June 25, 2013, Utah Supreme Court Case Summaries

June 25, 2013

Utah Supreme Court

Zions Management v. Record, 2013 UT 36, No. 20110860 (June 25, 2013)

ISSUE: Finality of an Order to Enforce Arbitration & Interpretation of an Arbitration Clause

Chief Justice Durrant,

Appellant Jeffrey S. Record seeks appellate review of the district  court’s order compelling  him to arbitrate various  claims that arose out of his employment with Appellee Zions Management Services Company (Zions). Mr. Record argues that the district court erred in compelling arbitration because the plain language of the arbitration clause in his employment contract allows him to pursue administrative remedies prior to submitting to arbitration. We agree. Accordingly, we vacate the district court’s order compelling arbitration and remand for further proceedings.

At ¶ 1.

.   

The Court summarizes the background of the case.

At ¶¶ 2-10. 

Jurisdiction

Mr. Record admits that he signed several documents acknowledging receipt of Zions’ “Employee Handbook,” and the Arbitration Agreement contained within the Handbook expressly states that it is governed by the FAA: “Because employment with [Zions] involves interstate commerce, this binding arbitration agreement is made pursuant to, and is governed by, the Federal Arbitration Act.” (Emphasis added.) And under Section 16(a)(3) of the FAA, appeals may only be taken from “a final decision with respect to an arbitration that is subject to this title.”  Thus, we agree with Zions’ argument that Mr. Record’s appeal was proper only if the district court’s order constitutes a “final order.”

At ¶ 16. 

We disagree, however, with Zions’ assertion that federal rather than state law applies to  the procedural question of whether the order was “final.” The United States Supreme Court has recognized the “general and unassailable proposition . . . that [s]tates may establish the rules of procedure governing litigation in their own courts.” But in the same opinion the Court cautioned that “where state courts entertain a federally created cause of action, the ‘federal right cannot be defeated by the forms of local practice.’” In other words, if state procedure poses “an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” then federal procedural law would preempt state law. Thus, the question for us becomes whether the application of our own procedural rules would pose “an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” when it enacted the FAA.

At ¶ 17. 

. . . Whether an order is “final” for the purposes of appeal is a purely procedural question, and given that (a) Congress has not expressly preempted the application of local procedural rules in the FAA and (b) the application of local procedural rules will not frustrate the purposes of the FAA, we conclude that even in litigation governed by the FAA, state procedural rules and applicable principles of law will apply. Accordingly, we address the issue of the finality of the district court’s order under Utah law.

At ¶ 19. 

Finality of Order

Zions’  principal  argument  against  the  finality  of  the district   court’s  order  is   that  the  order  included   a  stay  of Mr. Record’s administrative appeal  that was pending  before the Labor Commission, rather than a dismissal. Had the district court dismissed the discrimination claims that were pending on appeal before the Labor Commission and then ordered arbitration, Zions argues, the order would have been “final” and this appeal would be proper. Zions also contends that the order lacked finality because the district court retains jurisdiction to confirm, vacate, modify, or correct the arbitration award once arbitration is completed.  We are not persuaded by either  of these arguments because (1) the district court did not have the authority to issue the stay of the administrative proceedings, which means that the order compelling arbitration completely resolved the controversy between  the  parties,  making  it  a  “final”  order  from  which Mr. Record  could   appeal;   and  (2)  the  availability  of  post- arbitration remedies  before the district  court does not affect the finality of an order compelling arbitration.

At ¶ 20. 

Mr. Record initiated administrative proceedings when he filed a claim with UALD  alleging discrimination. Accordingly, under UAPA  the district court has no jurisdiction over those proceedings  until Mr.  Record has exhausted his  administrative remedies, at which point Mr. Record can seek judicial review of the agency’s decision.   Thus, when it was presented with the district court’s order that purported to stay Mr. Record’s administrative appeal, the Labor Commission correctly reasoned that “[t]he District Court  does not have jurisdiction to stay the Commission’s proceedings for an employment discrimination claim.” This is correct because the district court’s jurisdiction over those proceedings arises only after all administrative remedies have been exhausted. But because Mr. Record was just beginning to avail himself of those remedies at the time the district  court attempted to issue the stay, the district court acted without jurisdiction, rendering its order void.

