESPONDENT AND ITS COUNSEL OF RECORD

PLEASE TAKE NOTICE THAT on February 25,2016 at 9:00 a.m^:00 p.ifl), or as

soon thereafter as may be heard, in Departmer^3^4 of the above-entitled court, located at 720

9th Street, Sacramento, Califomia, before the Honorable David 1. Brown / Raymond M. Cadei,

Petitioner CALIFORNIA HOSPITAL ASSOCIATION ("CHA") w^ill, and hereby does, petition

the Court for an Order under Califomia Code of Civil Procedure section 1281.2 compelling

arbitration before Arbitrator Richard Aheam of three complaints brought by CHA against

Respondent SEIU, UNITED HEALTHCARE WORKERS - WEST ("UHW") under the parties'

written arbitration agreement, all three of which UHW has refiised to arbitrate. As necessary,

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CHA further seeks an Order consolidating SEIU, United Healthcare Workers - West, on its own

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behalf and on behalf of Caringfor Califomians, LLC v. C. Duane Dauner, et al.. Case No. 34-

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2015-00187138-CU-CO-GDS, a lawsuit filed by UHW in the Superior Court for the County of

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Sacramento, into the arbitration or staying that lawsuit pending arbitration. The lawsuit was filed

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in violation of the parties' arbitration agreement, and the subject matter of the lawsuit includes

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many of the same facts at issue in CHA's arbitration complaints. CHA is applying to intervene in

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that proceeding to seek a separate order compelling arbitration in accordance with the parties'

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arbitration agreement.

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CHA's petition is based on this Notice of Petition and Petition, the accompanying

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Memorandum of Points and Authorities, the Declarations of F. Curt Kirschner, Jr. and Gail M.

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Blanchard-Saiger, and upon all such other matters and arguments as may be presented to the

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Court at or prior to the hearing on this petition.

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Dated: January 26,2016

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2/

Attomeys for Petitioner


CALIFORNIA HOSPITAL ASSOCIATION

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1
NOTICE OF PETITION AND PETITION TO COMPEL ARBITRATION

pETniQN TQ ^QMfE ^ AW)|TRATIpf<

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Petitioner Califinnia Hospital Association Ct^HA") alleges as follows:


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PARTIES AND OTHER RELEVANT PERSONS


1.

CHA is a membership association of hospitals and health systems in Califomia

with offices in Sacramento. CHA collaborates with its members to provide strong and effective

representation and advocacy to advance the interests of Califomia hospitals, patients, and

communities.

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2.

been the President and Chief Executive Officer C X : E 0 ^ of CHA, and Gregoiy A. Adams, Mark
R. Laret, and James R. Holmes have served as CHA Officers.

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At the times relevant to the disputes at issue in this Petition, C. Duane Dauner has

3.

Respondent SEIU - United Heahhcare Workers West ("UHW*% an

unincorporated association, is a union of health care workers in California.

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4.

Caring For Califomians, a Labor Management Committee CXTFC") is a nonprofit

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mutual benefit corporation organized under California Corporate Code sectirai 7110 el seq. at the

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agreement of CHA and UHW.

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n.

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CHA AND UHW ENTER AN ARBTTRATION AGREEMENT


5.

On May 5,2014, CHA. UHW, and a number of Califi}mia hospitals and health

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systems entered into an agreement entitled the Code of Conduct. The Code ofConduct sought to

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"create a new model for laborrelationsthat is based on cooperation ratlwr than confrontation,"

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including by laying out **a labor-managementrelationshipasreflectedin the cocfe of conduct** and

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isuring that "eveiy oppa^tanity will be taken to resolve differences quickly and in a professional

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and non-confiontational manner.'* (Blanchard-Saiger Decl. Ex. A, Preamble.)

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6.

The Code ofConduct included both aibstantive and procedural provisions to

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achieve this goal.

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7.

Substantively, each patty ^reed thitt communicatuMis about the other "[would] be

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factual and shall focus on the merits of particular policies or issues. Differences, if any, [would]

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be addressed in a positive manner." (Blanchard-Saiger DecL Ex. A. I(BX1).) Neither party

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"[would] engage in personal attacks or nuike derogatoiy comments about the oUber Party or its
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NOTICE OF PETinON ANP PETITION TO COMPEL ARMTRATION

leadership, including board members.** (Id) UHW agreed that it would not engage in "reputation

or economic attacks; personal attacks; or instigating or supporting... litigation'* that was

"directed at or with respect to CHA... and any of [its] officers, directon, managers or

shareholders.** (Id. I(BX2).) UHW also speciftcalty agreed that it would not "sponsor or

support legislation, initiatives, or regulatory acdon adverse to the Califomia hospital industry

during the terms of this Agreement** (Id Q(C).)

8.

Procedurally, the Code of Conduct provided that the parties would "work

cooperatively toresolveproblems informally whenever possible.** {Id. III(A).) They agreed to

designate an Arbitrator and an Alternate Arbitrator and agreed that he or she would "resolve any

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disputes over the a|q>licatton and interpretation of this Agreement** (Id. 1II(B).) The parties

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also agreed that '*[t]he Arbitrator [would] have fmal and binding authority to enforce this

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Agreement andresolveissues that rise during the course of this Agreement.** (Id)

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9.

On August 13,2014, CHA and UHW selected Richard Aheam as the Arbitrator

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for disputes under die Code of Cbnduct and John K ^ l as Ihe Ahem^ Arbitrator. (Blanchard-

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SaigerDecL^3.)

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10.

On April 14.2015, the panics adopted a set of "Arbitration Procedures Pursuant

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to the Code of Conduct** that among other things, menKmalized the designations of Aibiiratois

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Aheam and KageL (Kirschner DecL Ex. A.)

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In Ihe Code of Conduct the parties also agreed "to establish an industry-wide

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Labor Management Cbopemtion Committee (the 'Committee*).** as peimitted by the Labor

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Managemem Coopoation Act of 1978, for various puiposes set forth in the agreement

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(Blanchard-Saiger Decl. Ex. A, U(A).) The paities agreed diat the "hospitals and health systems

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shall designate die Chief Executive Officer ('CEO*) of CHA as dieir representative on the

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Committee; the Union shall designate die President of the Union as its representative on the

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Committee.... The Committee shall not advance any agenda widiout die approval ofthe CEO

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of CHA and dte President of dte Union.** (Id n(AKl).)

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12.

The Code of Conduct anticipated that signatoiy hosfutals might choose to execute

"Conditional Access Agreements,** which would provide UHW accessrightsat Califomia acute
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NOTICE OF PETITION AND PETfTION TO COMPEL AMITIUTION

care hospitals in the event of "the achievement of a legislative or political solution that meets the

previously agreed upon goal of obtaining full Medi-Cal fimding and payments to hospitals for

seivices rendered to Medi-Cal beneficiaries... by December 31,2016.** (Id. Purpose and

Stmcture of Agreement (DX2).) Signatory hospitals, however, were not required to execute any

Conditional Access Agreements. (Id.) The parties agreed that "[i]n the event that by Januaiy I ,

2016, an insufGcient number of hospitals or healdt systems execute Conditional Access

Agreements to meet the requirement of [UHW access to] thirty thousand (30,000) non-union,

non-supervisory employees..., the Union [would] bereleasedfrom all further obligations under

this Agreement and this Agreement shall ternimate.** (Id) Upon such termination, "all of [the

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Code of Conduct's] terms are terminated widi respect to ali signatories." (Id Purpose and

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Stmcture of Agreement D(4).)

