NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

BEDSWORTH, Acting P.J.

INTRODUCTION

Howard Dorne, M.D., appeals from a judgment entered after the trial court denied his motion to vacate an arbitration award against him and granted a motion to confirm in favor of his employer, a medical group called Vascular and Interventional Specialists of Orange County (VISOC). Dorne sued VISOC for breach of his employment contract and Labor Code violations after he left the group on grounds of disability. The matter went to arbitration, and the arbitrator found in favor of VISOC on all Dorne's claims.

Dorne moved in the trial court to vacate the award, and the court denied the motion. It entered judgment for VISOC pursuant to the arbitrator's award, and Dorne appeals from the judgment entered after this order. He also appeals the subsequent award to VISOC for attorney fees incurred to oppose his motion to vacate the award. The two appeals have been consolidated.

We affirm the trial court's award of post-arbitration fees to VISOC. The employment contract between Dorne and VISOC provided for an attorney fee award to a prevailing party, and the trial court did not abuse its discretion in determining the amount of the award.

The arbitration award itself is for the most part unreviewable. Most of the issues Dorne has identified on appeal were well within the scope of the arbitrator's authority, and courts do not second-guess an arbitrator's interpretation of a contract or conclusions of fact or law, even if they are erroneous.

There is, however, an exception to this rule. An arbitrator exceeds his powers when an award violates unwaivable statutory rights. In this case, Labor Code section 218.5 expresses a clear legislative policy to require unsuccessful employees asserting wage claims to pay the employers' attorney fees and court costs only if the wage causes of action were brought in bad faith. The arbitrator awarded VISOC its attorney fees without making this finding; in fact, the arbitrator decided the parties' contract overrode Labor Code section 218.5.

Dorne had an unwaivable statutory right to escape attorney fees for his wage claims unless he acted in bad faith. Accordingly we return the matter to the trial court for resubmission to the arbitrator on this issue alone. In all other respects, we affirm the order denying Dorne's motion to vacate the arbitration award.

FACTS

Dorne, who is an interventional radiologist, joined an existing medical group, Flanigan & Harward, a medical corporation (F&H), in 2004. At that time, F&H consisted of two vascular surgeons. Eventually the group, now VISOC, expanded to three vascular surgeons and three interventional radiologists. Dorne and the other doctors were VISOC's equal shareholders.1

Dorne's employment agreement with VISOC had several provisions that are relevant to this appeal. The employment agreement defines "employee's responsibilities" as "(a) response to all inquiries and medical calls while on call, (b) performance of medical services to meet the needs of [VISOC's] patients, (c) maintaining office hours corresponding to those hours currently maintained by [VISOC], (d) attending to and consulting with respect to hospital patients of [VISOC], and (e) timely preparation of such medical and business records reasonably required to facilitate patient care and billings."

The agreement provided for termination of employment upon "the permanent disability of Employee, defined as the inability of Employee, through illness or other cause, to perform the majority of his usual duties on a regular, full-time basis for a continuous period of four hundred fifty (450) days."

"If Employee is unable, through illness or other cause, to perform the majority of his usual duties hereunder for a continuous period of at least ten (10) working days, Employee shall be deemed disabled from the first day of his inability to perform even though Employee may otherwise be able to perform some of his usual duties."

The employment agreement allowed a total of 70 days for vacation or educational leave per calendar year. "Upon any termination of employment, Employee shall be entitled to receive the compensation to which Employee is entitled . . . so long as the vacation time taken by Employee during the calendar year in which the termination occurs does not exceed the vacation/educational leave permitted by Section 4.1 above. Employee shall not be entitled to any additional compensation for unused vacation time."

The arbitration section of the employment agreement provided: "Any controversy or claim arising out of this Agreement shall be settled by arbitration. The arbitration shall be in conformity with and subject to applicable rules and procedure of the American Arbitration Association. If the American Arbitration Association is not then in existence of for any reason fails or refuses to act, the arbitration shall be in conformity with and subject to provisions of the California Code of Civil Procedure relating to arbitration as they stand amended at the time of the notice. The arbitrator(s) shall be bound by this Agreement. Any award which the arbitrator(s) render shall be final and binding upon the parties. Judgment on the award may be entered in any court of competent jurisdiction. The prevailing party shall be held harmless by the other party for the cost of the arbitration, including arbitrators' fees."