At ¶ 25. 

Accordingly, for the purposes of determining whether we have jurisdiction over this appeal, we will ignore the district court’s attempt to stay the administrative proceedings. Once the stay is removed from the district court’s order, the only issue before the district court was whether the Arbitration Agreement should be enforced. And once the district court issued its Order Compelling Arbitration, there was nothing left for the district court to do. Thus, under the reasoning of [Powell v. Cannon, 2008 UT 19, 179 P.3d 799], the district court’s order was a “final decision” because it effectively ended the controversy between the parties and left no claims  pending before the district court. We therefore have jurisdiction to hear this appeal.

At ¶ 26. 

Zions also argues that the district court’s order was not final because “the district court . . . retains jurisdiction, under both the FAA and [Utah Arbitration Act], to enter post-arbitration judgment and to otherwise confirm, vacate, modify or correct the arbitration award.” We disagree.

At ¶ 27. 

Although we stated in Powell that “the  [district]  court may modify or correct an arbitration award before entering a judgment on it,” the fact remains that in Powell the district court had stayed litigation on the underlying claims for negligence and medical  malpractice. Thus, while arbitration was proceeding, those claims remained live before the district court, and thus the district court did, in fact, “retain jurisdiction” over those claims, which is why we determined that the district court’s order compelling arbitration and staying litigation was not final.

At ¶ 28. 

But here there were no live claims that remained before the district court after it issued its order. As demonstrated above, the district court’s attempt to stay the administrative proceedings was void for lack of jurisdiction, and even though the district court may, pursuant to either the FAA or the Utah Arbitration Act, “confirm, vacate, or modify” an arbitration award, this fact does not affect the finality of an order compelling arbitration where no claims remain before the district court after it issues the order. Therefore, we conclude that the district court’s order was final and that we have jurisdiction to hear the merits of this appeal.

At ¶ 29.

Having determined that it has jurisdiction, the Court reviews the language in the parties’ arbitration agreement and determines that it unambiguously allows Mr. Record to pursue his claims with an administrative agency before going to arbitration.

At ¶¶ 30-36.

Under  the parties’  Arbitration  Agreement, Mr.  Record was not required to submit his discrimination claims to arbitration until he sought relief based on those claims “beyond the agency.” Because he has not yet pursued relief beyond the Labor Commission, the district court erred when it issued its order compelling arbitration.  We therefore vacate  that order and remand this case to the district court for further proceedings consistent with this opinion.

At ¶ 37.

State v. Maughan, 2013 UT 37, No. 20120524 (June 25, 2013)

ISSUE: Sufficiency of Evidence for Bindover on an Obstruction of Justice Charge

Justice Lee,

Wade Maughan confessed to helping Glenn Griffin commit murder. After being granted use immunity, Maughan was called as a witness at Griffin’s  murder trial.  Maughan refused to testify and was charged with obstruction of justice.

At the preliminary hearing on that charge, the magistrate declined to bind Maughan over for trial, concluding that the State had failed to present evidence of the specific intent required by the obstruction of justice statute. The State appealed, and the court of appeals affirmed. We now reverse. Expounding on our recent opinions clarifying the standard that governs the bindover decision on a preliminary hearing, we find that the evidence was sufficient to bind Maughan over for trial for obstruction of justice.

At ¶¶ 1-2.  

The Court recounts the factual and procedural background of this case.

At ¶¶ 3-12.