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13.

As agreed in the Code of Conduct CFC was foimed to function as a Labor

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Management Cooperation Committee. (Kirschner Decl. ^4.) CFC was incoiporated on

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September 17,2014, and organized as a nonprofit mutual benefit corporation under Califomia's

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Nonprofit Mutual Benefit Coiporation Law. (Blanchard-Saiger Decl. Ex. B.) Article II, section

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B of CFC's Aitkles of Incorporation restated the purposes set fiirth in die Code ofConduct and

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confirmed thatforits first two years, CFC'sfocuswould be on "obtaining fiill Medi-Cal fimding

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and payments to hospitals for services rendered to Medi-Cal beneficiaries.*' (Id Art II, B.)

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CFC's Bylaws named CHA and UHW as the corporadon's two "Designators," with sole authority

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Saiger DecL Ex. C, Ait III, IV.)


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CFC's Bylaws provicte diat "[t)he President of CHA, or whoever may succeed him

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or her as chief executive officer of CHA, shall serve as Co-Chan- [of CFC*s Board of Directors]

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by virtue of his/her position.** (Id Ex. C, Art IV, 3.) CHA was also given dierightto

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designate three additional directors, each a "CHA Director." (Id) Similarly, the Bylaws alk>cate

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four directors to UHW, including establishing die I^ident of UHW as die odier Co-Chair. (Id)

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The cunent CHA Co-Chair is Dauner, and the current CHA Directors are Adams, Laret, and

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Holmes. (Blanchard-Saiger DecL ^ 7.)


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NOTICE OF PETITION ANI> PETITION TO COMPEL ARBITRATION

IS.

The Bylaws fuithn- provide that "[a] vacancy in a CHA Director position may be

2 filled only by CHA, and a vacancy in a SEIU-UHW Director position may be filled only by
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SEIU-UHW.** (Blanchard-Saiger Decl. Ex. C, Ait IV, 4.) All acts of die Board must be

"ei^Hoved by both Co-Chairs plus at least two of die othier CHA Directors and two of the other

SEIU-UHW Directors." (Id Art. IV. 11.) Any amendmenttodie Articles of Incorporation or

the Bylaws must be "approved in writing by the Designators." (Blanchard-Saiger Decl. Ex. B,

Art. VII; see also id Ex. C, Art. IX, 4.)

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CHA DEMANDS ARBITRATION


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CHA served arbitration c<Mnplunts on UHW on November 14,2015 ("First

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Complaint"), November 30.2015 ("Second Complaint*^, and December 7,2015 (Third

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Cmiplaint"). The Second Complaint was amended on December 16,2015.

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First Complaini

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The First Complaint addresses an email UHW sent to a number of Califomia

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ho^ital executives. In die email, UHW discussed a number of recent political devebpments in

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Califomiarelatingto healdicare fimding, and accused CHA of causing Califomia hospitals to

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"miss out on nearly $6 billion a year in state andfederalfimding, and neariy S30 billion over the

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nextfiveyears." (Blanchard-Saiger DecL Ex. E, at 3.) UHWs message included numerous ftlse

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and derogatoiy charges about CHA diat breached the terms of die Code of Conduct (/dlat2-S.)

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On Novonber 14.2015. CHA notified UHW diat it viewed die email as a breach

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of UH Ws obligations under Section I(BXl) of die Code of Conduct to address any difTemices

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wddi CHA "in a podtive mamm^ and torefrainfiom"personal attacks" and "derogatory

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comments." (Id at 1-2.) CHA requested that UHW contact CHAtodiscuss die matter, and

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indicated that if the paities were not abletoresolve die matter promptly, CHA wouU initiate

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aibitration. (Id)

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UHW responded <m November 20,2015. (Id at 1.) In a perfunctory response,

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UHW look the position that its email had not violated the Code of Conduct arguing that

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"[s]impty because CHA may disagree widi UHW's perspective does not mean that the

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communication is a 'personal attack* or a 'derogatoiy' or 'negative* ccmimunication." (/<) ft


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NOTICE OF PETTTION AND PETITION TO COMPEL ARBmUTION

dien offered CHA the options of "talk[ing] about the complaint next week" or simply

"contact[ing] die Arbitrator to schedule an aibitration." (Id.)

Second Complaint

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The Second Complaint addresses UffW's efforts to qualify Califomia Initiative

15-0111, "Hospital Executive Compensation Act of 2016" ("Compensatton Initiative") for

placement on die 2016 Califomia ballot As CHA explained to UHW in its November 30,2015

complaint die Unkin's decisiontosponsor the Compensation Initiative violated Sections 1(B) and

11(C) ofthe Code ofConduct and in particular UfiW's agreement not to "sponsor or support...

initiatives adverse to the Califomia hospital industry" or make comments "raising concems

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about... executive compensation in health care." (Blanchard-Saiger DecL Ex. F, at 2-3.) CHA

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recommended that the November 14 and Novonber 30 complaints be consolidated into a single

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proceeding, and asked that although the goveming aibitration procedures set a sixty-day deadline

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for arbitrationtooccur, the panics agreetoa "prompt" aibitration date. (Id at 3.)

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In its December 4,2015 res^nse, UHW argued dial UHW onployees, not UHW

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itself, had proposed the Compensation Initiative, and that CHA had not identified the statements

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it believedtobe derogatoiy with sufficient specificity. (Id al 1.) UHW objectedtoomsolidation

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of the proceedings and CHA's request for a "prompt" hearing, but assured CHA that it was

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"certainly committed to litigating this complaint widiin the 60 daytimeframe as negotiated by

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the paities." (Id.) It only cautioned that "because of various conflicts. SEIU-UHW cannot agree

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22.

On Deceniba> 16,2015, CHA amended its November 30 arbitration ccmiplaint

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after it discovered that UHW had established a political fimd to support die Compensation

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Initiative. (Kirschner DecL Ex. B, at 1.) CHA explained that the creation of the fimd provided

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further evidence dut UHW was theforcebehind the Compensation Initiative. (Id) CHA abo

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infonned UHW that it viewed die oeation ofthe fimd as an independent violation ofthe Code of

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Conduct (Id)

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Uiird Complaint

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The Third Complaint addresses UHW's decision to tum a diqnite over die
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NOTICE OF PETITION AN& PETITION TO COMPEL ARMTiUTION

management of the CFC into a lawsuit charging CHA's officers (including CHA's President)

with breaches offiduciaryduty and various torts.

24.

As agreed in the Code of Conduct CFC was created with an initial focus of

increasing Medi-Cal fiindtng. As alleged in UHWs lawsuit CHW and UHW initially proposed

an initiativetoextend a taxtoincrease Medi-Cal fimding. (Kirschner DecL Ex. C ^ 41.)

AccordingtoUHW, though, CHA then decided to change course in response to pressurefrom"a

coalition of employers and labor organizations... with political interests that do not align with

CFC," whicb UHW referstoas die "ABC Coalition." (Id H 4.) UHW aUeges duit CFC teamed

that the ABC Coalition was planning to propose a similar, but competing, initiativetoCFC's (id

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^ 45), and that Dauner then began "secretly working widi the ABC Coalition to undermine CFC's

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initiative." (Id H SO.) AccordingtoUHW. Dauner's decisiontosupport die ABC Coalition's

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competing initiative constitutes a breach of afiduciaryduty the CHA Directors owed CFC. (Id

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in 73,90.)

