Los Angeles, CA — November 2013
Lee Tran Liang & Wang LLP (LTLW) successfully blocked a plaintiff’s novel attempt to compel arbitration against a defendant who was not a party to the arbitration agreement.
LTLW represented the City of Long Beach in an action brought by Promise Hospital of East Los Angeles. The Hospital alleged that CIGNA and the City failed to pay for medical services that it provided to a City employee under the City’s health plan. (Promise Hospital of East Los Angeles, L.P. v. Cigna Corporation et. al., Case No. B243126). The Hospital argued that it could compel arbitration against the City, even though the City was not a party to the agreement containing the arbitration provision, which was entered into by the Hospital and CIGNA. The trial court ruled that the arbitration provision was not enforceable against the City, and the Court of Appeal affirmed. The Court’s detailed opinion adopted all of LTLW’s arguments, holding that none of the grounds to compel a non-signatory to an arbitration provision applied in this case. Namely, the Court ruled that: 1) the City was not a third-party beneficiary, 2) there were no grounds for “direct-benefits” estoppel, and 3) CIGNA was not the City’s authorized agent for purposes of agreeing to arbitration. A contrary ruling could have had far-reaching effects for companies and individuals seeking to exercise their constitutional right to a jury trial.
LTLW partners Henry Wang and Kevin Bringuel led the successful appeal on behalf of the City of Long Beach.