The employment agreement also contained an attorney fee clause: "In the event of any controversy, claim or dispute between the parties hereto arising out of or relating to the Agreement or any breach thereof, the adjudicator may award the prevailing party reasonable expenses, attorneys' fees and costs, including but not limited to, the fees and expenses of the arbitrators and related administrative fees."

Dorne left VISOC in January 2013, saying he was disabled. As an interventional radiologist, he performed certain procedures wearing lead garments to protect himself from radiation. He asserted he had developed back pain and edema from standing for hours wearing these garments during the procedures.

A dispute developed between Dorne and VISOC, resulting in Dorne's filing suit against VISOC in Orange County Superior Court in January 2014, for breach of contract, Labor Code violations, and unfair competition. The first amended complaint, filed in January 2015, also named individual members of VISOC as defendants.

The court ordered the parties to arbitration, and the matter was heard by an American Arbitration Association arbitrator over five days in September 2015. The arbitrator issued the final award in April 2016. VISOC moved in the trial court to confirm the award, and Dorne moved to vacate it. The court granted VISOC's motion and denied Dorne's. It entered judgment in October 2016. An amended judgment, awarding VISOC $366,098 in attorney fees and costs relating to the arbitration and $30,000 in attorney fees incurred in opposing Dorne's motion to vacate the award was entered on February 22, 2017. Dorne has appealed from both judgments.

DISCUSSION

The arbitrator made several rulings pertinent to this appeal. The first is that Dorne was not disabled as that term was defined and used in the VISOC employment agreement. As a result, he could not claim the compensation and disability benefit provided in the agreement. Second, Dorne was not entitled to compensation for his unused vacation days. Finally, VISOC, not Dorne, was the prevailing party in the arbitration and contractually entitled to attorney fees and costs.

On appeal, Dorne has identified three grounds for overturning the arbitration award in VISOC's favor and reversing the amended judgment. First, he asserts the arbitrator exceeded his powers by rewriting the employment agreement with respect to disability. Second, the arbitrator should have ordered VISOC to pay him for vacation time pursuant to Labor Code section 227.3. Finally, both the arbitrator and the trial court erred by awarding VISOC attorney fees and costs.

California has a strong public policy favoring arbitration as a means of resolving disputes. Accordingly, arbitration awards may be reviewed only on the extremely narrow grounds listed in Code of Civil Procedure section 1286.2. "We cannot review the merits of the controversy, the validity of the arbitrator's reasoning, or the sufficiency of the evidence supporting an arbitrator's award." (Luster v. Collins (1993) 15 Cal.App.4th 1338, 1344 (Luster).) "Absent proof of one of the five grounds contained in section 1286.2, a court may not vacate an award for legal or factual error even if the error clearly appears on the face of the award and it causes substantial injustice." (Id. at p. 1345.) "`Every reasonable intendment must be indulged in favor of the award.' [Citation.]" (Ibid.)

Arbitration agreements subject to the California Arbitration Act may provide for judicial review of an arbitrator's legal errors, but they must do so "explicitly and unambiguously." (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1361.) In the absence of such an explicit and unambiguous provision, the rule that legal errors may not be reviewed applies. "Absent an express and unambiguous limitation in the contract or the submission to arbitration, an arbitrator has the authority to find the facts, interpret the contract, and award any relief rationally related to his or her factual findings and contractual interpretation." (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1182 (Gueyffier); see Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal.App.4th 576, 588-589.)

Because arbitration awards can be reviewed only on these narrow grounds, our first task in an appeal from an order denying vacation of an arbitration award is to determine whether an arbitrator's ruling identified as erroneous is reviewable at all. Only if the issue qualifies for review can we then proceed to inquire into the merits of the arbitrator's decision on it. (See Board of Education v. Round Valley Teachers Assn. (1996) 13 Cal.4th 269, 276 [reviewability of arbitrator's award independent of conclusion regarding upholding award].)

I. The Disability Provisions of the Employment Agreement

Regarding the disability issue, Dorne argues, first, the agreement did not give the arbitrator the right to decide whether he was disabled and, second, the arbitrator misinterpreted the definition of "disability" in the employment agreement and drew an incorrect conclusion based on that misinterpretation.

"[I]t is for the arbitrators to determine what issues are `necessary' to the ultimate decision. . . . `Likewise, any doubts as to the meaning or extent of an arbitration agreement are for the arbitrators and not the court to resolve.' [Citations.]" (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 372.)