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The Code OfConduct explicitly anticipated diat CHA and UHW might disagree

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regarding how besttoaccomplish die goals of die CFC by providing that CHA's and UHW's

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representatives couM veto any proposed acti(ms ofthe CFC. The Code ofConduct also provided

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a dispute resolution process that the parties agreed would govem disputes arisingfromits

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interpretation or application. Despite these provisions, UHW chosetosue Dauner and the other

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CHA Directors in court when Daun^ allegedly exercised his vetorightimpn^wrly, ratho* than

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following the dispute resolution process to whi^ the parties agreed. UHW's suit alleged that by

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working widi the "ABC Coalition" and blocking UHW from advancing its |eferred version of

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die initiative, the four CHA Directors had violated a fiduciary dutytoCFC. (Kirschner Decl. Ex.

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C, in 81 -83.) Later, UHW issued each defendant a Preservation Notice diat directed "you and

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your organization, the Califomia Hospital Association" to preserve all documents relatedtothe

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allqgations in UHWs complaint (Kirschner Decl. Exs. D-C.)

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26.

Upon learning of the lawsuit CHA notified UHW that it viewed the litigation as a

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violation of Section 1(B) of the Code of Conduct which prohibits "instigating or supporting...

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litigation" that is "directed at or with respect to CHA or signatoiy hospitals or health systnns and
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NOTICE OF PETITION ANR PETITION TO COMPEL AMITIUTION

any of their officers, directors, managers or diarehoMers." (Blanchard-Saiger Decl. Ex. G, at 1 -

2.) CHA also noted that die inflammatoty language UHW had used in hs complaintlabeling

Dauner a "saboteur" and accusing him of "corrupt acts," for exampleconstituted a separate

violation of the Union's dutiestorefrainfrom"reputation... attacks" or "personal attacks"

directed at CHA and its officers andtoavoid "derogatoiy conunents" about CHA. (Id. at 2.)

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Unlike UHW's responsestodie First and Second Complaints, UHW claimed diat

the dispute was not arbitrable. (Blanchard-Saiger Decl. Ex. H, at 1.) Because the "fiduciaiy duty

of a not-for-profit director or ofiicer is governed by state law." UHW took the position that "the

onty way for diat dutytobe enforced is through litigation." (Id) UHW explained diat die suit

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was not a "lawsuit by UHW against CHA and its officers," but was instead "a lawsuit by UHW,

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on behalf of itself as member of CFC and on behalf of CFC, against die four directras of CFC."

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(Id.) As a secondary point UHW also claimed that the allegations in the lawsuit were not

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derogatoiy because they were true. (Id. atl.)

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rv.

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UHW REFUSES TO ARBITRATE


28.

UHWs initial responsestothe First and Second Complaints acknowledged the

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aibitiabilhy of the parties' disputes, and anticipated that the parties would arbitrate diese disputes

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under die Code ofConduct In responsetodie First Complaint UHW assured CHA dut it

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"wouki be more than happy to talk to [counsel] about the complaint next week or we can simply

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contact the ArbitiatOTtoschedule an aiWtration." (Blanchard-Saiger DecL Ex. E. at 1.) In

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responsetodie Second Complaint UHW explained on December 4,2015 duit ahhough UHW

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was "certainly committedtolitigating this complaint within the 60 day time frame as negotiated

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by the parties.... because of various conflicts, SEIU-UHW cannot agreetoa hearing before the

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new year." (Blanchard-Saiger Decl. Ex. F, at 1.) In particular, UHW noted diat its counsel would

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be out ofthe countiy for "a period oftime in December 2015." (Id)

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29.

Because UHW had infonned CHA that it was unavailable to arbitrate until January

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2016. CHA contacted Aibitrator Aheam on December 15.2015torequest hearing dates, copying

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UHW on its message. (Kirschner Decl. Ex. H, at 9-10.) Arbitrator Aheam respondedtoboth

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parties the same iSay, proposing a number of dates and offering his availability fix a sdieduling
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NOTICE OF PETITION ANtt PETITION TO COMPEL ARMTRATION

conference call any day that week. (Id. at 9.) CHA agreed that a phone call would be desirable.

(A/, at 8.)

30.

UHW responded die following day, changing its position as to whether die

arbitration woukJ proceed. UHW now took the position diat it was "highly remote" diat UHW

would have any duty to arbitrate any of the three complaints after January 1,2016. (Id. at 7-8.)

Specifically. UHW expressed a belief that die Code of Conduct's condition subsequent providing

that "the Union [woukl] bereleasedfrom all fiirther obligations under diis Agreement and this

Agreement [would] tenninate" if an insufficient number of Conditional Access Agreemenis were

signed would opeiate retroactivelytoreleaseUHW*s pre-existing obligationtoarbitrate disputes

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that arose before termination. (Id. at 7.) Despite taking this new position that it may have no

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obligationtoarbitrate after January 1,2016, UHW reiimted its refusaltoarbitrate any of the

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complaints in December, essentially foreclosing any possibility of arbitration under UHW*s

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interpretation of the contract (Id at 7-8.)

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31.

In tight ofthis development CHA offered to arbitrate all ofits complaints in

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December 2015 on dates that were available for Arbitrator Aheam. (Id. at 6.) Arbitrator Aheam

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did not set the arbitrationsforthose dates, however, and instead scheduled a confoence call on

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January 4,2016to"addressQ procedural issues," and "deteimine a method for resolution." (Id at

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2.4.) He also set Januaiy 6,2016 as the hearing date for the First Complaint with die

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understanding diat UHW mightrefiisetoappear. (Id at 2.) CHA confirmed its availability for

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diis schedule, but UHW did not respond. (M at 1; Kirschner Dect. 112.)

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32.

On January 1,2016, the Code of Conduct terminated when the condition

subsequentregardingConditional Access Agreement was not satisfied. (Kirschner DecL ^ 13.)


33.

Three days later, UHW and CHA each participated in die conference call

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scheduled by Arbitrator Aheam. (Kirschner DecL 114.) UHW denied any obligationtoarbitrate

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CHA's pre-teimination complaints and indicated it woukl not participate in the hearing on the

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First Complaint scheduled for Januaty 6,2016. (Kirschner DecL HIS.) CHA explained its

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disagreement with UHWs position and asked Arbitrator Aheam to resolve the paities* dispute

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over arbitrability. (Kirschner Decl. ^ 16.) Arbitrator Aheam asked the partiestosubmit briefing
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NOTICE OF PETITION ANi> PE I'l HON 10 COMPEL ARBFriUTION

on the issue and indicated that he would infonn them of his mling shortly. (Kirschner Decl.

H17.)

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34.

On Januaty S, 2016, CHA submitted its position on these matters to Arbitrator

Aheam. UHW did not submit a position. (Kirschner Decl. H 18.)


35.

Having considered the parties* positions, Aibitrator Aheam ultimately determined

diat because he, as die neutral, had played arolein discussions that led to the creation ofthe

Arbitration Procedures, "ethical considerations... require[d] [him]torecuse [him}selffiomany

hearing involving" UHW's post-termination obligation to aibitrate. (Kirschner Decl. Ex. I, at 1.)

