Procedural Posture

Appellant employee filed an action against respondent employer for maliciously prosecuting a previous action that ended in an arbitration award in the employee’s favor. The trial court sustained the employer’s demurrer. The employee appealed, and the Court of Appeal of California, Second Appellate District, Division Three reversed the trial court’s decision. The employer’s petition for review of the court of appeal’s judgment was granted.

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Overview

The employee argued that his malicious prosecution claim based on contractual arbitration was proper because such a claim was allowed based on judicial arbitration. The supreme court found that: (1) judicial arbitration and contractual arbitration were sufficiently different such that the result should have been different because judicial arbitration was mandated by the legislature as to certain civil cases filed in court; (2) the public purpose of discouraging abuse of the judicial system by the bringing of maliciously motivated but baseless claims would not be directly served by permitting malicious prosecution based on a private, contractual arbitration; and (3) the nature of private arbitration did not always allow for a ready determination of whether or why the prior action terminated in the malicious prosecution plaintiff’s favor. Thus, the court held that the employee could not sue for malicious prosecution of the action that the parties resolved through contractual arbitration. The court rejected the employee’s argument that any ruling against his position should have been prospective only because the court did not overrule any decision predating the arbitration.