We have reviewed the arbitrator's award, and it is clear he was interpreting the contract clauses relating to disability and applying them to the circumstances surrounding Dorne's leaving his job as they were presented in the evidence before him. Even if the arbitrator erred when he interpreted the contract and applied the interpretation to the evidence, the arbitration award cannot be reviewed for this error. "The arbitrator was empowered to interpret and apply the parties' agreement to the facts he found to exist; included therein was the power to decide when particular clauses of the contract applied." (Gueyffier, supra, 43 Cal.4th at p. 1185.)

II. Vacation Pay

Dorne argues that Labor Code section 227.3 entitled him to vacation pay for days of vacation unused when he quit in January 2013. The arbitrator decided he was not eligible for this pay.

Labor Code section 227.3 provides, in pertinent part, "Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination."

"[A]n arbitrator exceeds its powers within the meaning of Code of Civil Procedure section 1286.2 by issuing an award that violates a party's statutory rights or `an explicit legislative expression of public policy.' [Citations.] . . . [¶] Therefore, `courts may, indeed must, vacate an arbitrator's award when it violates a party's statutory rights or otherwise violates a well-defined public policy.' [Citation.] . . . [¶] This exception is applicable only when there has been `"a clear expression of illegality or public policy"' that undermines the presumption in favor of private arbitration." (Ahdout v. Hekmatjah (2013) 213 Cal.App.4th 21, 37-38.)

Assuming that Labor Code section 227.3 represents an "explicit legislative expression of public policy" (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 32 (Moncharsh)) regarding vacation pay, we still cannot review the arbitrator's decision. The arbitrator did not decide that Labor Code section 227.3 applied, but Dorne was not going to get his vacation pay anyway. The arbitrator made a very different decision. He decided that the VISOC employment contract did not provide for paid vacations. So Labor Code section 227.3, which applies only to "paid" or "vested" vacations, did not apply to Dorne. This is, again, a matter of contract interpretation, and even if the arbitrator made a mistake, we cannot review the mistake for error. "As construction of the contract was for the arbitrator, not the courts, we cannot say he exceeded his powers . . . by failing to adopt a particular interpretation of the agreement." (Gueyffier, supra, 43 Cal.4th at p. 1186.)

III. Attorney Fees and Costs

Dorne makes three arguments on the issue of fees and costs. First, he asserts that Labor Code section 218.5 overrides an arbitrator's power to award attorney fees to an employer in the absence of a finding of bad faith on the employee's part. Second, once the arbitration was over, the court had to make a similar finding of bad faith before it could award VISOC the fees incurred in opposing Dorne's motion to vacate the award. Finally, despite the arbitrator's contrary determination, Dorne was really the prevailing party because VISOC paid him some money during the course of the arbitration. So he was the person with the "net monetary recovery" and therefore entitled to costs.

A. The Prevailing Party

Even if the arbitrator erred in determining that VISOC was the prevailing party, the error cannot be corrected through court process, either by the trial court or by us. (See Pierotti v. Torian (2000) 81 Cal.App.4th 17, 26 ["Who is the prevailing party is a mixed question of law and fact, and we simply have no power to second-guess the arbitrator's decision on that issue."]; Creative Plastering, Inc. v. Hedley Builders, Inc. (1993) 19 Cal.App.4th 1662, 1666.)

The arbitration provision in the employment contract provided that "[a]ny award which the arbitrator(s) render shall be final and binding upon the parties." The arbitrator determined that VISOC was the prevailing party entitled to an award, and that decision is not open to review.

B. Labor Code section 218.5, subdivision (a)

Labor Code section 218.5, subdivision (a), provides, in pertinent part, "In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney's fees and costs to the prevailing party if any party to the action requests attorney's fees and costs upon the initiation of the action. However, if the prevailing party in the court action is not an employee, attorney's fees and costs shall be awarded pursuant to this section only if the court finds that the employee brought the court action in bad faith."2

An exception to the restraint on a court's ability to vacate an arbitration award occurs when the arbitrator's decision "violates a party's unwaivable statutory rights or . . . contravenes an explicit legislative expression of public policy." (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916.) "Vacating an arbitration award based on public policy or a statutory right requires an explicit legislative expression of a public policy violated by the award or a conflict with a statutory scheme." (SunLine Transit Agency v. Amalgamated Transit Union, Local 1277 (2010) 189 Cal.App.4th 292, 303.) "Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny." (Moncharsh, supra, 3 Cal.4th at p. 32.)