He assured the parties, however, that he remained ready to resolve the underlying arbitration

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complaints after the arbitrability issues wereresolved.(Id)


36.

CHA then requested that UHW agreetosubmit the aibitrability dispute to

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Arbitrator Kagel as die Altemate Arbitrator. (Kirschner Decl. Ex. IC, at 1.) UHW failed to

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respondtoCHA*s request leaving CHA with no option but tofilethis Petition.

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PRAYER FOR RELIEF

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WHEREFORE, CHA prays as folbws:

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1.

For an order compelling aibitration ofCHA's three aibitration complaints before

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Arbitrator Aheam pursuant to the terms of the writtoi agreementtoarbitrate pursuant to

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Califomia Code of Civil Procedure 1281 et seq.

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2.

For an order consolidating SEIU. United Healthcare Workers - West, on its own

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andon behalf of Caringfor Califomians, LLC v. C. Duane Dauner, etal.. Case No. 34-2015-

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OOl 87138-CU-CO-GDS, into the arbitration or staying that action pending arbitratkMi;

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3.

That CHA be awarded its costs of suit; and

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4.

For such otfier and fiirtherreliefas is just and proper.

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NOTICE OF PETITION AND PETITION TO COMPEL ARBITRATION

Dated: January 26,2016

Jones Day

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Attomeys for Petitioner


CALIFORNIA HOSPITAL ASSOCIATION

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NOTICE OF PETITION ANP PE11TI0N TO COMPEL ARBITRATION

MEMORANDUM OF POINTS AND AUTHORmES

TABLE OF CONTENTS
Page
I.
II.

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INTRODUCTION
ARGUMENT
A. CHA and UHW Are Partiestoa Broad Art)itration Agreement
B. CHA Demanded Arbitratton of Three Disputes in November and December
2015, Each of Which Falls WidiintiieArbitration Agreement
I . UHW Concedes thai CHA's First and Second Complaints are Aibitrable
2. CHA's Third Complaint Also Is Arbitrabte
C. The Code of Conduct's Termination Does Not Extinguish UHW's Duty to
Arbiirate Disputes That Arose During the Life of the Agreement
D. The Court Should Order UHWtoArbitrate All Three Disputes.
IU.
CONCLUSION

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MEMORANDUM OF POINTS ANP AtTHORlTIBi

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TABLE OF AUTHORITIES

Page

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CASES

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Ajida Techs.. Inc. v. Roos Instruments. Inc.


(2001) 87 Ca\App.Ath 534

3, 7, 8, 10

6
7

Bono V. David
(2007) 147 Cat.App.4di 1055

^
9

Buckhom v. St. Jude Heritage Med Grp.


(2004) 121 Cal.App.4di 1401

10
JJ

Cedars-Sinai Med. Cnr. v. Shevry


(2006) 137 Cal. App. 4tii 964

11

12

Coon Plaza Doctors Hasp. v. Blue Cross of Cal.


(2000) 83 CaI.App.4di 677

13
14

2,7,8, 12

Elijafyuan v. S^terior Court


(2012) 210 CalApp.4di 15

15 _
16
17

Gen. Drivers, Local Union No. 984 v. Mahne & Hyde


(6di Cir. 1994) 23 FJd 1039..

8,9

20

Homestake Lead Co. of Mo. v. Doe Run Restaurant Corp.


(N.D. Cal. 2003) 282 F.Supp.2d 1131
Larkm v. Williams. Woolley, Cogswell. NakazawaA Russell
(1999) 76 CalApp.4di 227

21
2^

Laswell v. AG Seal Beach LLC


(2010) 189 Cal. App. 4di 1399

23

Utton Fin. Pritoing Div., Inc. v. NUiB


(1991) 501 U.S. 190

18
'9

9
2

11

24 " Maikkn v. Kaiser Found. Hasps.


(1976) 17 Cal Jd 699
25

26
27
28

Mansoiai v. Superior Court


(2010) 181 Calj\pp.4di 633

.,

MEMORANDUM OF POINTS ANP AIUTHORITIES

1
2
3
4
5

Merrick V. Writers Guild of Am.. W., Inc.


(1982) 130CalApp.3d212

Nolde Bros. Inc.. v. Bakery Workers


(1977) 430 U.S. 243
-

8,9

N. Cal: Dist Council ofHod Carriers v. Pa. Pipeline, Inc.


(1980) 103 Cal.App.3d 163

Operating Eng 'rt Local Union No. 3 v. Newmont Min. Corp.


(9di Cir. 2007) 476 FJd 690

6
7
8
9
10

SaintAffies Med. Ctr. v. PacifiCare of Cal.


(2003) 31 Cal.4di 1187

11

United Trans. Union. AFUCIO v. S. Cal. R/^tid TransU Dist.


(1992) 7 CaIApp.4di 804

12

Vianna v. Doctors' Mgfnt. Co.

13

(1994) 27 CalJKpp.4di 1186

14
IS

....3

STAIVTCS

Califomia Code of Civil Procedure 1281.2

X 7.11.12

16
17
18
19
20
21
22
23
24
25
26
27
28
ill

Htm v.r.i:in M OF POINTS ANP AlTHORITIBi

1
2
3

MEMORANDUM OF POINTS AND AUTHOMTIES


L

INTRODUCTION
On May 5.2014, Califomia Hospital Association ("CHA") and SEIU, United Healdicare

Workers - West ("UHW) signed a Code of Conduct that was designedtofoster cooperatbn and

improve the organizations* workingrelationship.The Code of Conduct included a broad

aibitration agreemait as an important meanstoachieve the parties' overall goal of ensuring that

the paities addressed differences in a "positive manner." After abiding by the terms of the

aibitration agreement for over a year, and successfully resolving other disputes pursuanttoits

lerms, UHW nowrefiisestoarbitrate three complaints brought by CHA. Its primary basis for

10

doing so. applkble to all three of CHA's complaints, is that the Code of Conduct terminated on

11

January 1,2016.

12

Califomia law is clear, however, that aibitration agreements are {Hesumedtoapplytoany

13

disputes that arise during the course of the underlying contract even if aibitration does not occur

14

until after the contract is terminated. In this sense, arbitration obligations survive the contract

15 from which they arise. All diree of the dilutes CHA sedcs to arbitrate arose while the Code of
16

Conduct remained in effect. In &ct CHAfiledandUHW responded toall three aibitration

17

complaints before die Code ofConduct terminated. And UHW onlyrefiisedto arbitrate in

18

January after it hadfirstasked CHAtoaccommodate its preference not to arbitrate in December.

19

There is no legal or equitable basis to support UHW's aitempttoavoid its arbitration

20

obligations simply because the Code ofConduct has now laminated. Moreover, UHWs refiisal

21 to arbitrate CHA's third complaint on the grounds thai the subject matter of UHWs lawsuit
22

relates to the Labor Management Committee established as provided fot in the Code ofConduct

23

improperly ignores the broad scope of the aibitration clause contained within the Code of

24

Conduct. For the reasons explained fiirther below, the Court shouldfindall three disputes

25

aibitrable, and wkr die paities to aibitration.'