Maughan was charged with obstruction of justice for concealing unprivileged information concerning a criminal offense in contravention  of  an  order  to  provide  it.  UTAH CODE  §  76-8-306(1)(i). In Utah this is a crime of specific intent. It requires proof of “intent to hinder, delay, or prevent the investigation, apprehension, prosecution, conviction, or punishment of any person regarding conduct that  constitutes a criminal offense.” Id. § 76-8-306(1). The question before us is whether the State presented enough evidence of specific intent to bind Maughan over for trial. We find that it did, and  reverse the court  of appeals’ contrary conclusion. In so doing, we agree with the court of appeals that there was some evidence sustaining an inference of intent to hinder Griffin’s prosecution, but find no room in the liberal bindover standard for second-guessing the reasonableness of that inference.

At ¶ 13.

To bind a defendant over for trial, the prosecution is required only to “produce believable evidence of all the elements of the crime charged,” State v. Clark, 2001 UT 9, ¶ 15, 20 P.3d 300 (internal quotation marks omitted), or, in other words, “evidence sufficient to support a reasonable belief that the defendant com- mitted the charged crime,” Ramirez, 2012 UT 59, ¶ 9, 289 P.3d 444 (internal quotation marks omitted). The magistrate, moreover, must “view all evidence in the light most favorable to the prosecution and must draw all reasonable inferences in favor of the prosecution.” Clark, 2001 UT 9, ¶ 10 (internal quotation marks omitted). This is a lenient standard. An inference is reasonable unless it falls “to a level of inconsistency or incredibility that no reasonable jury could accept it.” Ramirez, 2012 UT 59, ¶ 14 (internal quotation marks omitted).

At ¶ 14. 

We conclude that the State satisfied this standard here. It carried its burden of producing believable evidence that Maughan had been Griffin’s friend  and thus may have sought to prevent his conviction.  Such  evidence  provided  some  indication  that Maughan had a motive to prevent Griffin’s prosecution and  conviction. And because evidence of motive is often employed circumstantially to establish specific intent, see State v. Smith, 728 P.2d  1014,  1016  (Utah  1986) . . .  the evidence of a friendship between Maughan and Griffin supported a reasonable inference that Maughan wished to impede Griffin’s prosecution.

At ¶ 15. 

The court of appeals acknowledged this inference as “plausible”—and noted that  the logical “path” to it was “simple”—but nonetheless rejected it as “contradicted and overwhelmed” by evidence of the contrary inference that Maughan was “intensely absorbed” in protecting his rights in defending against the murder charge against him. State v. Maughan, 2012 UT App 121, ¶¶ 16–18, 276 P.3d 1258. In so doing, however, the court of appeals overstepped the bounds of the liberal bindover standard. It rendered its own assessment of the most reasonable inference to be drawn from the evidence instead of asking whether the evidence could reasonably sustain the inference proposed by the prosecution.

At ¶ 16.

Under this standard, we see no way to dismiss the inference  proposed by the  prosecution as “simply speculative.” Maughan, 2012 UT App 121, ¶ 18. The court of appeals did so based on the ample support for a contrary inference that it found in the record. Because Maughan consistently “expressed strong distrust that the grant of immunity would fully protect him,” and did so “at virtually every procedural juncture of the case,” the court of appeals deemed the “totality of the evidence” to sustain only one reasonable inference.  Id. ¶¶ 17–18. The conclusion does not follow from the premise, however.

At ¶ 18. 

Reasonable minds could differ on the factual matters before us. Perhaps a jury would ultimately agree with Maughan, concluding that  “the only reasonable inference to be drawn from the totality of the evidence is that Maughan acted in his own self-interest” and  not to hinder the prosecution of his friend Griffin. Maughan, 2012 UT App 121, ¶ 20. But in our view the magistrate and the court of appeals jumped the gun in rendering their own assessment of these issues. . . .  We accordingly reverse and remand with a mandate to bind Maughan over for trial on a single count of obstruction of justice. See id. ¶ 17.

At ¶ 21.