Labor Code section 218.5 appears to be an explicit legislative expression of a public policy that employees not be liable for attorney fees for unsuccessful wage causes of action unless they acted in bad faith, especially given the fact that the statute was amended in 2013 specifically to add this restriction.3 Accordingly, saddling Dorne with attorney fees and costs without a bad-faith finding violated his statutory right to escape fees and costs unless he acted in bad faith.4

VISOC's argument that Dorne's lawsuit was based solely on the employment contract, not on Labor Code violations, is simply wrong. Dorne alleged both kinds of claims in the first amended complaint. (See Sampson v. Parking Service 2000 Com., Inc. (2004) 117 Cal.App.4th 212, 218 [employee's judicial action for unpaid wages may be for breach of contract and/or statutory wages].) Moreover, it does not matter whether Dorne was seeking his wages under the contract or under the Labor Code. Wages are wages for both salaried employees, like Dorne, with contracts, and hourly employees, even those with no contracts. "Arbitration agreements are governed by their own attorney fees and costs provisions. But in employment dispute matters involving statutory claims, an employee's statutory rights to attorney fees and costs are not waived or forfeited, but rather are inferred in the arbitration agreement." (Ling v. P.F. Chang's China Bistro, Inc. (2016) 245 Cal.App.4th 1242, 1254 (Ling); see On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079, 1085-1086.) The Labor Code statutes referring to wages apply to both kinds of employees.5

It should be noted, however, that Labor Code section 218.5, subdivision (a), imposes a bad faith requirement only on an employee's liability for "attorney's fees and costs." While attorney fees authorized by contract are an element of costs under Code of Civil Procedure section 1033.5, subdivision (a) (10)(A), the code says nothing about arbitration expenses. Liability for these expenses, then, is governed by contract, and the attorney fees clause in Dorne's employment agreement permits the prevailing party to recover "the fees and expenses of the arbitrators and related administrative fees." The award by the arbitrator encompassing these fees and expenses is therefore not reviewable.

Furthermore, Dorne's subsequent "court action" was not one for nonpayment of wages. It was to overturn the arbitration award. (See, e.g., Ling, supra, 245 Cal.App.4th at p. 1263 [statutory attorney fee provision does not apply to petition to vacate award].) The attorney fees the court imposed on him were not pursuant to an effort to recover lost wages. Labor Code section 218.5 applies only to a cause of action for nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions. (See Ramos v. Garcia (2016) 248 Cal.App.4th 778, 791; Aleman v. Airtouch Cellular (2012) 209 Cal.App.4th 556, 584.) Consequently the Labor Code section did not apply to the trial court's award to VISOC for the fees incurred to oppose Dorne's motion to vacate the arbitration award. (Ling, supra, 245 Cal.App.4th at p. 1263 [There is "no authority to support the notion that a statutory attorney fee provision applying to a substantive claim extends to a petition to vacate an arbitration award resolving that claim. . . ."].)

We review a trial court's award of attorney fees for abuse of discretion. (Laffitte v. Robert Half Internat. Inc. (2016) 1 Cal.5th 480, 488.) The court in this case awarded VISOC its fees, while reducing the amount, as the prevailing party under the employment agreement's attorney fees clause. The court correctly decided that Labor Code section 218.5 did not apply in this proceeding and determined that VISOC was the prevailing party, notwithstanding a relatively small reduction in the amount requested. We can see no abuse of discretion here.

DISPOSITION

The order granting the motion to confirm the arbitration award and denying the motion to vacate the arbitration award and the amended judgment are reversed as to the arbitrator's award of attorney fees and court costs only. The matter is remanded for resubmission to the arbitrator to consider whether appellant brought any cause of action for wages, fringe benefits, or health and welfare contributions in bad faith and, if so, to determine the amount of attorney fees and court costs (as set forth in Code of Civil Procedure section 1033.5) attributable to the bad faith cause(s) of action. Only those attorney fees and court costs attributable to a cause of action or to causes of action brought in bad faith are to be assessed against appellant. In all other respects, the order granting the motion to confirm the arbitration award and denying the motion to vacate the arbitration award is affirmed.

The amended judgment is affirmed as to the award to respondent of the attorney fees incurred in opposing appellant's motion to vacate the arbitration award. The parties will bear their own costs on appeal.

MOORE, J. and GOETHALS, J., concurs.