26

27
28

* The factual background of ihis dispute has been set f<xth in the accompanying Notice of
Petiticm and Petition and die Declarations of F. Curt Kirschner, Jr. ("Kirschner DecL") and of
Gail M. Blanchard-Saiger ("Blanchanl-Saiger Decl.").
1
MEMORANDUM OF POINTS ANP AljTHOftl'HES

1
2

n.

ARGUMENT
Califomia has a "strong public policy in &vor of arbitration." (Lariin v. Williams.

WooUey. Cogswell. Nakazawa & Russell (1999) 76 Cal.App.4di 227,229.) The party opposing

arbitration has the burden "to demonstrate that an aibitration clause cannot be interpreted to

require aibitration of the dispute." (Coast Plaza Doctors Hosp. v. Blue Cross ofCal. (2000) 83

Cal.App.4di 677,686-687.) "Doubts as to whether an aibitration clause appliestoa particular

dispute are to be resolved infevorof sending the partiestoarbitration. The court shouM order

them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the

dispute." (United Trans. Union. AFUCIO v. S. Cal. R/^id Transit Dist., (1992) 7 Calj\pp.4di

10

804,808.) A court must compel aibitration upon finding: (I) the existence of an aibitration

11

agreement; (2) an arbitrable dispute; and (3) arefusaltoarbitrate. (See Cal. Code Civ. Proc.,

12

1281.2; Mansouri v. Superior Court (2010) 181 Cal.App.4di 633,641.)

13

Each of these three etements is present here.

14

A.

15

The existence of die arbitration agreement is not in dispute. When CHA and UHW signed

CHA and UHW Agreed lo a Broad Arbitration Provision.

16

die Code ofConduct on May 5,2014, diey agreedtobe bound by Section IIl(B). Specifically,

17

they agreed that a "designated Arbitrator [would] resolve any disputes ova the application and

18

interpretation of this Agreement" and that "[t]he Arbitrator [woukl] havefinaland binding

19

authority to enforce this Agreement andresolveissues thatriseduring tlw course of this

20

Agreement" (Blanchard-Saiger DecL, Ex. A, III(B).)

21

UHW does not deny having agreed to the Code of Conduct as a whole, or having entered

22

into the aibitration agreement specifically. Nor does it suggest either is invalid. To the contraty,

23

UHW has acknowledged thefixceof the aibitraticm agreement by arbitrating other complaints

24

befim Aibitrator Aheam, as agreed by the parties. (Kirschner Decl. ^3.) And not only has

25

UHW agreedtoaibitrate complaints brought against it under the aibitration agreement it has also

26

used the arbitratkm agreement to foree otha partiestoarbitrate complaints brought by UHW.

27

(Id.) Without doubt the parties'have a valid, written arbitration agreement

28

Moreover, the scope ofthe arbitration agreement is extremely broad. The parties agreed
2

MEMORANDUM OF POINTS ANP AUTHORITIES

1 to arbitrate "any disputes over die application and interpretation" ofthe Code ofConduct, and
2

agreed that an arbitrator would "havefinaland binding audioritytoenforce... and resolve issues

diat arise during the course of" die Code ofConduct (Blanchard-Saiger DecL Ex. A. III(B).)

Califomia courts have long recognized that similarly worded clauses are broadly construed to

include all claims "rooted in the...relattonshipcreated by [the parties*] contract" (Vianna v.

Doctors Mgmt Co. (1994) 27 Ca]App.4di 1186,1188,1190 [clause covering "any dispute of

any kind whatsoever, regarding the meaning, interpretatkm or enforcement of tfie provisioi of

diis Agreemenf*]; see also Mnricitv. Writers Guild of Am.. W..Inc (1982) 130 Cal AppJd 212,

217,219 [clause covering any dispute "conceming the interpretation ofany ofthe terms of thb

10

Basic Agreement and the applicati<i and effect of such teims as determined by an interpretation

11

thereor reached tort action with "roots in tiierelationshipbetween the parties which was created

12

by the collective bargainmg provisions of their agreement"].) Thus, a clause covering disputes

13

"conceming die enforcement or die interpretation of any provisions of this Agreement" inchides

14 tort claims diat are not "wholly independenf' of die contract (Buckhom v. St. Jude Heritage
15
16

Med GT^. (2004) 121 Ca]App.4di 1401,1404, 1407.)^


Here, the parties committedtoarbitrate "all controversies," arisingfiomthe Code of

17

Conduct "whedier legalfectuaLequitable, contractual or tcfftious." (Ajida Techs., Inc v. Roos

18

Instruments, Inc (2001) 87 CalJVpp.4di 534,543-44 [interpreting a clause covering "[a]ny

19

diqnites over this Agreement"] [citations omitted].) As discussed betow, CHA's aibitratkm

20

complaints are based onrightsaffordedtoit under the Code of C<Hiduct and fall well widiin the

21

scope of die aibhratim t^reement

22
23
24
25
26
27
28

' In thefewinstances wtiere disputes have been held nottofellwithin an aibitration


clause acklressing "appticatkMi or intoiHetation" of a contract the disputes havefidlenferoutside
the soc^oftiw coniract cmtaining tfae art)itrati(Mi clause. For ocample, one court has heM tliat a
dilute could not "be charactoized as regarding tlw application or inteipretation" of the parties'
agreements wliere "[n)o aUegation in die FAC foughttobe arbitrated] is based onrightsafT<ded
petitioners under die terms" of diose agreements. (Elijahjuan v. Superior Court (2012) 210
Cal.App.4th IS, 21.) And another heM that an arl>itratk clause covmng disputes "involving the
construction or plication" of a tami devetopmoit agreement dkl not reach a defemation claun
filedfiveyears a%r die agreement was executed. (Bono v. David (2(t07) 147 CaIApp.4di 1055,
1058-59,1069 [twining dte clause was "nanow" because it lacked "arising" language].)
3

MEMORANPUM OF POINTS ANP AUTHORITIES

B.

The parties' broad aibitration agreement covers each of CHA's diree complaints against

3
4
5
6
7
8
9
10
11
12
13
14

Each of CHA*s Three Disputes Falb Within the Arbitration Agreeraent

UHW at issue here.'


1,

UHW GoBcedcs that CHA^s First and Second Complaints are


Artdtrable.
CHA'sfirsttwo complaints require little discussion because UHW conceded that both are
arbitrable.
Ct{A*s First Complaint concems an email UHW sent to a number of Califomia hospital
executives in Novemlier, making numerous derogatoiy statements about CHA and its leadership.
(Blanchard-Saiger DecL Ex. E. at 2-5.) CHA's November IS, 2015 aibitration anplaint alleged
that the derc^atoty language UHW used in the email violated Section I(BXI) of the Code of
Conduct which requires that the parties' address their differences in a "positive manner" and
refivinfrom"personal attacks or derogatory comments." (Blanchard-Saiger Decl. Ex. A,
I(BXI); id Ex, E, at I.) UHW responded dial die email was not "derogatoiy" or "negative," and
dM not constitute a "personal attack." (Blanchard-Saiger Ex. E, at 1.)

15
16
17
18
19
20
21
22
23

In its SectMid Complaint CHA alleged lhat UHW's sponsorship and support ofthe
Ho^ital Executive Compensation Act of 2016 violated SectkMis 1(B) and 11(C) of die Code of
Conduct by which UHW agreed not to "sponsor or support... initiatives adversetothe
Califomia hospital industiy" or make comments "raising concems about... executive
compensation in health care." (Blanchard-Saiger Decl. Ex. F, at 2-3.) UHW responded diat for
various technical reasons, the alleged acts dM not violate the Code of Conduct's ternis. (Id. at 1.)
With respecttoboth complaints, die controvosy between the parties b over the proper
application and inteipretation oftiie leims of the Code of Conducta dispute thatfellssquarely

24 _
^ CHA initially asked Arbitrator Aheam to decide aibitrability because the Code provides
ttiat the aibitrator would have "final and binding authority"to"enforce" and resolve "any
disputes" arisingfromthe inteipretation or ^iplicab'on of die Code. Aibitrator Ahearo's decision
26 to recuse himserffiomdie aibitrability issues on ethical grounds, and UHW's unwillingness even
to respondtoCHA's requesttosubmit the paities* disputestoAibitrator Kagel, has forced CHA
27 tofilethis petitiontocom^ aibitration. Aibitrator Aheam has agreedtoaibitrate the merits
once the parties' arbitrability dispute is resolved. Byfilingthis petition, CHA does not waive its
28 rigiht to sedcartNtratk>n ofany dispute arising under the Code ofConduct
4
MEMORANDUM OP POINTS ANP AUTHORITIES
25

widiin the scope of the aibitration agreement InfeetUHW has conceded that the underlying

disputes are bodi aibitrable. (See Blanchard-Saiger Decl. Ex. E, at 1 [UHW suggests diat CHA

"simply contact the Arbitratortoschedute an aibitration" and advises that UHW believed that "an

in person arbitrati<Mi with wimesses will be necessary"]; id Ex. F, at 1 [UHW explains lhat the

"Union is certainly conunittedtolitigating this complaint within the 60 day timeframeas

negotiated by die parties"].)

7
8
9

2.

CHA's Third Complaint Abo Is Arbitrable.

CHA's Third Complaint concems the lawsuit UHW brought against four CHA officers,
accusing them of violating afiduciaryduty to CFC and committii^ various torts. Among the

10

Anti-Empbyer activities Section 1(B)(2) expressly prohibits b "litigatkm" that is "directed at or

11

vrith respecttoCHA... and any of [its] officers, directors, manageis or stiarehoMers."

12

(Blanchard-Saiger DecL Ex. A, I(BX2).) CHA contends UHWs bwsuit breaches dib

13

provision; UHW contends otherwise. Put another way, the parties disagree over the proper

14

interpretation and applicatkm of Section I(BX2). Thus, their disputefellssquarely within the

15

scope of the arbitration ^reement

16

The derogatory language UHW uses in its lawsuit constitutes an additional breach of the

17

Code of Conduct and provMes an indepoident basistocompel aibitration. UHWs suit includes

18

numerous disparaging statonents atXHit CHA and its officeis and direct<5. (See, e.g., Kirschner

19

Decl. Ex. C. m 1,59,61,64,82.) As CHA pointed out in its aibitration compbim, diere b little

20

doubt diat in making such statements, UHW las breached Section II(BXl) and (2), which

21

prohibit "personal attacks," "reputation . . . attacks," and "derogatoiy commons." (See

22

Blanchaid-Saiger Decl. Ex. A, I(BX1). (2).)

23

UHWs only response on this point has been that the allegations in the suit are not

24

derogatory or disrespeafiJi because, in UHWs view, thqr are troe. CHA, of course, disagrees,

25

which is why the parties bave a dispute. UHW has never argued lhat the dispute over whether its

26

allegations vkiiate die Code of Conduct's prohibititni on derogatoiy statementsfellsoutside the

27

scope of the arbitration clause. Nor could it In that way, diere is no meaningfiil difference

28

between this dispute and CHA's Firat CtHnplaint In fiict the negotiations over Medi-Cal fimding
5
MEMORANDUM OF POINTS ANP AUTHORITIES

1 fiom which UHWs letter accused Daiuier of "folding" and "feiling" are the very same
2

negotialionsfromwhich UHW's lawsuit accuses Dauner of having "engaged i n . . . covert

actions" and "soM hb veto power as a Co-Chair of CFC." (Compare Blanchard-Saiger Decl. Ex.

E, at 2-5 widi Kirschner Decl. Ex. C ^ 69,75.) Having admitted die aibitrability of die First

Complaint UHW has no basistochallenge the arbitralnlity of the Third Complaint

UHW has contended thb dilute b not artiitrable because it sued CHA's oflicers in their

capacity as CFC directors. (See Blanchard-Saiger Decl. Ex. H, at I.) This asserted exception has

no basis under the Code ofConduct UHW agreed that it wouM not initiate litigatkm against any

ofCHA's officers, and UHW has done just that There is no carve-out permitting UHW to

10

initiate litigation against CHA officers duetotheir participatkm in the CFC. Andtoread such an

11

exception into the Code of Conduct would defeat the purpose of the agreement which {vovided

12

for both die creation of CFC (with half of its directors comingfromCHA) and the bar on

13

litigatton against CHA's ofBcen, directors, managers, and shareholders.

14

Further, UHWsassoted distinction ignores the allegations of UHWs complaint All

15

four defendants are identified in the c<Hnplaint as CHA directors and officers. (See Kirschner

16

DecL E x . c n 7-10.) And, as the complaint acknowledges, allfourwoe appointedtoCFC's

17

board precisely because of the positions they hold widi CHA, as anticipated by the Code of

18

Conduct (See ICirschner Decl. Ex. C132; see also Blanchard-Saiger 1^1. Ex. A II(AX1)

19

("Signatoiy bospitab and healdi systems shall designate die Chief Executive Officer ('CEO*) of

20

CHA as dieir representative on the committee." and the parties may "mutually agreeQ to

21

designate more representativestotbe Committee.**].) Infeetthe suit explicitiy alleges that

22

Dauner's "wrongdoing" was carried out to protect CHAfrom"direct threats"toits interests

23

(Kirchner DecL Ex. C m 4-5), and that the other three defendants are "subordinate to Defendant

24

Dauner in the CHA... hierarchy" (id 132), and "agreedtosupport Dauner" in his plan (id %

25

72). Similariy, the Preservation Notices UHW issuedtoeach defendant were directedto"you

26

and your organization, the Califomu Ho^ital Associatkm." (See Kirschner Decl. Exs. IM!.)

27

Fuitho', thereliefsoughteliminatton of CHA*srighttoequal control over CFC as agreed in the

28

Code of Conductconclusively establidies that the defendants woe sued because ofIheir
6

MEMORANPUM OP POINTS ANP AUTHORITIES

positions widi CHA, and the lawsuit as a whole b one "directed at" CHA. (See Blanchard-Saiger

DecL Ex. A. I(BX2).)

UHW*s claim that the dispute b not aibitrable because UHW sued in its capacity as a

CFC member is no more convincing. Assuming arguendo UHW has standingtobring an action

on CFC*s behalf (which it does not), UHW has brought the lawsuit also in its own capacity.

(Kirschner DecL Ex. C H 6.). Indeed, UHW alleges that it has been "uniquely" injured in its own

7 right (Kirschner Decl. Ex. C H 97.) Any possibte basb UHW could havetoassert claims on
8

behalf of die CFC would arisefromthe Code ofConduct (Blanchard-Saiger Decl. Ex. A, I](A)

[providing for the creatkui of CFC].) UHW*s allegations are inextricabty tied to the Code of

10

Conduct

11

, UHW'sfinalchalloigetoaibitrabilitythatmembeis ofthe CFC must be ableto"hold

12

the officers and directors of CFC responsible" for alleged breaches of theirfiduciaiydutytoCFC,

13

and tfaat "the only way for that duty to be enforced is through litigation" (Blanchard-Saiger Decl.

14

Ex. H, at 1)alsofeib.Califmnia recognizes that arbitrators are as capable as courts of

15

enforcing Califimiia law. (See Madden v. Kaiser Found Hosps. (1976) 17 Cal.3d 699,706-07

16

[recognizing arbitration as "an accepted andfevoredmethod of resolving db|ites" andtoutingit

17

as "an ^cpeditious and economkal method ofrelievingoveitnirdened civil calendars"].) And

18

where parties have agreedtoreferlegal disputes to an aibitrator, aibitration is not only a

19

sufficient fbnim, it is the requiredfonim.(Coosl Plaza, supra, 83 Cal~App.4th at p. 687 [noting

20

that the language of section 1281.2 "is mandatory, not precatcy**].)

21

In short, CHA's Third Complaint is as arbitrable as the First and Second Complaints.

22

C.

23
24
25
26
27

The Code of Condnct^s Termination Does Not Extingabh UHW*s Duty to


ArbHrale Dbpntcs That Ane Dnriog the Ufe of Ihe Agreement

UHW has contended lhat its aibitration obligations for all of the disputes ended when the
Code of Conduct teiminated on January 1,2016. (Kirschner Decl. ^ 15.) UHWs position is
wrong: di^tes following die tenninatkm of an agreement with an aibitration clause are
presumed aibitrabte where the dispute involvesfectsand occurrences tfaat arose hefon expiration.
(See Litton Fin. PrirOingDiv., Inc. v. NLRB, (1991) 501 U.S. 190,205-06; see also^/MAZ, supra.

28
7
MEMORANPUM OF POINTS ANP AUTHORITIES

87 Calj\pp.4di at pp. 545-46 [relying on Litton and "expressly hold[ing] that a paity*s

contractual duty to aibitrate dii^utes may survive termination of the agreement givingriseto that

duty"].) There are "'strong reasons*" for diis presumption. (Ajida, supra, il CalApp.AA at p.

546 [<\}iotm$ Nolde Bros. Inc.. v. Bakery Workers (1977) 430 U.S. 243,252].) Odierwise, any

partytoa contract containing an arbitration agreement could avoid its dutytoaibitrate a dispute

by terminating the contract and filing suit the next day. (See Nolde Bros., supra, 430 U.S. at p.

252.) A party could even withdraw from ongoing aibitration if it feared a poor result (See id.)

The facts and occurrences underlying each of CHA*s aibitration compbints arose before

the Code of Conduct terminated. Indeed, CHA initbted, and UHW answered, each complaint

10

before January 1,2016. Thus, each complaint is presumptively arbitrable. (See Coast Plaza,

I\

supra, 83 Cal App.4th at pp, 915-16 [ordering arbitration of dbpute arisingfiiominsurer's alleged

12

bad-faithrefiisaltorenegotiate contractualreimbursementrateswith provider notwithstanding

13

provMer's decision to terminate entire contract after negotiations broke down but before filing

14

suit]; Operating Eng 'rs Local Union No. 3 v. Newmont Min. Corp. (9di Cir. 2007) 476 FJd 690,

15

693 [ordering arbitration where parties* dispute ''involve[d] facts and occurrences diat arose

16

before eiqiiration" of tlie paities* agreement]).

17

UHW appears torelyon a condition subsequent in the Code of Conduct providing that in

18

the event "an insufficient number of hospitab or health systems execute Conditional Access

19

Agreements" (essentially an agreement facilitating organizing activities) contempbted by the

20

Code of Conduct "the Union shall bereleasedfiomall further obligations under this Agreement

21

and diis Agreemem shall terminate." (Kirschner DecL Ex. H. at 5,7.) But that language does not

22 rebut the presumption of arbitrability. Indeed, courts enforce arbitration cbusfoltowingthe


23 termination of a contract even where the contract states "that '[n]orightsor obligations created by
24

or arising out of [the contrs;t] diall extoid beyond its termination.*" (Gen. Drivers, Local Union

25

No. 984 V. Mahne & Hyde (6di Cir. 1994) 23 F.3d 1039, 1045-46 [constming aibitration clause

26

m collective bargaining agreement].)

27
28

The reasoning of cases like Genera/Drrverr b straightforward. Even where a contract's


termination hasreleasedpaitiesfiiomtheir contractual obligatkms, "[i]t would be inconsistent
8
MEMORANPUM OF POINTS ANP AUTHORITIES

widi the policy favoring aibitrationtosummarilyrelievethe parties of die obligationtoarbitrate

where a dbpute arose while the [contract] was in effect and die resuhing grievance procedure was

initiated and well under way before" the agreement tominated. (Id at 1046.)^ Indeed, if a

generalreleaseupon terminatton were enough to eliminate the obligation to arintrote, die

presumption of post-teimination aibitrability would apply onlytocontracts that expressly provide

for post-tmnination arbitration, an exception that would swallow the mle. Thb b not the bw:

the presumption provides that "parties*feiluretoexcludefiromarbitrability contract disputes

arising after tennination.fiu-from manife^g an intenttohave arbitratton obligatbns cease with

the agreement affords a basis for concluding diat diey intendedtoaibitrate all grievances arising

10

out of the contractualrelationship."(Nolde Bros., supra, 430 U.S. at p. 2SS.)

11

Moreover, on a petitiontocompel aibitration, the court*sfocusis on whether the parties

12

had an agreementtoarbitrate, and whether their dispute is <me that falb within the scope of the

13

arbitration agreement To that end, die Califomia Supreme Court has endorsed the view that "an

14

aibitiatifm clause is separable from other portions of a contract" (Sairu Agnes Med Ctr. v.

15

PacifiCare of Cal. (2003) 31 Cal.4di 1187,1193,1199.) The ariiitration agreanent here

16

racpressly grants the artritrator "final and binding audioritytomforce dib Agreement and resolve

17

issues tha rise during the course of this Agreement" (Blanchard-Saiger Decl. Ex. A, ni(B)

18

[emphasis added).) It does not require that die Code of Conduct remain in effect during

19

aibitration. The Court should not import a condition subsequentfroma separate part ofthe

20

contracttoretroactively hivalidate CHA'srighttoaibitrate all disputes that "rise" while the

21

contract is in effect. (See Saint Agnes Med Ctr., supra, 31 Cal.4di at p. 1199 [explaining that

22

"the separable nature of aibitration agreements compel[led it] to conclude" that a party's

23

otiligationtoartiitrate "(a]ny controversy, diqiute or claim arising out of the interpretation.

24
25
26
27
28

* See abo Homestake LetulCo. of Mo. v. Doe Rm Restaurant Cwp. (N.D. Cal. 2003) 282
F.Supp.2d 1131.1139-40 (provisitm that partna would "no longer [tw] subjecttoany obligations
under the Paitaoship Agreeinent arising" after a transfer of paitaership shares "fiee^d]
Homestakefromany new contractual obligati(xis following tfae transit of its share m tfae
paitiiership, but it does notrelieveH<nestake ofits preexi^g dutytoaccept aibitrotton") and N.
Cal. Dist. Council of Hod Carriers v. Pa Pipeline, Inc. (1980) 103 CalApp.3d 163.172
("Termination of a collective bargaining agreement does not extinguish the dutytoarintrate if a
dispute arose during die life of die agreement").

mm

M OF POINTS ANP AUTHORITIES

perfonnance or breach of" a contract remained, notwithstanding its claim diat a condition

sutisequent had rendered the contract void].)

Finally, the progression of UHWsresponsesto CHA*s arbitration demands suggests that

UHW deliberately attemptedtorun out the clock on CHA'stimelyarbitration compbints. On

December 4, 2015, UHW responded to the Second Complaint by assuring CHA diat it was

"commiaedtolitigating this complaint within die 60slaytimeframeas negotiated by the parties,"

but asserted that the arbitration hearing wouM have to be held in "the new year." (Bbnchard-

Sdger Decl. Ex. F, at 1.) In making diese statements, UHW gave no indbation that it believed it

would not have a dutytoarbitrate in "the new year," even though, as UHW later confirmed, CHA

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had previously informed UHW tfaat it was "highly remote" tfaat the Code of Conduct would

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survive January 1,2016. To the contraty, UHWs statements appear designed to assure CHA that

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UHW would live up to its contractual obligations and that CHA's disputes would be arbitrated in

13

due course. Based on UHWs representations, CHA contacted Aibitrator Aheam in December

14

2015 to schedule arbitration hearings on all three complaints in January. (Kirschner DecL Ex. H,

15

at 9-10.)

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Only after Aibitrator Aheam proposed several January dates for hearings did UHW

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express its intention torefusetoarbitrate any disputes after die Code of Conduct terminated. (Id.

18

at 7-8.) Even though UHW stated on December 4,2015 diat it was not avaibble to arbitrate any

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dispute during the month of December. UHW waited until December 16toinform CHA and

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Arbitrator Aheam that it would likely not be obligated to arbitrate after January 1,2016. (Id.)

21

This kind of gamesmanship b exactly what the Supreme Court wamed against in Nolde Brothers,

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and why California's "statoloty [arbitration] scheme... explicitiy recognizes that written

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agreements to arbitrate may be 'extended or renewed by an oral or implied agreement.'" (Ajfida,

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siqtra, 87 Calj\pp.4di at p. S4S [quoting Cal. Cbde Civ. Proc. 1280(f)].)

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Finally, UHW assured CHA diat UHW would comply widi its obligationtoarbitrate and

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wouMparticipateinproceedingsbefore Arbitrator Aheam in Januaty. UHW thenreliedon those

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assurancestopersuade CHAtorequest that Aibitrator Aheam not schedule arbitration hearings

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until January, in deferencetoUHW counsel's travel schedule. It woiiU be inequitabletoallow


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MEMORANPUM OF POINTS ANP AUTHORITIES

UHWtonow reverse course, and escape aibitration through an alleged loophole of its own

manufecture. (See Cedars-Sinai Med Ctr. v. Shewry (2006) 137 Cal. App. 4di 964,987 ["The

doctrine of equitable estoppel provides that a person may not deny the existence of a state of facts

if he intentionally led anothertobelieve a particular circumstance to be true and torelyupon such

belief to his detriment**].) This dispute should be retumedtoAibitrator Aheam so that the parties

may conclude the arbitration proceedings initbted in Novemlier 201S.

D.

Where a party seeking an ordertocompel arbitration of a dispute b also party to "a

The Court Should Order UHW to Arbitrate All Three Dbpotes.

pending court action... widi a third party, arising out of tbe same transaction . . . and there is a

10

possibility of conflicting mlings on a common issue of law or fact" Califomia Code of Civil

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Procedure section 12812(c) provides a narrow exception to the mandatoty nature of orders to

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compel aibitration. Rather than requiring an order to compel arbitration, subsection (c) provides

13

courts some discretion in determining whether the parties' dispute should be resolved in court or

14

aibitration. Courts have explained, however, that thb "third party" exemption must be "construed

15

to mean a [third] party that is not bound by the aibitration agreement" or cannot "enforce" it.

16

(Laswell v. AG Seal Beach. LLC (2010) 189 Cal. App. 4di 1399, 1407.) Because Dauner, Adams.

17

Laret and Holmes are agents of CHA, and because UHWs allegations of misconduct are

18

inextricably intertwined with duties imposed by the Code ofConduct those individuals can

19

enforce die aibitr^on agreement against UHW. As a result they are not "ihird panics" whose

20

presence b sufficient to triggo- the section 1281.2(c) exemption. An order compelling aibitration

21

b mandatoiy.

22
23

And even if DaunCT, Adams, Laret and Hobnes were properly characterized as diird
parties, die Court should not allow UHW to use the fact that itfiledsuit against diose individuals

24 to sMestep its obligation to arintrate CHA's Compbints here. CHA served all three of its
25

aibitration complaints before UHW effected service of its bwsuit and. in any event litigatkm is at

26

an early stage; infeetthe defendants have yettoresptmdtoUHWs compbint (ICirschner DecL

27

^ 6.) Neidter the parties nor the court would be prejudbed by an order c<npelling arbitration.

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Nor wouM an ordertoc(Mnpel aibitration prejudice any third paities. Indeed, CHA will seek
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M OF POINTS ANP AUTHORITIES

leavetointervene in dte lawsuit shortly and, together with the Individual Defendants, will move

2 to compel aibitration of that dispute as well.


3

UHWs decisiontofilesiut against Dauner and tfae Individual Defendants was a breach of

its obligations under the Code ofConduct including its obligationtoarbitrate. UHW has further

breached its continuing obligations under the Code of Conduct's artiilration agreement by

6 refiising to aibitrate issues tfaat arose during the life of the parties' agreonent An order allowing
7

litigation rather than aibitration to proceed would tum the parties' aibitration agreement on its

Itead. In such circumstances, tfae Court should use any discretion it may have under section

1281.2(c)toorder ali of the parties* disputes into a single artiitration or, at a minimum, stay

10

UHWs suit until the CHA*s complaints are resolved in arbitration. (See Coast Plaza Doctors,

11

si^tra, 83 Cal.App.4th at p. 693 ["A stay is appropriate where (i]n the absence of a stey, the

12

continuation of the proceedings in the trial court dismpts the arbitration proceedings and can

13

render diem ineffective"] [quotaticMi marks omitted, alteration in original].)

14

DL

15

CONCLUSION
For these reasons, CHA's PetitkMitoOrnipel Arbitration should be granted, and

16

proceedmgs in SEIU. United Healthcare Workers - West, on its awn andon behalfof Cari/^fbr

17

Califomians. U C v. C. Duane Dauner. el al.. Case No. 34-2015-00187138'CU-CO<}DS should

18

be consolMated into the aibitration or stayed pending resolutkm of the artiitration,

19

Dated: Januaiy 26,2016

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22 ,
Altom^s for Petitioner
CALIFORNIA HOSPITAL ASSOCIATION

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2S
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NAf-l3O07SI74lv6

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